We also manufacture 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.

Pursuant to the terms of the Note, the Note matured on the earliest date of a closing of a debt or equity financing or May 16, 2006. On March 7, 2006, the Note holder and the Company agreed to extend the Note until May 16, 2006. As a consideration for the extension, we issued 30,000 shares of restricted common stock to the Lender. On August 8, 2006, we entered into an Allonge to the Note pursuant to which Motivated Minds agreed to extend the maturity date of the Note to provide that $150,000 shall be due and payable on August 16, 2006 and $150,000 shall be due on October 16, 2006. In connection with the Allonge, we agreed to issue 45,000 shares of restricted common stock to Motivated Minds. Pursuant to an amendment to the Registration Rights Agreement dated February 15, 2006, the Company granted Motivated Minds piggy back registration rights with respect to the 45,000 shares of common stock. On August 16, 2006 we repaid $150,000 of principal and all accrued interest to Motivated Minds. The due date on the remaining $150,000 principal was extended through December 16, 2006 and we issued an additional 30,000 restricted common stock to the Lender. On December 7, 2006, we repaid $50,000 of principal and the due date on $100,000 balance on Note was extended until January 31, 2007. Additionally, we agreed to add an additional $5,000 to the interest due pursuant to the Note. On January 23, 2007, we repaid the entire principal and interest in the aggregate amount of $105,000 due on the Note.

The CAMOFI Note bears interest at 12% and matures on February 28, 2009. Interest on the aggregate of the unconverted and then outstanding principal amount is payable monthly in arrears, in cash or registered shares of common stock at the Company's election, or a combination thereof, beginning on the first day of the first month after the issuance date of March 1, 2006. Notwithstanding the foregoing, payment in shares of common stock can only occur if during the 20 trading days immediately prior to the payment date, the payment in shares of common stock would not exceed 25% of the volume for any of the previous 20 trading days, we shall have given the holder notice, and the following conditions (the “Equity Conditions”) have been met: (i) we have duly honored conversions and redemptions; (ii) all liquidated damages and other amounts owing in respect of the CAMOFI Note have been paid; (iii) there is an effective registration statement pursuant to which the holder is permitted to resell all of the shares issuable pursuant to the CAMOFI Purchase Agreement; (iv) our stock is listed or quoted for trading on either of the Nasdaq SmallCap Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board and the shares issuable pursuant to the CAMOFI Purchase Agreement are listed for trading; (v) there is sufficient number of authorized but unissued and unreserved shares for the issuance of shares issuable pursuant to the CAMOFI Purchase Agreement; (vi) we are not in default under the CAMOFI Purchase Agreement; (vii) the shares issued or issuable will not exceed 4.99%; (viii) no public announcement of a pending or proposed fundamental transaction (such as a merger or consolidation of the Company, any completed tender offer or exchange, any reclassification of our common stock or compulsory share exchange where our common stock is effectively converted into or exchanged for other securities, cash or property) or change of control transaction has occurred that has not been consummated; (ix) the closing price of our common stock is at lease 115% of the conversion price of the CAMOFI Note, (as adjusted).

We have the right to prepay in cash, all, or a portion of the CAMOFI Note, at 120% of the principal amount plus accrued interest at the date of prepayment. In addition, we are required to repay the CAMOFI Note at 120% of the principal amount thereof plus accrued interest to the date of repayment in the event we shall (A) sell all or a portion of the our assets, (B) become subject to change in control transaction, or (C) Quilite International, LLC's audited financial statement are materially worse than its unaudited financial statements. In determining whether Qulite’s audited financial statements are materially worse than its unaudited financial statements, we will rely on a qualified third party accounting expert to determine the differences. The comparison will take place prior to the closing of any transaction between the Company and Quilite. Presently, the Company has not set a time for the consummation of any transactions with Quilite.

Upon the occurrence of an event of default, at the Holder's election, the full principal amount of the Note, together with interest and any other amounts owed pursuant to the CAMOFI Note shall become immediately due and payable in cash. The aggregate amount payable upon an event of default shall be equal to 120% of the principal amount of the CAMOFI Note, plus all accrued and unpaid interest thereon and all other costs, expenses, and liquidated damages due with respect to such CAMOFI Note. Commencing 5 days after the occurrence of any event of default that results in the eventual acceleration of the CAMOFI Note, the interest rate on the Note shall accrue at the rate of 20% per annum, or such lower maximum amount of interest permitted to be charged under applicable law. Pursuant to the terms of the Note, an event of default means (subject to any applicable grace or cure period) (i) any default in the payment of any principal interest or liquidated damages in connection with the Note; (ii) failure to observe any covenant or agreement contained in the Note; (iii) a default under any of the other documents executed in connection with the CAMOFI Purchase Agreement or any other material agreement, lease document or instrument to which the Company or any subsidiary is bound which default is not cured within 10 trading days; (iv) any representation or warranty made in any of the documents or in any written statement delivered to CAMOFI shall be untrue in all material respects as of the date made or deemed made; (v) any proceeding under applicable bankruptcy or insolvency laws commenced against the Company or its subsidiaries, which remains un-dismissed after 60 days or any adjudication of the Company or any of its subsidiaries is adjudicated insolvent or bankrupt.

In connection with the CAMOFI Purchase Agreement, we entered into an escrow agreement by and among, CAMOFI, Katten Muchin Rosenman, as Escrow Agent, and us and a letter agreement with CAMOFI, pursuant to which $1,500,000 was deposited into escrow by CAMOFI. Pursuant to the terms of the letter agreement, the $1,500,000 will be released to us upon consummation of the acquisition of Quilite International LLC, provided however, (v) the terms of such acquisition are satisfactory to CAMOFI; (w) CAMOFI shall be satisfied, in its sole discretion, with the progress of negotiations for the extension or renewal of our Headquarters lease; (x) no default or Event of Default shall have occurred or be continuing; (y) there shall have been no material adverse change in our business and the business of our subsidiaries or results of operations; and (z) the Equity Conditions shall have all been satisfied. Based upon changed circumstances the parties determined to release the funds held in escrow to the Company as follows: (a) $750,000 on July 10, 2006, which was used for general working capital purposes and (b) $750,000 on August 4, 2006, which was used to repay a portion of the CAMOFI Note.

