UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10-Q/A~~10-Q

~~Amendment no. 1~~

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

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

For the quarterly period ended ~~March 31,~~September 30, 2009

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

Commission file number: 000-09459

NEW CENTURY COMPANIES, INC.

(Exact name of registrant as specified in its charter)

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

9831 Romandel Ave.

Santa Fe Springs, CA 90670

(Address of principal executive offices)

(562) 906-8455

(Registrant’s telephone number, including area code)

Not applicable

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¨No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨o No ¨o

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

Large accelerated filer¨	Accelerated filer¨
Non-accelerated filer¨	Smaller reporting company x

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

As of ~~August 17,~~November 5, 2009, the Company had ~~15,344,654~~21,045,500 shares of common stock, $0.10 par value, issued and outstanding.

NEW CENTURY COMPANIES, INC.

~~Explanatory Note~~INDEX

~~We are filing this Amendment to Form 10-Q for the three-month period ended March 31, 2009, to restate the condensed consolidated financial statements and all the disclosures accordingly.~~

	Page No.
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements		F-1

Condensed Consolidated Balance Sheets - September 30, 2009 (Unaudited) and December 31, 2008		F-1

Condensed Consolidated Statements of Operations (Unaudited) -
Three and Nine Months Ended September 30, 2009 and 2008		F-2

Condensed Consolidated Statements of Cash Flows (Unaudited) -
Nine Months Ended September 30, 2009 and 2008		F-3

Notes to Condensed Consolidated Financial Statements		F-4

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		4

Item 3. Quantitative and Qualitative Disclosures About Market Risk		9

Item 4T. Controls and Procedures		9

PART II - OTHER INFORMATION

Item 1. Legal Proceedings		11

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		11

Item 3. Defaults Upon Senior Securities		11

Item 4. Submission of Matters to a Vote of Security Holders		11

Item 5. Other Information		11

Item 6. Exhibits		11

SIGNATURES		12

In connection with the preparation of our condensed consolidated financial statements for the quarter ended June 30, 2009, we discovered errors in our valuation of our derivative liabilities, certain contract related balances and a classification error, which we reported for the three-month period ended March 31, 2009, and needed to be restated. Specifically, the condensed consolidated financial statements are being restated to (i) change the valuation of our derivative liabilities, (ii) decrease the previously reported change in warrant value during the quarter ended March 31, 2009, and (iii) adjust our revenues, cost of sales, costs in excess of billings and billings in excess of costs in connection with our contract accounting. For additional detail related to such restatement, please see Note 6 of the condensed consolidated financial statements included in this Form 10-Q/A for the period ended March 31, 2009.

In addition, we filed our Form 10-Q for the period ended March 31, 2009 before our prior independent registered public accounting firm completed its review of the condensed consolidated financial statements for the period then ended.

Forward-Looking Statements

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

~~NEW CENTURY COMPANIES, INC.~~

~~INDEX~~

		~~Page No.~~
~~PART I - FINANCIAL INFORMATION~~

~~Item 1. Financial Statements~~		~~F-1~~

~~Condensed Consolidated Balance Sheets - March 31, 2009 (Restated) (Unaudited) and December 31, 2008~~		~~F-1~~

~~Condensed Consolidated Statements of Operations (Restated) (Unaudited) - Three Months Ended March 31, 2009 and 2008~~		~~F-2~~

~~Condensed Consolidated Statements of Cash Flows (Restated) (Unaudited) - Three Months Ended March 31, 2009 and 2008~~		~~F-3~~

~~Notes to Condensed Consolidated Financial Statements~~		~~F-4~~

~~Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~		3

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~		7

~~Item 4T. Controls and Procedures~~		7

~~PART II - OTHER INFORMATION~~

~~Item 1. Legal Proceedings~~		9

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~		9

~~Item 3. Defaults Upon Senior Securities~~		9

~~Item 4. Submission of Matters to a Vote of Security Holders~~		9

~~Item 5. Other Information~~		9

~~Item 6. Exhibits~~		9

~~SIGNATURES~~		10

Part I - Financial Information

ITEM 1. FINANCIAL STATEMENTS

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

~~March 31,~~September 30, 2009 and December 31, 2008

	(Unaudited)
	March 31,			December 31,
	2009			2008			(Unaudited)
	(Restated - See Note 6)						September 30,			December 31,
							2009			2008
ASSETS

Current Assets
Cash	$	268,095		$	31,889		$	3,154		$	31,889
Contract receivables, net of allowance of $0 and $24,000 for March 31, 2009 and December 31, 2008, respectively		334,391			237,787
Contract receivables, net of allowance of $0 and $24,000 for September 30, 2009 and
December 31, 2008, respectively								16,367			237,787
Inventories		412,889			564,022			399,500			564,022
Costs and estimated earnings in excess of billings on uncompleted contracts		102,028			416,664			124,516			416,664
Deferred financing costs		370,933			252,305			201,779			252,305
Prepaid expenses and other current assets		165,933			168,668			160,466			168,668

Total current assets		1,654,269			1,671,335			905,782			1,671,335

Property and Equipment, net		172,876			186,906			131,572			186,906
Deferred Financing Costs, net		173,803			233,702			91,844			233,702

Total Assets	$	2,000,948		$	2,091,943		$	1,129,198		$	2,091,943


LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Bank overdraft	$	32,152		$	15,329		$	20,202		$	15,329
Accounts payable and accrued liabilities		1,519,171			1,417,464			1,968,865			1,367,464
Dividends payable		459,275			459,275			500,550			459,275
Billings in excess of costs and estimated earnings on uncompleted contracts		607,061			1,388,348			64,660			1,388,348
Capital lease obligation, current portion		28,542			27,874			17,008			27,874
Derivative liability		4,306,028			1,975,298			24,296,537			2,025,298
CAMOFI Convertible note payable, net of discount of $1,756,612 at March 31, 2009 and $2,089,443 at December 31, 2008, respectively		1,070,670			737,838
CAMHZN Convertible note payable, net of discount of $294,813 at March 31, 2009 and $350,090 at December 31, 2008, respectively		455,187			399,910
CAMOFI Convertible Note, net of discount of $288,039		413,161			-
CAMHZN Convertible Note, net of discount of $71,778		102,022			-
Convertible notes payable, net of discounts of $1,374,359 at
September 30, 2009 and $2,439,533 at December 31, 2008, respectively								3,200,922			1,137,748