on or before January 31, prepare and file with the United States Securities and Exchange Commission (“SEC”) a Registration Statement covering the resale of all common Stock issuable upon conversion of the 12% Senior Secured Convertible Note dated February 28, 2009, up to 33% of our issued and outstanding stock;

ii)

within 90 days from effectiveness of the Registration Statement referred to in i) above, prepare and file a Registration Statement covering the resale of all common Stock issuable upon conversion of the 12% Senior Secured Convertible Note dated February 28, 2009 to the extent not registered above plus all shares of common stock underlying the Purchaser Warrants, up to 33% of our issued and outstanding stock;

iii)

within 90 days from effectiveness of the Registration Statement referred to in ii) above, prepare and file a Registration Statement covering the resale of all common Stock issuable upon conversion of the 12% Senior Secured Convertible Note dated February 28, 2009 plus all shares of common stock underlying the Purchaser Warrants to extent not registered above, up to 33% of our issued and outstanding stock;

iv)

within 90 days from effectiveness of the Registration Statement referred to in iii) above, prepare and file a Registration Statement covering the resale of all additional Purchaser Warrants to extent not registered above, up to 33% of our issued and outstanding stock;

Pursuant to the Amendment, CAMOFI agreed to waive any liquidated damages accrued prior to the date of the Amendment. However, failure to meet the timetable set forth above will subject us to liquidated damages equal to 1.5% of the outstanding principal of the Notes for any registrable securities then held by CAMOFI for the first 30 days (or part thereof) after the default date and an additional 1.5% for any subsequent 30-day period (or part thereof), thereafter or a maximum of 10% of the remaining balance of the CAMOFI Notes. If we fail to pay any partial liquidated damages within seven days after the date payable, we will be required to pay interest thereon at a rate of 20% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to CAMOFI, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.

	2005			2004

CONTRACT REVENUES	$	6,038,459		$	4,605,813

COST OF SALES		4,323,489			5,062,799

GROSS PROFIT (LOSS)		1,714,970			(456,986	)

OPERATING EXPENSES
Consulting and other compensation		579,921			319,700
Salaries and related		218,249			245,688
Selling, general and administrative		350,787			764,055

TOTAL OPERATING EXPENSES		1,148,957			1,329,443

OPERATING INCOME (LOSS)		566,013			(1,786,429	)

OTHER INCOME (EXPENSE)
Gain on forgiveness of accounts and notes payable		318,973			544,318
Interest income		19,765			1,020
Interest expense		(235,592	)		(181,468	)

TOTAL OTHER INCOME (EXPENSE)		103,146			363,870

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		669,159			(1,422,559	)

PROVISION FOR INCOME TAXES		800			800

NET INCOME (LOSS)	$	668,359		$	(1,423,359	)

NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS	$	512,059		$	(1,791,594	)

Basic net income (loss) available to common stockholders per common share	$	0.06		$	(0.25	)

Diluted net income (loss) available to common stockholders per common share	$	0.05		$	(0.25	)

Basic weighted average common shares outstanding		9,186,987			7,038,209

Diluted weighted average common shares outstanding		9,836,987			7,038,209

	Preferred Stock, Series B				Preferred Stock, Series C						Preferred Stock, Series D
	Shares		Amount		Shares			Amount			Shares			Amount
Balance, January 1, 2004		—	$	—		63,600		$	63,600			—		$	—

Issuance of convertible preferred
stock at a discount		—		—		—			—			23,640			591,000
Isssuance of common stock for
consulting services rendered		—		—		—			—			—			—
Amortization of deferred consulting
fees		—		—		—			—			—			—
Issuance of common stock in
connection with the conversion
of preferred stock		—		—		(2,820	)		(2,820	)		—			—
Accumulated dividends on preferred
stock		—		—		—			—			—			—
Interest on notes receivable from
stockholders		—		—		—			—			—			—
Net loss		—		—		—			—			—			—

Balance, December 31, 2004		—		—		60,780			60,780			23,640			591,000

Issuance of common stock in
connection with debt extention		—		—		—			—			—			—
Isssuance of common stock for
consulting services		—		—		—			—			—			—
Isssuance of common stock as a
penalty for not registering
preferred shares		—		—		—			—			—			—
Issuance of common stock in
connection with legal settlment		—		—		—			—			—			—
Accrued dividends payable		—		—		—			—			—			—
Issuance of common stock in
connection with the conversion
of preferred stock		—		—		(31,800	)		(31,800	)		—			—
Issuance of common stock in
connection with the conversion
of preferred stock		—		—		—			—			(12,000	)		(300,000	)
Issuance of common stock in
connection with settlement of
debt		—		—		—			—			—			—
Issuance of common stock in
connection with settlement of
accounts payable		—		—		—			—			—			—
Amortization of deferred consulting
fees		—		—		—			—			—			—
Interest on notes receivable from
stockholders		—		—		—			—			—			—
Net income		—		—		—			—			—			—

Balance, December 31, 2005		—	$	—		28,980		$	28,980			11,640		$	291,000

	Common Stock				Additional Paid In Capital			Notes Receivable From Stockholders			Deferred Consulting Fees
	Shares		Amount		Additional Paid In Capital			Notes Receivable From Stockholders			Deferred Consulting Fees
Balance, January 1, 2004		6,895,265		689,527	$	3,809,194		$	(466,159	)	$	(109,813	)

Issuance of convertible preferred
stock at a discount		—		—		123,660			—			—
Isssuance of common stock for
consulting services rendered		350,000		35,000		130,000			—			(10,000	)
Amortization of deferred consulting
fees		—		—		—			—			111,480
Issuance of common stock in
connection with the conversion
of preferred stock		47,000		4,700		(1,880	)		—			—
Accumulated dividends on preferred
stock		—		—		—			—			—
Interest on notes receivable from
stockholders		—		—		—			(19,765	)		—
Net loss		—		—		—			—			—

Balance, December 31, 2004		7,292,265		729,227		4,060,974			(485,924	)		(8,333	)

Issuance of common stock in
connection with debt extention		250,000		25,000		22,500			—			—
Isssuance of common stock for
consulting services		1,050,000		105,000		414,000			—			(519,000	)
Isssuance of common stock as a
penalty for not registering
preferred shares		300,000		30,000		60,000			—			—
Issuance of common stock in
connection with legal settlment		100,000		10,000		10,000			—			—
Accrued dividends payable		—		—		—			—			—
Issuance of common stock in
connection with the conversion
of preferred stock		530,001		53,000		(21,200	)		—			—
Issuance of common stock in
connection with the conversion
of preferred stock		600,000		60,000		240,000			—			—
Issuance of common stock in
connection with settlement of
debt		500,000		50,000		260,000			—			—
Issuance of common stock in
connection with settlement of
accounts payable		75,000		7,500		39,000			—			—
Amortization of deferred consulting
fees		—		—		—			—			272,616
Interest on notes receivable from
stockholders		—		—		—			(19,715	)		—
Net income		—		—		—			—			—

Balance, December 31, 2005		10,697,266	$	1,069,727	$	5,085,274		$	(505,639	)	$	(254,717	)

	Subscriptions Receivable			(Accumulated Deficit)			Total Stockholders' Equity (Deficit)

Balance, January 1, 2004	$	(462,500	)	$	(5,679,912	)	$	(2,156,063	)

Issuance of convertible preferred
stock at a discount		—			(153,660	)		561,000
Isssuance of common stock for
consulting services rendered		—			—			155,000
Amortization of deferred consulting
fees		—			—			111,480
Issuance of common stock in
connection with the conversion
of preferred stock		—			—			—
Accumulated dividends on preferred
stock		—			(214,575	)		(214,575	)
Interest on notes receivable from
stockholders		—			—			(19,765	)
Net loss		—			(1,423,359	)		(1,423,359	)

Balance, December 31, 2004		(462,500	)		(7,471,506	)		(2,986,282	)

Issuance of common stock in
connection with debt extention		—			—			47,500
Isssuance of common stock for
consulting services		—			—			—
Isssuance of common stock as a
penalty for not registering
preferred shares		—			—			90,000
Issuance of common stock in
connection with legal settlment		—			—			20,000
Accrued dividends payable		—			(156,300	)		(156,300	)
Issuance of common stock in
connection with the conversion
of preferred stock		—			—			—
Issuance of common stock in
connection with the conversion
of preferred stock		—			—			—
Issuance of common stock in
connection with settlement of
debt		—			—			310,000
Issuance of common stock in
connection with settlement of
accounts payable		—			—			46,500
Amortization of deferred consulting
fees		—			—			272,616
Interest on notes receivable from
stockholders		—			—			(19,715	)
Net income		—			668,359			668,359

Balance, December 31, 2005	$	(462,500	)	$	(6,959,447	)	$	(1,707,322	)

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEET

September 30, 2006

(Unaudited)


ASSETS
Current Assets
Cash	$	60,344
Restricted cash		566,310
Contracts receivable		740,464
Inventories, net		1,585,704
Costs and estimated earnings in excess of billings on uncompleted contracts		531,535
Deferred financing costs, net		335,067
Prepaid expenses and other current assets		33,005

Total current assets		3,852,429
Property and Equipment, net		319,914
Deferred Financing Costs, net		474,678

	$	4,647,021
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses		1,706,804
Dividends payable		320,400
Billings in excess of costs and estimated earnings on uncompleted contracts		246,763
Warrant liability		1,320,953
Notes payable		84,000
Convertible notes payable, net of discounts		382,411

Total current liabilities		4,061,331
Convertible Notes Payable, net of discounts		329,250
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 $903,000)		27,780
Cumulative, convertible, Series D preferred stock, $25 par value,
75,000 shares authorized, 11,640 shares issued and outstanding
(liquidation preference of $403,000)		291,000
Common stock, $0.10 par value, 50,000,000 shares authorized;
11,459,654 shares issued and outstanding		1,145,966
Subscriptions receivable		(462,500	)
Notes receivable from stockholders		(505,639	)
Deferred consulting fees		(35,808	)
Additional paid-in capital		7,500,575

Accumulated deficit		(7,704,934	)
Total stockholders' equity		256,440

	$	4,647,021

See accompanying notes to the condensed consolidated financial statements.

F-31

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the

Three and Nine Months Ended September 30, 2006 and 2005

(Unaudited)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2006			2005			2006			2005
CONTRACT REVENUES	$	1,996,131		$	1,604,851		$	5,993,751		$	4,244,719
COST OF SALES		1,627,231			1,008,635			4,414,891			2,890,316

GROSS PROFIT		368,900			596,216			1,578,860			1,354,403
OPERATING EXPENSES
Consulting and other compensation		104,464			153,418			432,422			351,797
Salaries and related		86,826			27,701			212,948			125,253
Selling, general and administrative		196,271			67,472			657,463			428,160
TOTAL OPERATING EXPENSES		387,561			248,591			1,302,833			905,210

OPERATING INCOME (LOSS)		(18,661	)		347,625			276,027			449,193
OTHER (INCOME) EXPENSES
Gain (loss) on forgiveness of debt		6,697			(50,760	)		(7,204	)		(50,760	)
Change in fair value of derivative
liability		(834,285	)		—			(869,047	)		—
Liquidated damages		420,000			—			582,500			—
Interest, including debt discount
amortization		514,302			63,369			1,560,740			182,654

TOTAL OTHER (INCOME) EXPENSES		106,714			12,609			1,266,989			131,894
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES		(125,375	)		335,016			(990,962	)		317,299
PROVISION FOR INCOME TAXES		—			—			—			—

NET INCOME (LOSS)	$	(125,375	)	$	335,016		$	(990,962	)	$	317,299
NET INCOME (LOSS) APPLICABLE
TO COMMON STOCKHOLDERS	$	(125,375	)	$	335,016		$	(745,487	)	$	211,774
Basic net income (loss) applicable
to common stockholders
per common share	$	(0.01	)	$	0.04		$	(0.07	)	$	0.03
Diluted net income (loss) applicable
to common stockholders
per common share	$	(0.01	)	$	0.04		$	(0.07	)	$	0.03
Basic weighted average common
shares outstanding		11,435,487			8,741,821			11,176,819			7,912,876
Diluted weighted average common
shares outstanding		11,435,487			9,268,011			11,176,819			8,439,066

See accompanying notes to the condensed consolidated financial statements.