Total current liabilities		8,993,269			6,421,336			30,068,744			6,421,336

Long Term Liabilities
Capital lease obligation, long term portion		2,482			9,804			-			9,804

Total liabilities		8,995,751			6,431,140			30,068,744			6,431,140


Commitments and Contingencies

Stockholders' Deficit
Cumulative, convertible, Series B preferred stock, $1 par value, 15,000,000 shares authorized, no shares issued and outstanding (liquidation preference of $25 per share)		-			-
Cumulative, convertible, Series C preferred stock, $1 par value, 75,000 shares authorized, 26,880 shares issued and outstanding (liquidation preference of $672,000)		26,880			26,880
Cumulative, convertible, Series D preferred stock, $25 par value, 75,000 shares authorized, 11,640 shares issued and outstanding (liquidation preference of $291,000)		291,000			291,000
Common stock, $0.10 par value, 50,000,000 shares authorized; 15,344,654 shares issued and outstanding at March 31, 2009 and December 31, 2008		1,534,466			1,534,466
Cumulative, convertible, Series B preferred stock, $1 par value,
15,000,000 shares authorized, no shares issued and outstanding
(liquidation preference of $25 per share)								-			-
Cumulative, convertible, Series C preferred stock, $1 par value,
75,000 shares authorized, 26,880 shares issued and outstanding
(liquidation preference of $981,000)								26,880			26,880
Cumulative, convertible, Series D preferred stock, $25 par value,
75,000 shares authorized, 11,640 shares issued and outstanding
(liquidation preference of $482,000)								291,000			291,000
Common stock, $0.10 par value, 50,000,000 shares authorized;
15,315,500 shares issued and outstanding
at September 30, 2009 and 15,344,654 at December 31, 2008								1,531,551			1,534,466
Notes receivable from stockholders		(564,928	)		(564,928	)		(564,928	)		(564,928	)
Deferred equity compensation		(81,667	)		(101,667	)		(46,668	)		(101,667	)
Additional paid-in capital		7,355,007			7,355,007			6,886,444			7,355,007
Accumulated deficit		(15,555,561	)		(12,879,955	)		(37,063,825	)		(12,879,955	)

Total stockholders' deficit		(6,994,803	)		(4,339,197	)		(28,939,546	)		(4,339,197	)

Total Liabilities and Stockholders' deficit	$	2,000,948		$	2,091,943		$	1,129,198		$	2,091,943

See accompanying notes to the condensed consolidated financial statements.

F-1

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three and Nine Months Ended ~~March 31,~~September 30, 2009 and 2008

(Unaudited)

For the Three Months Ended March 31,
(Restated - See Note 6)
2009 2008

CONTRACT REVENUES $ 1,054,702 $ 1,526,602

COST OF SALES 818,893 1,308,479

GROSS PROFIT 235,809 218,123

OPERATING EXPENSES
Consulting and other compensation 62,615 271,384
Salaries and related 153,087 53,496
Selling, general and administrative 232,021 438,029
TOTAL OPERATING EXPENSES 447,723 762,909

OPERATING LOSS (211,914 ) (544,786 )

OTHER INCOME (EXPENSES)
Gain on writeoff of accounts payable 5,681 56,628
(Loss) / gain on valuation of derivative liabilities (1,800,978 ) 1,300,762
Interest expense (668,395 ) (486,769 )

TOTAL OTHER INCOME (EXPENSES) (2,463,692 ) 870,621

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (2,675,606 ) 325,835

PROVISION FOR INCOME TAXES - -

NET INCOME ( LOSS) $ (2,675,606 ) $ 325,835

NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $ (2,675,606 ) $ 325,835

Basic net income (loss) available to common stockholders per common share $ (0.17 ) $ 0.02

Diluted net income (loss) available to common stockholders per common share $ (0.17 ) $ 0.01

Basic weighted average common shares outstanding 15,344,654 14,033,089

Diluted weighted average common shares outstanding 15,344,654 41,981,711

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
				(As Restated)						(As Restated)
	2009			2008			2009			2008


CONTRACT REVENUES	$	644,609		$	997,890		$	3,058,941		$	3,959,168

COST OF SALES		653,060			1,328,845			2,665,683			4,000,938

GROSS PROFIT (LOSS)		(8,451	)		(330,955	)		393,258			(41,770	)

OPERATING EXPENSES
Consulting and other compensation		424,126			121,058			563,899			466,440
Salaries and related		122,129			124,193			358,625			305,919
Selling, general and administrative		46,992			90,711			414,980			753,074
TOTAL OPERATING EXPENSES		593,247			335,962			1,337,504			1,525,433

OPERATING LOSS		(601,698	)		(666,917	)		(944,246	)		(1,567,203	)

OTHER INCOME (EXPENSES)
Gain on write off of accounts payable		-			-			5,680			60,205
Loss on valuation of derivative liabilities		(19,649,947	)		(791,700	)		(21,225,850	)		(5,995	)
Interest expense		(1,064,798	)		(485,802	)		(2,685,653	)		(1,340,215	)

TOTAL OTHER EXPENSES, net		(20,714,745	)		(1,277,502	)		(23,905,823	)		(1,286,005	)

NET LOSS	$	(21,316,443	)	$	(1,944,419	)	$	(24,850,069	)	$	(2,853,208	)

Preferred Stock Dividends	$	-			-		$	(41,275	)	$	(41,275	)

NET LOSS APPLICABLE
TO COMMON STOCKHOLDERS	$	(21,316,443	)	$	(1,944,419	)	$	(24,891,344	)	$	(2,894,483	)

Basic and diluted net loss available to
common stockholders per common share	$	(1.39	)	$	(0.13	)	$	(1.62	)	$	(0.20	)

Basic and diluted weighted average common
shares outstanding		15,358,665			15,344,656			15,349,376			14,478,506

See accompanying notes to the condensed consolidated financial statements.