F-32

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Month Ended June 30, 2006 and 2005

(Unaudited)

	2006			2005
Cash flows from operating activities:
Net income (loss)	$	(990,962	)	$	317,299
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and equipment		111,737			194,208
Net gain on forgiveness of debt		(7,204	)		(50,760	)
Amortization of deferred financing costs		254,545			—
Estimated fair market value of common stock and warrants
issued for consulting services		244,909			122,833
Amortization of debt discounts		1,020,628			47,500
Estimated fair market value of common stock
issued for penalties and settlement		—			110,000
Change in fair value of derivative liability		(869,047	)		—
Changes in operating assets and liabilities:
Contracts receivable		(452,895	)		(47,920	)
Inventories		(656,757	)		14,824
Costs and estimated earnings in excess of billings
on uncompleted contracts		(113,780	)		(363,863	)
Prepaid expenses and other current assets		(31,445	)		(8,041	)
Accounts payable and accrued expenses		154,362			236,445
Billings in excess of costs and estimated earnings
on uncompleted contracts		(254,621	)		(355,196	)

Net cash provided by (used in) operating activities		(1,590,530	)		217,329
Cash flows from investing activities:
Purchases of property and equipment		(20,000	)		—

Net cash used in investing activities		(20,000	)		—
Cash flows from financing activities:
Restricted cash		(566,310	)		—
Bank overdraft		(27,649	)		—
Proceeds from issuance of convertible notes payable		3,800,000			—
Principal payments on notes payable		(846,000	)		—
Principal payments on convertible notes payable		(266,667	)		—
Deferred financing costs		(422,500	)		—
Principal repayments on obligations under capital lease		—			(63,406	)

Net cash provided by (used in) financing activities		1,670,874			(63,406	)

Net increase in cash		60,344			153,923
Cash at beginning of period		—			129,087

Cash at end of period	$	60,344		$	283,010
Supplemental disclosure of non-cash investing and financing activities:
Common stock and warrants issued for deferred financing costs	$	641,790		$	—

Conversion of note payable interest to common stock	$	170,250		$	—

Debt discounts on convertible notes payable	$	3,823,400		$	—

Debt discount on notes payable for note extension	$	18,900		$	47,500

Accrued cumulated dividends on preferred stock	$	42,000		$	105,525

Cummulative preferred dividends waived	$	287,875		$	—

Conversion of preferred stock to common stock	$	2,000		$	331,800

See accompanying notes to the condensed consolidated financial statements.

F-33

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

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, 2005, filed with the SEC. In the opinion of management, all adjustments necessary to present fairly, in accordance with GAAP, the Company's financial position as of September 30, 2006, 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 nine moths ended September 30, 2006 are not necessarily indicative of the results for the full year.

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 negative working capital of $208,902 and an accumulated deficit of $7,704,934 at September 30, 2006, and had net cash used in operating activities of $1,590,530 for the nine months ended September 30, 2006. These factors, among others, raise substantial doubt about the

F-34

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

Company's ability to continue as a going concern. The Company funds operations through increased sales and debt and equity financing arrangements which management believes may be insufficient to fund its capital expenditures, working capital and other cash requirements for the fiscal year ending December 31, 2006. 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 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.

REVENUE RECOGNITION

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

will change within the near term.

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

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

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

Contracts that are substantially complete are considered closed for consolidated financial 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." Such fees and costs incurred by the Company are immaterial to the operations of the Company.

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 of markdowns, price concessions and warranty costs. Such reserve is based on management's evaluation of historical experience, current industry trends and estimated costs.

F-35

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

BASIC AND DILUTED LOSS PER COMMON SHARE

Under SFAS No. 128, "Earnings Per Share," basic earnings per common share is computed by dividing income 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. There were 877,922 potentially dilutive and 13,372,330 potential common shares at September 30, 2006, which include common stock purchase warrants and shares underlying convertible preferred stock and convertible notes payable.

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the three and nine month periods ended September 30, 2006 and 2005:

For the Three Months Ended September 30,

	2006			2005
Net income (loss)	$	(125,375	)	$	335,016
Cumulative preferred dividends accrued		—			—
Numerator for basic and diluted net income (loss) per common share:
Net income (loss) applicable to common stockholders		(125,375	)		335,016
Denominator for basic net income (loss) per common share:
Basic weighted average common shares outstanding		11,435,487			8,741,821
Denominator for diluted net income (loss) per common share:
Diluted weighted average common shares outstanding		11,435,487			9,268,011

Basic net income (loss) per common share	$	(0.01	)	$	0.04
Diluted net income (loss) per common share	$	(0.01	)	$	0.04

For the Nine Months Ended September 30,

	2006			2005
Net income (loss)	$	(990,962	)	$	317,299
Cumulative preferred dividends accrued		(42,400	)		(105,525	)
Waiver of accrued cumulative preferred
dividends		287,875			—
Numerator for basic and diluted net income (loss) per common share:
Net income (loss) available to common stockholders		(745,487	)		211,774
Denominator for basic net income (loss) per common share:
Basic weighted average common shares outstanding		11,176,819			7,912,876
Denominator for diluted net income (loss) per common share:
Diluted weighted average common shares outstanding		11,176,819			8,439,066

Basic net income (loss) per common share	$	(0.07	)	$	0.03
Diluted net income (loss) per common share	$	(0.07	)	$	0.03

F-36

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

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 Company previously accounted for awards granted under its equity incentive plan under the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations, and provided the required pro forma disclosures prescribed by SFAS No. 123, "Accounting for Stock-Based Compensation," as amended. 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. Accordingly, no share-based compensation was recognized in the financial statements prior to January 1, 2006.

Under the modified prospective method of adoption for SFAS No. 123-R, the compensation cost recognized by the Company beginning January 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of April 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123-R.

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.

At September 30, 2006, the Company had 3,750,000 options available for future issuance under their equity compensation plans.

The effects of share-based compensation resulting from the application of SFAS No. 123-R to options granted outside of the Company's Stock Option Plan resulted in zero expense for the three and nine month periods ended September 30, 2006. Share-based compensation recognized as a result of the adoption of SFAS No. 123-R as well as pro forma disclosures according to the original provisions of SFAS No. 123 for periods prior to the adoption of SFAS No. 123-R use the Black Scholes option pricing model for estimating fair value of options granted.

In accordance with SFAS No. 123-R, the Company's policy is to adjust share-based compensation on a quarterly basis for changes to the estimate of expected award forfeitures based on actual forfeiture experience. The effect of adjusting the forfeiture rate for all expense amortization after December 31, 2006 is recognized in the period the forfeiture estimate is changed. Since the Company had no unvested options during the nine month period ended September 30, 2006, the effect of forfeiture adjustments in the three and nine month periods was not applicable.

Pro forma information required under SFAS No. 123 for periods prior to 2006 as if the Company had applied the fair value recognition provisions of SFAS No. 123 to options granted under and outside of the Company's equity incentive plans was as follows:

F-37

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

		Three Months Ended September 30,			Nine Months Ended September 30,
		2006			2006
Net income (loss) available as reported		(125,375	)		(745,487	)
Less: Total stock-based employee compensation
expense determined under the Black Scholes
option pricing model, net of tax		—			—
Pro forma net loss	$	(125,375	)	$	(745,487	)
Basic net income (loss) per common share :
As reported	$	(0.01	)	$	(0.07	)

Pro forma	$	(0.01	)	$	(0.07	)
Diluted net income (loss) per common share
As reported	$	(0.01	)	$	(0.07	)

Pro forma	$	(0.01	)	$	(0.07	)

Pro forma compensation expense reported in the above table is generally based on the vesting provisions in the related stock option grants. Since all options granted prior to January 1, 2005 had been completely vested prior to such date, there is no pro forma compensation expense to disclose for the three and nine months ended September 30, 2005, as reflected in the above table, nor any weighted average assumptions to disclose.

The expected volatility is based on the historical volatility. The expected life of options granted is based on the "simplified method" described in the SEC's Staff Accounting Bulletin No. 107 due to changes in the vesting terms and contractual life of current option grants compared to the Company's historical grants.

Options outstanding that have vested and are expected to vest as of September 30, 2006 are as follows:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Shares		Price		Term in Years		Value (1)
Vested		1,255,000	$	0.34		1.87	$	149,500
Expected to vest		—		—		—	$	—
Total		1,255,000		—		—	$	149,500

(1)	These amounts represent the difference between the exercise price and $0.38, the closing market price of the Company's common stock on September 30, 2006 as quoted on the Over-the-Counter Bulletin Board under the symbol "NCNC.OB" for all in-the-money options outstanding.

F-38

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

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 Options
	Shares Available for Grant		Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value (1)
December 31, 2005		3,600,000		1,413,500	$	0.40	$	481,000
Grants		—		—		—
Exercises		—		—		—
Cancellations		150,000		158,500	$	0.34
September 30, 2006		3,750,000		1,255,000	$	0.34	$	149,500
Options exerciseable at:
December 31, 2005				1,413,500	$	0.40
September 30, 2006				1,255,000	$	0.34

(1) Represents the difference between the exercise price and the December 31, 2005 or September 30, 2006 market price of the Company's common stock, which was $0.62 and $0.38 respectively.

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

DEFERRED FINANCING COSTS

Direct costs of securing debt financing are capitalized and amortized over the term of the related debt using the straight-line method. When a loan is paid in full, any unamortized financing costs are removed from the related accounts and charged to operations. During the three months ended September 30, 2006, the Company amortized approximately $84,000.

STOCK PURCHASE WARRANTS ISSUED WITH NOTES PAYABLE

The Company granted warrants in connection with the issuance of certain notes payable. Under Accounting Principles Board Opinion No. 14, "Accounting for Convertible Debt and Debt Issued With Stock Purchase Warrants," the relative estimated fair value of such warrants represents a discount from the face amount of the notes payable. Such discounts are amortized to interest expense over the term of the notes.

BENEFICAL CONVERSION FEATURE OF CONVERTIBLE NOTES PAYABLE

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

F-39

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

CLASSIFICATION OF WARRANT OBLIGATION

In connection with the issuance of the 12% Senior Secured Convertible Notes (See Note 3), the Company has an obligation to file a registration statement covering the resale of 125% of the Registrable Securities, as defined in the Registration Rights Agreement. The obligation to file the registration statement meets the criteria of an embedded derivative to be bifurcated pursuant to SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", as amended.

Under this transaction, the Company is obligated to register for resale the common shares underlying the warrants, and as a result, the embedded derivative associated with this warrant obligation does not meet the scope exception of paragraph 11(a) of SFAS No. 133. Specifically, at the commitment date, the Company did not have any uncommitted registered shares to settle the warrant obligation and accordingly, such obligation has been classified as a liability (outside of stockholders' equity) 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 will be evaluated at each reporting date and as such, it will continue to be reported as a liability until such time all of the criteria necessary for equity classification have been met.

NEW ACCOUNTING PRONOUNCEMENTS

Recent accounting pronouncements discussed in the notes to the December 31, 2005 financial statements filed previously with the Securities and Exchange Commission in Form 10-KSB that are required to be adopted during the year ending December 31, 2006 did not or will not have a significant impact on the Company's financial statements.

2. CONTRACTS IN PROGRESS

Contracts in progress as of September 30, 2006 which include completed contracts not completely billed, approximate:

Cumulative costs to date	$	5,081,000
Cumulative gross profit to date		4,700,000
Cumulative revenue earned		9,781,000

Less progress billings to date		(9,496,000	)

Net under billings	$	285,000

The following is included in the accompanying condensed consolidated balance sheet under these captions as of September 30, 2006:

Costs and estimated earnings in excess of billings
on uncompleted contracts	$	532,000
Billings in excess of costs and estimated earnings
on uncompleted contracts		(247,000	)
Net under billings	$	285,000

3. DEBT TRANSACTIONS

During the three months ended September 30, 2006, the Company amortized approximately $313,000 of debt discounts, including beneficial conversion features, to interest expense.

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

F-40

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

During the quarter ended September 30, 2006, the Company settled two notes payable with a note holder with principal balances totaling approximately $80,000 and recognized $40,000 in forgiveness of debt.

During the three months ended September 30, 2006, the Company made cash payments of $116,667 to reduce the principal balance on one of its outstanding secured convertible notes payable. As of September 2006, the principal balance is approximately $3,383,000 which is presented net of debt discounts totaling approximately $564,000.