F-2

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the ~~Three~~Nine Months Ended ~~March 31,~~September 30, 2009 and 2008

(Unaudited)

				As Restated
	2009			2008


Cash flows from operating activities:
Net loss	$	(24,850,068	)	$	(2,853,208	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of property and equipment		62,032			61,708
Bad debt expense		-			2,260
Gain on write off of accounts payable		(5,680	)		(60,205	)
Amortization of deferred financing cost		337,384			216,298
Amortization of stock-based consulting fees		54,999			208,254
and employee compensation
Amortization of BCF and debt discount		1,901,039			1,808,684
Estmated fair value of options issued to employees and consultants		365,520			-
(Gain) / loss on valuation of liabilities		21,225,850			5,995
Warrants issued in connection with debt extension		80,000			-

Changes in operating assets and liabilities:
Contracts receivable		221,420			385,937
Inventories		164,522			216,991
Costs and estimated earnings in excess of billings on
uncompleted contracts		292,148			48,042
Prepaid expenses and other current assets		8,202			(274,579	)
Accounts payable and accrued liabilities		607,079			(859,705	)
Billings in excess of costs and estimated earnings on
uncompleted contracts		(1,323,688	)		361,140

Net cash used in operating activities		(859,242	)		(732,388	)

Cash flows from investing activities:
Purchases of property and equipment		(6,698	)		(32,225	)

Cash flows from financing activities:
Bank overdraft		4,873			(12,355	)
Proceeds from issuance of convertible notes payable		853,000			600,000
Principal payments on notes payable and capital lease		(20,668	)		(100,413	)

Net cash provided by financing activities		837,205			487,232

Net decrease in cash		(28,735	)		(277,381	)

Cash at beginning of period		31,889			281,729

Cash at end of period	$	3,154		$	4,348

Supplemental disclosure of non-cash financing and investing activities:

Accrued cumulative dividends on preferred stock	$	41,275		$	41,275

Debt discount recorded on convertible notes payable, net of financing
costs	$	588,695		$	2,827,643

Stock and warrants issued for financing costs	$	-		$	102,500

Cashless exercise of stock options	$	6,591		$	-

Reclassification of the estimated fair value of non-employee options
and warrants to derivative liability	$	129,524		$	-

Cumulative effect to retained earnings due to reclassification of
non-employee options and warrants to derivative liability	$	707,474		$	-

(Restated - See Note 6)
2009 2008

Cash flows from operating activities:
Net (loss) income $ (2,675,606 ) $ 325,835
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization of property and equipment 14,030 20,757
Gain on write off of accounts payable (5,681 ) (56,628 )
Amortization of deferred financing costs 116,271 89,574
Amortization of stock-based consulting fees and employee compensation 20,000 125,343
Amortization of BCF and debt discount 508,044 251,894
Estimated fair value of common stock issued for services - 75,000
(Gain) / loss on valuation of derivatives liabilities 1,800,978 (1,300,962 )

Changes in operating assets and liabilities:
Contracts receivable (96,604 ) (60,178 )
Inventories 151,133 170,900
Costs and estimated earnings in excess of billings on uncompleted contracts 314,636 (22,635 )
Prepaid expenses and other current assets 2,735 (222,867 )
Accounts payable and accrued liabilities 157,388 (94,354 )
Billings in excess of costs and estimated earnings on uncompleted contracts (781,287 ) 410,089

Net cash used in operating activities (473,963 ) (288,232 )

Cash flows from financing activities:
Bank overdraft 16,823 12,699
Proceeds from issuance of convertible notes payable, net of financing costs 700,000 -
Principal payments on notes payable and capital lease (6,654 ) (6,196 )

Net cash provided by financing activities 710,169 6,503

Net change in cash 236,206 (281,729 )

Cash at beginning of period 31,889 281,729

Cash at end of period $ 268,095 $ -

Supplemental disclosure of non-cash financing and investing activities:

Debt discount recorded on convertible notes payable $ 479,752 $ 923,610

See accompanying notes to the condensed consolidated financial statements.

F-3

NEW CENTURY COMPANIES, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(RESTATED)~~

FOR THE THREE AND NINE MONTHS ENDED ~~MARCH 31,~~SEPTEMBER 30, 2009 AND 2008 (As Restated)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization ~~and~~And Nature ofOf Operations

New Century Companies, Inc. and its wholly owned subsidiary, New Century Remanufacturing, Inc., (collectively, the "Company"), a California corporation, was incorporated March 1996 and is located in Southern California. The Company provides after-market services, including rebuilding, retrofitting and remanufacturing of metal cutting machinery. 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 ~~primarily in~~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."~~"NCNC ".

On October 9, 2009, the Company entered into a share exchange agreement with Precision Aerostructures, Inc. ("PAI") pursuant to which the sole shareholder of PAI agreed to transfer all capital stock of PAI to the Company (see Note 6). The Company and PAI are currently in the process of determining and settling the final acquisition price. PAI is a world class supplier of precision machined details and assemblies for many of the major aircraft builders in the United States and around the world. PAI specializes in engineering, and manufacturing of precision CNC machined multi-axis structural aircraft components. PAI’s production facility is in Rancho Cucamonga, CA. The share exchange was consummated on October 9, 2009.

Principles ofOf Consolidation

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

Basis ofOf 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-K for the year ended December 31, 2008, filed with the SEC. In the opinion of management, all adjustments necessary to present fairly, in accordance with GAAP, the Company's financial position as of ~~March 31,~~September 30, 2009, 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 nine months ended ~~March 31,~~September 30, 2009 are not necessarily indicative of the results for the full year ending December 31, 2009. Amounts related to disclosure of December 31, 2008 balances within these interim condensed consolidated financial statements were derived from the audited 2008 consolidated financial statements and notes thereto.

~~Restatements~~The Company has evaluated subsequent events through November 16, 2009, the filing date of this quarterly report on Form 10-Q, and determined that no subsequent events have occurred that would require recognition in the condensed consolidated financial statements or disclosure in the notes thereto other than as disclosed in the accompanying notes.

~~The accompanying balance sheet as of March 31, 2009 and the statements of operations and cash flows for the three months ended March 31, 2009 and 2008 have been restated – see Note 6.~~

F-4

Restatements

The statement of operations for the three and nine months ended September 30, 2008 and the statement of cash flows for the nine months ended September 30, 2008 included herein were restated to reflect the effect of changes to the original accounting for the 12% CAMOFI Note issued in February 2006. The original accounting did not record the separate derivative liability for the conversion option and warrants in accordance with U.S. accounting standards. For additional information regarding the restatement, see Note 5 and see Note 11 to our Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.

Reclassifications

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

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. As of ~~March 31,~~September 30, 2009, the Company has an accumulated deficit of approximately ~~$15,556,000,~~$37,064,000, had recurring losses, a working capital deficit of approximately ~~$7,339,000,~~$29,163,000, and was also in default on ~~two of~~ its convertible notes. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company intends to fund operations through anticipated increased sales along with renegotiated or new debt and equity financing arrangements which management believes may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2009. 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~~continued its aggressive program for selling ~~machines.~~machines;

·	~~The Company continues~~continued to implement plans to further reduce operating ~~costs.~~costs; and

·	~~The Company~~ is seeking investment capital through the public and private markets.

·	~~The Company is seeking strategic acquisition candidates.~~

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.

Inventories

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. At each balance sheet date, the Company evaluates its ending inventories for excess quantities and obsolescence. Among other factors, the Company considers historical demand and forecasted demand in relation to the inventory on hand and market conditions when determining obsolescence and net realizable value. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventories.

F-5

Revenue Recognition

The Company's revenues consist primarily of contracts with customers. The Company uses the percentage-of-completion method of accounting to account for long-term contracts pursuant to ~~Statements of Position 81-1, “Accounting for Performance of Construction-Type and Certain Production-Type Contracts,”~~U.S. accounting standards, 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.

For contracts, the amount of revenue recognized at the financial statement date is the portion of the total contract price that the cost expended to date bears to the anticipated final cost, based on current estimates of cost to complete. Contract costs include all materials, direct labor, machinery, subcontract costs and allocations of indirect overhead.

~~F-5~~

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

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

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

The Company accounts for shipping and handling fees and costs in accordance with ~~EITF Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs."~~U.S accounting standards. 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,"~~U.S. accounting standards, revenue is recorded net of an estimate for markdowns, price concessions and warranty costs. Such reserve is based on management's evaluation of historical experience, current industry trends and estimated costs. As of ~~March 31,~~September 30, 2009, the Company estimated the markdowns, price concessions and warranty costs and concluded amounts are immaterial and did not record any adjustment to revenues.

Warranty

The Company provides a warranty on certain products sold. Estimated future warranty obligations related to certain products and services are provided by charges to operations in the period in which the related revenue is recognized. At ~~March 31,~~September 30, 2009 ~~and~~there was no warranty obligation balance. At December 31, 2008, the warranty obligation balance was ~~$15,160 and $50,000, respectively.~~$50,000. There were no amounts charged to warranty expense in the accompanying consolidated statements of operations during the three and nine months ended ~~March 31,~~September 30, 2009.

Concentrations of Credit Risks

Cash is maintained at various financial institutions. The Federal Deposit Insurance Corporation (“FDIC”) insures accounts at each financial institution for up to $250,000 ~~for March 31,~~at September 30, 2009 and December 31, 2008. At times, cash may be in excess of the FDIC insured limit of $250,000. The Company did not have any significant uninsured bank balances at ~~March 31,~~September 30, 2009 and December 31, 2008.

During the ~~period~~nine montes ended ~~March 31,~~September 30, 2009, sales to ~~two~~five customers accounted for approximately ~~46%~~60% of net sales. ~~Further, there were no~~At September 30, 2009, three customers ~~that~~ accounted for ~~a significant amount~~approximately 95% of ~~receivables at March 31, 2009.~~the accounts receivable balance.

During the ~~period~~nine months ended ~~March 31,~~September 30, 2008, sales to two customers accounted for approximately ~~64%~~33% of net sales. At September 30, 2008, four customers accounted for approximately 90% of the accounts receivable balance.

F-6

Management reviews the collectability of contract receivables periodically and believes that the allowance for doubtful accounts ~~for period ended March 31,~~at September 30, 2009 and ~~the year ended~~ December 31, 2008 is adequate. There was no allowance for doubtful accounts at ~~March 31,~~September 30, 2009 and $24,000 at December 31, 2008.

~~F-6~~

Use of Estimates

In the opinion of management, the accompanying balance sheets and related statements of operations and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with ~~accounting principles generally accepted in the United States of America.~~GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made by management are, among others, deferred tax asset valuation allowances, realization of inventories, collectability of contracts receivable, the estimation of costs for long-term construction contracts and the valuation of conversion options, stock options and warrants. Actual results could differ from those estimates.

Basic ~~and~~And Diluted Loss Per Common Share

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

Common stock equivalents, representing convertible Preferred Stock, convertible debt, options and warrants totaling approximately ~~61,821,000~~132,360,000 and 10,101,000 shares at ~~March 31,~~September 30, 2009 ~~(restated)~~and 2008, respectively, are not included in the diluted loss per share as they would be anti-dilutive. Common stock equivalents, representing convertible Preferred Stock, convertible debt, options and warrants totaling approximately 27,949,000 shares are included in the diluted loss per share at March 31, 2008.

Stock Based Compensation

~~Effective January 1, 2006, we adopted~~The Company uses the fair value method of accounting for employee stock compensation ~~cost pursuant to SFAS No. 123(R), “Share-Based Payment.”~~cost. Under the fair value recognition provisions of ~~SFAS 123(R),~~this statement, share-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. The Company had no equity incentive awards granted prior to January 1, 2006 that were not yet vested. For the three and nine months ended ~~March 31,~~September 30, 2009, share-based compensation expense of $330,506 and $365,520, respectively, was recognized in the accompanying condensed consolidated statements of operations. For the three and nine months ended September 30, 2008, no share-based compensation expense was recognized in the accompanying condensed consolidated statements of operations.

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.

There is no share-based compensation resulting from ~~the application of SFAS No. 123R to~~ options granted outside of the Company's Stock Option Plan for the three and nine months ended ~~March 31,~~September 30, 2009 and 2008. ~~Share-based compensation recognized as a result of the adoption of SFAS No. 123R use the Black Scholes option pricing model for estimating fair value of options granted.~~

In accordance with ~~SFAS No. 123R,~~U.S. accounting standards, 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.

F-7

F-17

Additionally, at such time (the “Vesting Date”) as the cumulative net income of PAI is at least $3,000,000 for the period commencing on January 1, 2010 and ending on October 9, 2012 the Company will issue to Cabral warrants (the “Warrants”) to purchase 3,000,000 shares of the Company’s common stock. The Warrants will be for a term of the earlier of three years from the Vesting Date or January 1, 2014, and shall have an exercise price of $0.10 per share. The share exchange was consummated on October 9, 2009.

~~March 31, 2009~~PAI is a world class supplier of precision machined details and assemblies for many of the major aircraft builders in the United States and around the world. PAI specializes in engineering, and manufacturing of precision CNC machined multi-axis structural aircraft components. PAI’s production facility is in Rancho Cucamonga, California.