Also, during the three months ended September 30, 2006, the Company made cash payments of $150,000 to reduce the principal balance on one of its outstanding convertible notes payable. As of September 2006, the balance on such note is $150,000. The balance is due on October 16, 2006, and is currently in default.

4. EQUITY TRANSACTIONS

On July 25, 2006, in connection with the Motivated Minds convertible note dated February 15, 2006, the Company issued 45,000 restricted shares of common stock to Motivated Minds for extension of the maturity date of $150,000 of principal balance of the note until August 16, 2006, and the remaining principal balance of $150,000 of the note until October 16, 2006. The common stock was recorded at the estimated fair value of the common stock on the date of the transaction totaling approximately $23,000, which was recorded as interest expense for the quarter ended September 30, 2006.

In July 2006, the Company issued 100,000 shares of common stock valued at $41,000 (based on the market price of the shares) to a third party for consulting services under one month contract.

5. CONTINGENCIES

On February 28, 2006, the Company entered into a Securities Purchase Agreement ("the Note") with CAMOFI whereby CAMOFI agreed to purchase, up to $5,000,000 aggregate principal amount of 12% Senior Secured Convertible Notes, due February 28, 2009 (up to $3,500,000 to be purchased at the closing and up to an additional $1,500,000 to be purchased pursuant to an Additional Investment Right), secured by a first priority lien on all assets of the Company and its current and future subsidiaries (including a pledge of the shares of the Company's current and future Subsidiaries). The Note is convertible into shares of the Company's common stock at a fixed price of $0.63 at any time at CAMOFI's option. Additionally, $1,500,000 of the $3,500,000 proceeds from the closing were placed into an escrow account, which was originally intended to be used for a potential private company business acquisition. Accordingly, such amount has been recorded as restricted cash in the accompanying condensed consolidated balance sheet at September 30, 2006. In connection with the Note, the Company issued 3,476,190 warrants at an exercise price of $0.63 to CAMOFI. The warrants vested and became fully exercisable on their issuance date. Based upon changed circumstances and the immediate need of the Company for the funds for general working capital purposes, the parties decided to release the funds held in escrow to the Company as follows: (a) $750,000 on July 10, 2006 and (b) $750,000 on August 4, 2006. The Company utilized the first $750,000 funds for general working capital purposes. The balance of $750,000 is restricted solely for payment of the principal balance of the Note.

CAMOFI has not exercised its $1,500,000 Additional Investment Right. Additionally, CAMOFI has certain registration rights for the common stock underlying both the warrants and the convertible debt. The related registration rights agreement includes financial penalties because the Company failed to meet the registration statement effectiveness deadline, which was June 28, 2006. Such penalties, which are 1.5% of the outstanding principal balance of the Note for the first 30 days and an additional 1.5% for each 30 day period thereafter, can be paid in common stock at the option of the Company.

As of September 30, 2006, the Company has accrued $582,500 for such estimated liquidated damages, which are included in accounts payable and accrued expenses in the accompanying condensed consolidated balance sheet. Of such amount, $43,500 was accrued during the three months ended March 31, 2006, $119,000 was accrued during the three months ended June 30, 2006, and $420,000 was accrued during the three month ended September 30, 2006, based on the estimate that the registration statement will become effective at the current year end. As a result of not meeting these deadlines, this condition may be deemed an "Event of Default" if not cured to the satisfaction of CAMOFI prior to the expiration of thirty days from the Event Date, as defined in the registration rights agreement, and could possibly allow CAMOFI to call the debt or seek other remedy at such time.

F-41

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

For The Nine Months Ended September 30, 2006 And 2005

(Unaudited)

6. SUBSEQUENT EVENTS

On October 23, 2006, the Company announced that its proposed acquisition of Quilite International will be delayed for an indefinite period of time. The Company stated that negotiations for the acquisition have not moved forward as a result of the illness of Quilite's CEO. Assembly of Quilite products has also been suspended due to the illness.

F-42

* Unless indicated otherwise, all of the above offerings and sales were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of New Century or executive officers of New Century, and transfer was restricted by New Century in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our Securities and Exchange Commission filings.

Delaware	3541	06-10345787
(State or other jurisdiction	(Primary standard	(IRS employer
of incorporation)	industrial code number)	identification number)

Title of each class of securities to be registered	Amount to be registered		Proposed maximum offering price per share (1)		Proposed maximum aggregate offering price		Amount of registration fee
Common stock, $.10 par value		385,000	$	0.35	$	132,825	$	14.21
Common stock , $.10 par value (2)		3,850,000	$	0.35	$	1,328,250	$	142.12
Total		4,235,000					$	156.34

Prospectus Summary		1
Risk Factors		6
Forward Looking Statements		10
Use of Proceeds		10
Management's Discussion and Analysis or Plan of Operation		10
Description of Property		16
Legal Proceedings		16
Management		16
Executive Compensation		17
Certain Relationships and Related Transactions		19
Market for Common Equity and Related Stockholder Matters		19
Security Ownership of Certain Beneficial Owners and Management		20
Selling Stockholder		20
Description of Securities		21
Plan of Distribution		23
Legal Matters		24
Experts		24
Available Information		24
Disclosure of Commission Position on Indemnification for Securities Act Liabilities		24
Index to Consolidated Financial Statements		F-1

The Offering

Common stock offered by selling stockholders		Up to 4,235,000 shares of common stock, including 3,850,000 shares of common stock issuable upon conversion of convertible notes and 385,000 shares. This number represents 36% of our total number of shares outstanding.

Common stock to be outstanding after the offering		Up to 15,489,660 shares.*

Use of proceeds		We will not receive any proceeds from the sale of the common stock.

OTCBB Symbol		NCNC.OB

LOCATION	PRINCIPAL USES	APPROX SQ. FT.