The ~~balance sheet at March 31, 2009~~terms of the purchase were the result of arms-length negotiations.

Additionally, the Company advanced $250,000 to PAI.

The Company and PAI are currently in the ~~statement~~process of determining and settling the final acquisition price.

Following the acquisition, the Company will report PAI' results of operations and statement of cash flows for the three months ended March 31, 2009 included herein reflect the effect of changes to the original accounting for the CAMOFI and CAMZHN notes issued in February 2009, certain adjustments related to the Company’s contract accounting,as a misclassification error and the valuation of the related derivative liabilities at March 31, 2009. Accordingly, the effect of the restatements on the balance sheet at March 31, 2009 and statement of operations for the three months ended March 31, 2009 has been summarized below:new segment.

Effect of Correction As Previously Reported Adjustment As Restated
Balance Sheet as of March 31, 2009

(1) Costs in Excess of Billings 15,551 86,477 102,028

(2) Deferred financing costs 435,986 108,750 544,736

(3) Accounts payable and accrued liabilities 1,625,005 105,834 1,519,171

(4) Billings in Excess of Costs 823,478 (216,417 ) 607,061

(5) February 2009 Convertible Notes 564,984 49,801 515,183

(6) Derivative Liability 4,885,000 (578,972 ) 4,306,028

(7)Accumulated Deficit 16,701,824 (1,146,263 ) 15,555,561

Statement of Operations for the three months ended March 31, 2009

(8) Sales 1,298,458 (243,756 ) 1,054,702

(9) Cost of sales 1,365,543 (546,650 ) 818,893

(10) Selling, general and administrative 268,271 (36,250 ) 232,021

(11) Marked-to-Market Gain (Loss) (2,738,436 ) 937,458 (1,800,978 )

(12) Interest expense (490,498 ) (177,897 ) (668,395 )

(13) Net Loss (3,821,869 ) 1,146,263 (2,675,606 )

Net Loss Available to common shareholders (3,821,869 ) 1,146,263 (2,675,606 )

EPS – Basic (0.25 ) 0.08 (0.17 )

EPS - Diluted (0.25 ) 0.08 (0.17 )

F-18

~~(1)~~

~~Adjustment in order to reconcile the Company’s balance sheet account to the Company’s contract accounting worksheets.~~

~~(2)~~

~~Represents the reclassification of $145,000 of financing costs in connection with the February 2009 notes, less amortization of $36,250.~~

~~(3)~~

~~Adjustment primarily reflects a classification error of $80,000 related to derivative liabilities.~~

~~(4)~~

~~Adjustment in order to reconcile the Company’s balance sheet account to the Company’s contract accounting worksheets.~~

~~(5)~~

Adjustment reflects an increase of $278,486 of debt discount related to the valuation of the conversion options and an increase of $119,935 of amortization of such options, net of reclassification of financing costs of $108,750 noted in (2) above.

~~(6)~~

Adjustment reflects an increase of $278,486 related to the valuation of the conversion options of the February 2009 notes and a decrease in the loss on fair value of $937,458 and corrections of $80,000 of misclassifications between the change in fair value and interest expense.

~~(7)~~

~~and (13) The cumulative effect of adjustments (8) through (12).~~

~~(8)~~

~~and (9) Adjustment in order to reconcile the Company’s P&L accounts to the Company’s contract accounting worksheets.~~

~~(10)~~

~~Adjustment relates to the reclassification of deferred financing costs to interest expense.~~

~~(11)~~

Adjustment primarily relates to an increase of $278,486 in the original valuation of the conversion options in connection with the February 2009 notes, misclassification of derivative liabilities noted in (3) above and an overall decrease in the valuation of all derivatives of $578,972.

~~(12)~~

~~Adjustment relates to proper classification and recording of interest expense.~~

~~F-19~~

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

OVERVIEW

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

CNC machines use commands from onboard computers to control the movements of cutting tools and rotation speeds of the parts being produced. Computer controls enable operators to program operations such as part rotation, tooling selection and tooling movement for specific parts and then store the programs in memory for future use. The machines are able to produce parts while left unattended. Because of this ability, as well as superior speed of operation, a CNC machine is able to produce the same amount of work as several manually controlled machines, as well as reduce the number of operators required; generating higher profits with less re-work and scrap. Since the introduction of CNC tooling machines, continual advances in computer control technology have allowed for easier programming and additional machine capabilities.

A vertical turning machine permits the production of larger, heavier and more oddly shaped parts on a machine, which uses less floor space when compared to the traditional horizontal turning machine because the spindle and cam are aligned on a vertical plane, with the spindle on the bottom.

The primary industry segments in which the Company’s machines are utilized to make component parts are in aerospace, power generation turbines, military, component parts for the energy sector for natural gas and oil exploration and medical fields. The Company sells its products to customers located in United States, Canada and Mexico. There were no significant international sales during 2009 and 2008.

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~~30 billion dollar business annually. The industry is sensitive to market conditions and generally trends downward prior to poor economic conditions, and improves prior to an improvement in economic conditions.

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

The Company's current strategy is to expand its customer sales base with its present line of machine products. The Company's growth strategy also includes strategic acquisitions in addition to growing the current business. Plans for expansion are funded through current working capital from ongoing sales. A significant acquisition will require additional financing.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED ~~MARCH 31,~~SEPTEMBER 30, 2009 COMPARED TO ~~MARCH 31,~~SEPTEMBER 30, 2008.

Revenues. The Company generated revenues of ~~$1,054,702~~$644,609 for the three months ended ~~March 31,~~September 30, 2009, which was a ~~$471,900~~$353,281 or ~~31%~~35% decrease from ~~$1,526,602~~$997,890 for the three months ended ~~March 31,~~September 30, 2008. The decrease is the result of lower ~~then usual sales due to~~than general economic climate and a tighter credit ~~market and less availability of funds for companies to make capital equipment purchases.~~market.

Gross ~~Profit.~~Loss. Gross ~~profit~~loss for the three months ended ~~March 31,~~September 30, 2009, was ~~$235,809~~$8,451 or ~~22%~~-1% of revenues, compared to ~~$218,123~~$330,955 or ~~14%~~-33% of revenues for the three months ended ~~March 31,~~September 30, 2008, a ~~8% increase.~~97% decrease. The ~~increase~~decrease in gross ~~profit~~loss is due to management strategy to lower cost of sales through reduction of overhead expenses and cost of materials.

Operating Expenses. The Company incurred total operating expenses of ~~$447,723~~$593,247 for the three months ended ~~March 31,~~September 30, 2009, which was a ~~$315,186~~$257,285 or ~~41% decrease~~77% increase from ~~$762,909~~$335,962 for the three months ended ~~March 31,~~September 30, 2008. In the three months ended ~~March 31,~~September 30, 2009, compared with the three months ended ~~March 31,~~September 30, 2008, ~~all the~~ operating expenses increased (decreased) as ~~follow:~~follows:

	Increase/(Decrease) %
Consulting and other compensation		~~(77~~250	)
Salaries and related		~~186~~42
Selling, general and administrative		~~(57~~(63)	)

The ~~decrease~~increase in consulting and other compensation is due to ~~the reduction in the number~~approximately $331,000 of ~~consulting contracts and the expiration of the existing contracts. The increase in salaries and~~compensation expense related ~~costs is due~~ to the ~~reclassification~~issuance of ~~certain costs to compensation.~~4,200,000 common stock options. Selling, general and administrative expenses decreased primarily due to ~~management~~the above reclassification, and secondarily due to management’s strategy to reduce operating expenses.

Operating Loss. Operating loss for the three months ended ~~March 31,~~September 30, 2009, was ~~$211,914~~$601,698 compared to ~~$544,786~~$666,917 for the three months ended ~~March 31,~~September 30, 2008. The decrease in loss of ~~$332,872~~$65,219 is primarily due to decreased cost of sales and decreased selling, general and administrative expenses for the quarter ended ~~March 31,~~September 30, 2009.

Interest ~~Expense and Debt Discount Amortization.~~Expense. Interest expense for the three months ended ~~March 31,~~September 30, 2009, was ~~$668,395~~$1,064,798 compared with ~~$486,769~~$485,802 for the three months ended ~~March 31,~~September 30, 2008. The increase of ~~$181,626~~$578,996 in interest expenses is due to additional interest on new convertible loans. A significant component of interest expense relates to the non-cash amortization of debt discounts, which approximated $765,000 and $370,000 during the three months ended September 30, 2009 and 2008, respectively.

~~Change in Fair Value~~ Loss on valuation of Derivative Liabilities. In connection with its convertible notes, the Company recorded conversion options and warrant derivative liabilities. The derivative liabilities are ~~reevaluated~~revalued each reporting period. During the three months ended ~~March 31,~~September 30, 2009, we recorded a $19,649,947 loss ~~of $1,800,978~~ on the change in fair value due to the increase in ~~our~~ stock price and decrease in the conversion and warrant exercise prices. For the three months ended September 30, 2009, we recorded a $14,356,701 loss from ~~December 31,~~the increase in fair value of the conversion option liability and a $992,599 loss from increase in fair value of the warrant liability on the CAMOFI Convertible Notes. Also, for the three months ended September 30, 2009, a $3,755,561 loss from increase in fair value of the conversion option liability and a $303,349 loss from the increase in fair value of the warrant liability on the CAMHZN Convertible Notes. Also, for the three months ended September 30, 2009, a $241,737 loss from increase in fair value of the derivative liability related to the non-employee stock options and warrants.

RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO SEPTEMBER 30, 2008.

Revenues. The Company generated revenues of $3,058,941 for the nine months ended September 30, 2009, which was a $900,227 or 23% decrease from $3,959,168 for the nine months ended September 30, 2008. The decrease is the result of the general economic climate and a tighter credit market.

Gross Profit / (Loss). Gross profit for the nine months ended September 30, 2009, was $393,258 or 13% of revenues, compared to a gross loss of $41,770 or -1% of revenues for the nine months ended September 30, 2008, a $435,028 increase. The increase in gross profit is due to due to management strategy to lower cost of sales through reduction of overhead expenses and cost of materials.

Operating Expenses. The Company incurred total operating expenses of $1,337,504 for the nine months ended September 30, 2009, which was a $187,929 or 12% decrease from $1,525,433 for the nine months ended September 30, 2008. In the nine months ended September 30, 2009, compared with the nine months ended September 30, 2008, operating expenses increased (decreased) as follows:

	Increase/(Decrease) %
Consulting and other compensation		21
Salaries and related		68
Selling, general and administrative		(51	)

The increase in consulting and other compensation is due to approximately $366,000 of compensation expense related to the issuance of 4,200,000 common stock options and the vesting of common stock options granted in 2008. Selling, general and administrative expenses decreased primarily due to above reclassification, and secondarily due to management’s strategy to reduce operating expenses.

Operating Loss. Operating loss for the nine months ended September 30, 2009, was $944,246 compared to $1,567,203 for the nine months ended September 30, 2008. The decrease in loss of $622,957 or 40% is primarily due to decreased consulting and selling, general and administrative expenses.

Interest Expense. Interest expense for the nine months ended September 30, 2009, was $2,685,653 compared with $1,340,215 for the nine months ended September 30, 2008. The increase of $1,345,438, or 100%, in interest expenses is due to additional interest on new convertible loans. A significant component of interest expense relates to the non-cash amortization of debt discounts, which approximated $1,901,000 and $1,808,684 during the nine months ended September 30, 2009 and 2008, respectively.

Loss on Valuation of Derivative Liabilities. In connection with its convertible notes, the Company recorded conversion options and warrant derivative liabilities. The derivative liabilities are revalued each reporting period. For the nine months ended September 30, 2009, we recorded a $21,225,850 loss on the change in fair value due to the increase in stock price and decrease in the conversion and warrant exercise prices. For the nine months ended September 30, 2009,we recorded a $15,470,287 loss from the increase in fair value of the conversion option liability and a $1,050,072 loss from the increase in fair value of the warrant liability on the CAMOFI Convertible Notes. Also, for the nine months ended September 30, 2009, we recorded a $4,141,931 loss from the increase in fair value of the conversion option liability and a $321,823 loss from the increase in fair value of the warrant liability on the CAMHZN Convertible Notes. Also, for the three months ended September 30, 2009, a $241,737 loss from increase in fair value of the derivative liability related to the non-employee stock options and warrants.