9835 Santa Fe Springs Rd.
Santa Fe Springs, CA 90670	Manufacturing	44,000

NAME	AGE	POSITION

David Duquette Officer,	62	Chairman of the Board, Chief Executive Officer,
		Chief Financial President and Director

Josef Czikmantori	55	Secretary and Director

	ANNUAL COMPENSATION								LONG-TERM COMPENSATION
									AWARDS				PAYOUTS
NAME AND PRINCIPAL POSITION	YEAR		SALARY ($)		BONUS ($)		OTHER ANNUAL COMPENSATION ($)		RESTRICTED STOCK AWARD(S) ($)		SECURITIES UNDERLYING OPTIONS/ SARS (#)		LTIP PAYOUTS ($)		ALL OTHER COMPEN- SATION ($)
(A)	(B)		(C)		(D)		(E)		(F)		(G)		(H)		(I)
David Duquette, Chairman of the
Board, President		2002	$	193,800		—		—		—		—		—		—

David Duquette, Chairman of the
Board, President and Director		2003	$	127,200		—		—		—		400,000		—		—

David Duquette, Chairman of the		2004	$	180,000
Board, President and Director

David Duquette, Chairman of the
Board, President and Director		2005	$	101,273

Name	Number of securities underlying options/SARs granted (#)		Percent of total options/SARs granted to employees in fiscal year			Exercise or base price ($/Share)		Expiration date
David Duquette, CEO		400,000		0	%	$	0.25		9/12/08
Josef Czikmantori, Director		150,000		0	%	$	0.25		9/12/08

	Year Ended December 31, 2005						Year Ended December 31, 2004
	Options and Warrants			Weighted Average Price			Options and Warrants			Weighted Average Price
Outstanding, beginning of year		1,711,583		$	1.75			1,821,583		$	2.34
Granted		-			-			25,000			0.65
Exercised		-			-			-			-
Cancelled/Terminated		(243,083	)		(9.88	)		(135,000	)		(9.54	)

Outstanding and exercisable, end of year		1,468,500		$	0.40			1,711,583		$	1.75

					NUMBER OF SECURITIES REMAINING AVAILABLE FOR
	NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF		WEIGHTED-AVERAGE EXERCISE PRICE OF		FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS
	OUTSTANDING OPTIONS,		OUTSTANDING OPTIONS,		(EXCLUDING SECURITIES
	WARRANTS AND RIGHTS		WARRANTS AND RIGHTS		REFLECTED IN COLUMN(A))
	(A)		(B)		(C)
Equity compensation plans approved by
security holders		1,413,500		0.39		936,500

Equity compensation plans not approved
by security holders		55,000		0.86

Total		1,468,500		—		936,500

	High		Low
FISCAL YEAR 2006
December 31	$	0.40		0.16
September 30		0.66		0.38
June 30		1.21		0.45
March 31, 2006	$	0.87		0.53

FISCAL YEAR 2005
December 31	$	0.77		0.38
September 30		0.73		0.21
June 30		0.33		0.13
March 31		0.51		0.15

FISCAL YEAR 2004
December 31	$	0.29		0.06
September 30		0.32		0.15
June 30		0.65		0.18
March 31		0.85		0.40

			PERCENTAGE OF
NAME OF BENEFICIAL OWNER	NO. OF SHARES(1)		OWNERSHIP (1)

David Duquette (2)		2,433,334		20	%
Josef Czikmantori (3)		1,150,000		9	%

Officers and Directors as a Group (2 persons)		3,583,334		29	%

Name	Beneficial Ownership Before the Offering (1)		Percentage of Common Stock Owned before the Offering (1)			Shares of Common Stock Included in the Prospectus (2)		Beneficial Ownership after the Offering(3)		Percentage of Common Stock Owned after the Offering (3)

Motivated Minds, LLC (4)		135,000		1.15	%		135,000		-0-		-0-
CAMOFI Master LDC (5)		580,819		4.99	%		3,850,000		-0-		-0-
Ascendiant Securities, LLC (6)		250,000		2.14	%		250,000		-0-		-0-
							4,235,000

Audited Financial Statements for the Years ended December 31, 2005 and 2004

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheet as of December 31, 2005	F-3

Consolidated Statements of Operations for the years ended December 31, 2005 and 2004	F-4

Consolidated Statements of Stockholders' Equity (Deficit) for the years ended December 31, 2005 and 2004	F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2005 and 2004	F-7

Notes to Consolidated Financial Statements	F-8

Interim Financial Statements for the Three and Nine Month Periods ended September 30, 2006 and 2005 (Unaudited)

Condensed Consolidated Balance Sheets as of September 30, 2006 (Unaudited)	F-31

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2006 and 2005 (Unaudited)	F-32

Condensed Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2006 and 2005 (Unaudited)	F-33

Notes to Unaudited Condensed Consolidated Financial Statements	F-34

ASSETS
Current Assets
Contract receivables	$	287,569
Inventories, net		928,947
Costs and estimated earnings in excess of billings on uncompleted contracts		417,755
Prepaid expenses and other current assets		1,560

Total current assets		1,635,831

Property and Equipment, net		411,651

	$	2,047,482

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Bank overdraft	$	27,649
Accounts payable and accrued expenses		1,649,080
Dividends payable		565,875
Billings in excess of costs and estimated earnings on uncompleted contracts		501,384
Notes payable		974,816

Total current liabilities		3,718,804

Notes Payable, net of current portion		36,000

Commitments and Contingencies

Stockholders' Deficit
Cumulative, convertible, Series B preferred stock, $1 par value,
15,000,000 shares authorized, no shares issued and outstanding		—
(liquidation preference of $25 per share)
Cumulative, convertible, Series C preferred stock, $1 par
value, 75,000 shares authorized, 28,980 shares issued and
outstanding (liquidation preference of $1,187,000)		28,980
Cumulative, convertible, Series D preferred stock, $25 par value,
75,000 shares authorized, 11,640 shares issued and outstanding
(liquidation preference of $394,000)		291,000
Common stock, $0.10 par value, 50,000,000 shares authorized;
10,697,266 shares issued and outstanding		1,069,727
Subscriptions receivable		(462,500	)
Notes receivable from stockholders		(505,639	)
Deferred consulting fees		(254,717	)
Additional paid-in capital		5,085,274
Accumulated deficit		(6,959,447	)

Total stockholders' deficit		(1,707,322	)

	$	2,047,482

Cumulative costs to date	$	5,196,000
Cumulative gross profit to date		4,380,000

Cumulative revenue earned		9,576,000

Less progress billings to date		(9,659,000	)
Net over billings	$	(83,000	)

Costs and estimated earnings in excess of
billings on uncompleted contracts	$	418,000

Billings in excess of costs and estimated
earnings on uncompleted contracts		(501,000	)

Net over billings	$	(83,000	)