FINANCIAL CONDITION, LIQUIDITY, CAPITAL RESOURCES

The net ~~increase~~decrease in cash during the ~~three~~nine months ended ~~March 31,~~September 30, 2009 was ~~$236,206. The increase is due to proceeds from issuance of convertible notes payable in which we received net proceeds of $700,000.~~$28,735.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2009, the cash provided by financing activities was ~~$710,169,~~$837,205, compared with ~~$6,503~~$487,232 in the ~~three~~nine months ended ~~March 31,~~September 30, 2008. For the ~~three~~nine months ended ~~March 31,~~September 30, 2009, ~~$473,976~~$859,242 cash was used byin operating ~~activities.~~activities, compared with $732,388 in the nine months ended September 30, 2008.

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 ~~$15,556,000,~~$37,064,000, a net loss of approximately ~~$2,677,000,~~$24,850,000, a working capital deficit of approximately ~~$7,339,000~~$29,163,000 and was also in default on two of its convertible ~~notes.~~notes payable with a combined principal and accrued interest balance of approximately $4,100,000 at September 30, 2009. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company intends to fund operations through anticipated increased sales along with renegotiated or new debt and equity financing arrangements which management believes may be insufficient to fund its capital expenditures, working capital and other cash requirements for the year ending December 31, 2009. 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 machines.~~

·~~The Company continues to implement plans to further reduce operating costs.~~

·	continued its aggressive program for selling machines;

·~~The Company is seeking investment capital through the public and private markets.~~

·	continued to implement plans to further reduce operating costs; and

·~~The Company is seeking strategic acquisition candidates.~~

·	is seeking investment capital through the public and private markets.

INFLATION AND CHANGING PRICES

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

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in our consolidated financial statements and the accompanying notes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, accounts receivable, doubtful accounts, inventories, and ~~inventories.~~derivative liabilities. Actual results could differ from these estimates. The accounting policies stated below are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements:

Revenue Recognition

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

The Company accounts for shipping and handling fees and costs in accordance with ~~EITF 00-10 "Accounting for Shipping and Handling Fees and Costs."~~U.S. accounting standards. 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~~

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

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

Method of Accounting for Long-Term Contracts

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

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

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

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

Accounting for Derivative Instruments

The Company records liabilities for embedded derivatives related to its convertible notes payable at their fair values at the ~~lower~~inception date 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.

notes. In accordance with U.S. accounting standards, the derivative liabilities are revalued at each subsequent balance sheet date.

Other Significant Accounting Policies

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer, who is also our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our Chief Executive Officer concluded as of ~~March 31,~~September 30, 2009 that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses discussed immediately below.

Material Weaknesses

(1) We had not effectively implemented comprehensive entity-level internal controls, as evidenced by the following deficiencies:

We did not establish an independent Audit Committee who are responsible for the oversight of the financial reporting process, nor was an Audit Committee Charter defined. At the current time we do not have any independent members of the Board who could comprise this committee.

We did not establish an adequate Whistle Blower program for the receipt, retention, and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and the confidential, anonymous submission by employees of the issuer of concerns regarding questionable accounting or auditing matters to the Audit Committee and Board of Directors.

We did not have an individual on our Board, nor on the Audit Committee, who meets the “Financial Expert” criteria.

We did not maintain documentation evidencing quarterly or other meetings between the Board, senior financial managers and our outside general counsel. Such meetings include reviewing and approving quarterly and annual filings with the Securities and Exchange Commission and reviewing on-going activities to determine if there are any potential audit related issues which may warrant involvement and follow-up action by the Board.

We did not follow a formal fraud assessment process to identify and design adequate internal controls to mitigate those risks not deemed to be acceptable.

We did not conduct annual performance reviews or evaluations of our management and staff employees.

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

We do not have a formally trained Chief Financial Officer who is responsible for the oversight of the accounting function. Currently the CEO is responsible for this function, but has not had formal accounting or auditing experience.

The ~~Accountant~~Controller is the only individual with technical accounting experience in our company but is limited in the exposure to SEC filings and ~~disclosures.~~disclosures and is not a full-time employee of the Company.

We have not consulted with other outside parties with accounting experience to assist us in the SEC filings and ~~disclosures prior to the December 31, 2008 10-K filing during 2009.~~disclosures.

(3) We did not adequately segregate the duties of different personnel within our accounting group due to an insufficient complement of staff and inadequate management oversight.

(4) We did not adequately design internal controls as follows:

	·	The controls identified in the process documentation were not designed effectively and had no evidence of operating effectiveness for testing purposes.

	·	The controls identified in the process documentation did not cover all the risks for the specific process

The controls identified in the process documentation did not cover all applicable assertions for the significant accounts.

(5) Due to the material weaknesses identified at our entity level we did not test whether our financial activity level controls or our information technology general controls were operating sufficiently to identify a deficiency, or combination of deficiencies, that may result in a reasonable possibility that a material misstatement of the financial statements would not be prevented or detected on a timely basis.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no significant changes in the Company's internal control over financial reporting during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Inherent limitations exist in any system of internal control including the possibility of human error and the potential of overriding controls. Even effective internal controls can provide only reasonable assurance with respect to financial statement preparation. The effectiveness of an internal control system may also be affected by changes in conditions.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

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

None.

Item 3. Defaults Upon Senior Securities

Starting October 2008, the Company has been in default with ~~all~~ monthly payments on the 12% CAMOFI and 15% CAMHZN Convertible Note payable. As of ~~March 31,~~September 30, 2009, the ~~Company’s default~~amount of payments in arrears of principal and interest aggregate to ~~$530,000.~~$1,500,000.

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

None.

Item 5. Other Information

~~None.~~

Item 6. Exhibits

Exhibit 31.1 Certification required by Rule 13a-14(a) or Rule 15d-14(d) and under Section 302 of the Sarbanes-Oxley act of 2002

Exhibit 32.1 Certification required by Rule 13a-14(a) or Rule 15d-14(d) and under Section 906 of the Sarbanes-Oxley act of 2002

911

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.

~~August 28,~~November 16, 2009	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.

~~August 28,~~November 16, 2009	/s/ DAVID DUQUETTE
	Name: David Duquette
	Title: Chairman, President and Director

~~August 28,~~November 16, 2009	/s/ JOSEF CZIKMANTORI
	Name: Josef Czikmantori
	Title: Secretary and Director

1012

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	Number of		Exercise		Contractual		Intrinsic
	Shares		Price		Term in Years		Value (1)

Vested		3,450,000	$	0.17		1.74	$	—
Expected to vest (2)		650,000	$	0.08		0.16	$	—
Total		4,100,000					$	—

Exercise Price	Number of Options Outstanding And Exercisable		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 0.01-0.08		1,200,000		0.08	$	0.08

$ 0.10-0.20		7,000,000		0.02	$	0.13

		8,200,000			$	0.13

Exercise Price	Number of Options outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 0.075-0.083		1,300,000		0.32	$	0.08

$ 0.15-0.20		2,800,000		1.42	$	0.19

		4,100,000			$	0.15

	Outstanding Warrants
			Weighted		Aggregate
	Number of		Average		Intrinsic
	Shares		Exercise Price		Value (1)

December 31, 2008		5,586,824	$	0.21	$	—

Grants		—		—
		—		—
Exercises		—		—

Cancellations/ Terminated		—		—		—

Outstanding and Exercisable at
March 31, 2009		5,586,824	$	0.21		—

Exercise Price	Number of Warrants outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
$ 0.60-0.70		1,372,538		0.78	$	0.64

$ 0.07		4,214,286		3.58	$	0.07

		5,586,824			$	0.21

	For the Three Months Ended March 31,
	(Restated - See Note 6)
	2009			2008

CONTRACT REVENUES	$	1,054,702		$	1,526,602

COST OF SALES		818,893			1,308,479

GROSS PROFIT		235,809			218,123

OPERATING EXPENSES
Consulting and other compensation		62,615			271,384
Salaries and related		153,087			53,496
Selling, general and administrative		232,021			438,029
TOTAL OPERATING EXPENSES		447,723			762,909

OPERATING LOSS		(211,914	)		(544,786	)

OTHER INCOME (EXPENSES)
Gain on writeoff of accounts payable		5,681			56,628
(Loss) / gain on valuation of derivative liabilities		(1,800,978	)		1,300,762
Interest expense		(668,395	)		(486,769	)

TOTAL OTHER INCOME (EXPENSES)		(2,463,692	)		870,621

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		(2,675,606	)		325,835

PROVISION FOR INCOME TAXES		-			-

NET INCOME ( LOSS)	$	(2,675,606	)	$	325,835

NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS	$	(2,675,606	)	$	325,835

Basic net income (loss) available to common stockholders per common share	$	(0.17	)	$	0.02

Diluted net income (loss) available to common stockholders per common share	$	(0.17	)	$	0.01

Basic weighted average common shares outstanding		15,344,654			14,033,089

Diluted weighted average common shares outstanding		15,344,654			41,981,711

							September 30,
	Level 1		Level 2		Level 3		2009

Fair value of derivative liability		—	$	—	$	24,296,537	$	24,296,537

Total	$	—	$	—	$	24,296,537	$	24,296,537

Derivative liability - December 31, 2008	$	2,025,298

Derivative liability added during the year		1,045,389

Change in fair value of derivative liability		21,225,850

Total derivative liability - September 30, 2009	$	24,296,537

	September 30, 2009			December 31, 2008

Cumulative costs to date	$	2,855,000		$	6,756,000
Cumulative gross profit to date		2,417,000			5,768,000

Cumulative revenue earned		5,272,000			12,524,000
Less progress billings to date		(5,212,000	)		(13,495,000	)

Net under billings	$	60,000		$	(971,000	)

	(Restated) March 31, 2009			December 31, 2008

Cumulative costs to date	$	2,029,000		$	6,756,000
Cumulative gross profit to date		1,547,000			5,768,000

Cumulative revenue earned		3,576,000			12,524,000
Less progress billings to date		(4,081,000	)		(13,495,000	)

Net over billings	$	(505,000	)	$	(971,000	)

	September 30, 2009						December 31, 2008
CONV NOTES	CAMOFI			CAMHZN			CAMOFI			CAMHZN
Principal	$	2,827,281		$	750,000		$	2,827,281		$	750,000
Discount related to warrants liability		(62,326	)		(25,732	)		(119,369	)		(48,890	)
Discount related to convertible option liability		(997,251	)		(158,526)			(1,909,996	)		(301,200)
Discount related to stock issued with notes		(31,370	)		-			(60,078	)		-
Notes presented net of debt discounts	$	1,736,334		$	565,742		$	737,838		$	399,910

Accrued Interest	$	311,001		$	121,874		$	56,546		$	37,500

Amended 12% CAMOFI Note, net of discount of $1,090,947	$	1,736,334
15% CAMZHN Note, net of discount of $184,258		565,742
February CAMOFI Note		701,200
February CAMZHN Note		173,800
July CAMOFI Note, net of discount of $31,323		19,077
July CAMZHN Note, net of discount of $7,831		4,769
September CAMOFI Note, net of discount of $48,000		-
September CAMZHN Note, net of discount of $12,000		-
	$	3,200,922

	Three months ended March 31, 2008
					Per Share
	Income		Shares		Amount

Net income	$	325,835
Less: Preferred stock dividends		-
Basic income available to common shareholders	$	325,835		14,033,089	$	0.02

Add: Preferred dividends		-
Add: Interest on convertible debt		254,100		-
Add: Dilutive impact of convertible preferred stock		-		1,026,676
Add: Dilutive impact of convertible debt		-		23,333,333
Add: Dilutive impact of options and warrants		-		3,588,614

Diluted income available to common shareholders	$	579,935		41,981,711	$	0.01

Effect of Correction	As Previously Reported			Adjustment		As Restated
Balance Sheet as of September 30, 2008
Conversion Option Liability		-			4,032,781		4,032,781
Warrant Liability		-			310,389		310,389
Convertible Note Payable		543,390			(348,758)		194,632
Accumulated Deficit		13,860,275			1,697,812		15,558,087
Total Stockholders’ Deficit		3,604,689			3,859,895		7,464,584
Statement of Operations for the three months ended September 30, 2008
Marked-to-Market Gain (Loss)		(37,899)			(753,801)		(791,700)
Interest Expense		57,387			428,415		485,802
Net Income (Loss)		(762,203	)		(1,182,216)		(1,944,419)
Net Income (Loss) Available to common shareholders		(803,478	)		(1,140,941)		(1,944,419)
EPS - Diluted		(0.05	)		(0.08)		(0.13)
Statement of Operations for the nine months ended September 30, 2008
Marked-to-Market Gain (Loss)		(37,899)			31,904		(5,995)
Interest Expense		1,041,538			298,677		1,340,215
Net Income (Loss)		(2,586,435)			(266,773)		(2,853,208)
Net Income (Loss) Available to common shareholders		(2,627,710)			(266,773)		(2,894,483)
EPS – Basic and Diluted		(0.18)			(0.02)		(0.20)