Machinery and equipment	$	1,364,000
Computer equipment		23,000
Capital lease equipment		272,000
Leasehold improvements		123,000
		1,782,000
Less accumulated depreciation and amortization		(1,370,000	)

	$	412,000

	2005			2004
Computed "expected" tax (benefit) expense	$	227,000		$	(484,000	)

Addition to (reduction) in income taxes resulting from:
State income taxes, net of federal benefit		40,800			(57,000	)
Change in deferred tax asset valuation allowance		(267,000	)		533,000
Non-deductible expenses		—			8,800

	$	800		$	800

Deferred tax assets:
Tax net operating loss carryforwards	$	3,955,000		$	4,194,000
Accrued inventory reserve		167,000			194,000
Accrued expenses		18,000			19,000

Total gross deferred tax asset		4,140,000			4,407,000
Less valuation allowance		(4,140,000	)		(4,407,000	)

Total net deferred tax asset	$	—		$	—

	Year Ended						Year Ended
	December 31, 2005						December 31, 2004
	Options and			Weighted			Options and			Weighted
	Warrants			Average Price			Warrants			Average Price

Outstanding, beginning of year		1,711,583		$	1.75			1,821,583		$	2.34

Granted		—			—			25,000			0.65

Exercised		—			—			—			—

Cancelled/Terminated		(243,083	)		(9.88	)		(135,000	)		(9.54	)

Outstanding and exercisable, end of
year		1,468,500		$	0.40			1,711,583		$	1.75

	Options Outstanding
			Weighted
			Average		Weighted
			Remaining		Average
			Contractual		Exercise
Exercise Price	Number		Life (Years)		Price

$0.25- $0.75		1,320,000		2.7	$	0.25
$1.00- $1.25		135,000		1.7		1.05
$5.00		5,000		2.0		5.00
$10.00		8,500		0.5		10.00

		1,468,500				0.40

Balance, January 1, 2005	$	3,471,000
New contracts, January 1, 2005 through December
31, 2005		5,941,000
		9,412,000
Less, contract revenue earned - January 1, 2005
through December 31, 2005		(6,038,000	)

Balance December 31, 2005	$	3,374,000

SEC REGISTRATION FEE	$	117.82
ACCOUNTING FEES AND EXPENSES	$	5,000	*
LEGAL FEES AND EXPENSES	$	40,000	*
MISCELLANEOUS	$	4,882.18	*
	$	50,000

EXHIBIT NUMBER		DESCRIPTION

2.1		Share Exchange Agreement dated as of December 18, 2000. (1)

3.1		Certificate of Incorporation as filed with the Delaware Secretary of State, as amended.(2)

3.2		Certificate of Amendment to the Certificate of Incorporation as filed with the Delaware Secretary of State.(3)

3.2		Bylaws. (2)

5.1		Sichenzia Ross Friedman Ference LLP Opinion and Consent (filed herewith)

10.1		Agreement and Plan of Merger, dated as of May 25, 2003, by and among Internetmercado.com, Inc., New Century Remanufacturing, Inc., New Century Acquisition Corporation, David Duquette and Josef Czikmantori; (4)

10..2		Series A Convertible Note issued to Motivated Minds, LLC dated February 28, 2006 (6)

10.3		Common Stock Purchase Warrants issued to Motivated Minds, LLC dated February 28, 2006 (6)

10.4		Registration Rights Agreement dated February 15, 2006 (6)

10.5		Securities Purchase Agreement between New Century Companies, Inc. and CAMOFI Master LDC (5)

10.6		12% Senior Secured Convertible Note issued by New Century Companies, Inc. in favor of CAMOFI Master LDC (5)

10.7		Common Stock Purchase Warrant issued to CAMOFI Master LDC (5)

10.8		Registration Rights Agreement between New Century Companies, Inc. and CAMOFI Master LDC (5)

10.9		Escrow Agreement between New Century Companies, Inc., CAMOFI Master LDC and Katten Muchin Rosenman LLP, as Escrow Agent (5)

10.10		Security Agreement between New Century Companies, Inc. and its current and future subsidiaries on the one hand, and CAMOFI Master LDC on the other hand (5)

10.11		Subsidiary Guarantee provided by all current and future subsidiaries of New Century Companies, Inc. to CAMOFI Master LDC (5)

10.12		Lock-up Agreement with certain shareholders of New Century Companies, Inc. (5)

10.13		Allonge to Series A Convertible Note dated August 8, 2006 (filed herewith)

10.14		Amendment to Registration Rights Agreement dated August 8, 2006 (filed herewith)

10.15		Amended and Restated Registration Rights Agreement dated December 19, 2006 (7)

10.16		Common Stock Purchase Warrants issued to Motivated Minds, LLC dated December 19, 2006 (7)

21.1		Subsidiaries of the Company (6).

23.1		Consent of Squar, Milner, Peterson, Miranda, & Williamson, LLP (filed herewith)

23.2		Consent of Sichenzia Ross Friedman Ference LLP (See Exhibit 5.1)

(1)		Incorporated herein by reference from the Company's filing on Form 8-K filed on August 23, 2000.

(2)		Incorporated by reference to Exhibit 2.1 the Company's Registration Statement on Form C-18, filed on August 14, 1980.

(3)		Incorporated by reference to 8-K filed June 4, 2003

(4)		Incorporated by reference to the Exhibit 2.1 of the 8-K filed June 4, 2003.

(5)		Incorporated by reference to the Company’s Form 8-K filed on March 13, 2006

(6)		Incorporated by reference to the Company’s Form SB-2 Registration Statement filed on June 8, 2006

(7)		Incorporated by reference to the Company’s Form 8-K filed on December 26, 2006


	New Century Companies, Inc.

	By:	/s/ David Duquette
		David Duquette Chief Executive Officer and Chief Financial Officer

Signature	Title	Date

/s/ David Duquette	Chief Executive Officer	January 23, 2007
David Duquette	Chief Financial Officer and Director

/s/ Josef Czikmantori	Secretary and Director	January 23, 2007
Josef Czikmantori

NEW CENTURY COMPANIES, INC.

/s/ David Duquette
By: David Duquette
Its: President

MOTIVATED MINDS, LLC

/s/ Ira Gaines
By: Ira Gaines
Its: President


		Very truly yours,
		/s/ Marcelle S. Balcombe
		Marcelle S. Balcombe