UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





(Mark
One)





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





For the
quarterly period ended June 30, 2009





OR





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





Commission
file number 0-14306





CHINA
CRESCENT ENTERPRISES, INC.


(Exact Name of Registrant as Specified
in Its Charter)






Nevada
                84-0928627(State
      or other jurisdiction of
                (I.R.S.
      employerincorporation
      or organization)
                identification  number)






14860
Montfort Drive, Suite 210, Dallas, TX    75254


(Address
of principal executive offices)





(214) 722-3040


Issuer’s
telephone number, including area code








NEWMARKET CHINA,
INC.


(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 (the
“Exchange Act”) 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 þ     No
o





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of  “large accelerated filer,” “accelerated filer” and
“smaller reporting company” in Rule 12b-2 of the Exchange Act.





Large
      Accelerated Filer [   ]
              
              Accelerated
      Filer [   ]Non-Accelerated
      Filer  [ü]
              
              Smaller
      Reporting Company [ 
 ]





Indicate
by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).


Yes o     No
þ











PART
      I – FINANCIAL INFORMATION
                    Page No.Item 1. Unaudited Financial StatementsConsolidated Balance Sheets – June 30, 2009 and December
      31, 2008
                    1Consolidated Statements of Operations - Three  and
      Six Months Ended June 30, 2009 and 2008
                    2Consolidated Statement of Changes in Equity – December
      31, 2008 through June 30, 2009
                    3Consolidated Statements of Cash Flows – Six Months Ended
      June 30, 2009 and 2008
                    4Notes to Condensed Consolidated Financial
      Statements
                    5Item 2.  Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
                    12Item 3. Quantitative and Qualitative Disclosures About
      Market Risk
                    14Item 4. Controls and Procedures
                    14PART
      II – OTHER INFORMATIONItem 1.  Legal Proceedings – Not
      Applicable
                    14Item 2.  Unregistered Sales of Equity
      Securities and Use of Proceeds
                    15Item 3.  Defaults Upon Senior
      Securities – Not
      Applicable
                    15Item 4.  Submission of Matters to a
      Vote of Security Holders
                    15Item 5.  Other Information – Not
      Applicable
                    15Item 6.  Exhibits
                    15SIGNATURES
                    16












Item
1.  Unaudited Financial Statements




China
      Crescent Enterprises, Inc.Consolidated Balance SheetASSETS
                                                              
                                                              June
      30, 2009
                                                              
                                                              
                                                              December
      31, 2008(Unaudited)CURRENT
      ASSETSCash
      and cash equivalents
                                                              
                                                              $
                                                              2,259,195
                                                              
                                                              
                                                              $
                                                              2,600,498Accounts
      receivable
                                                              
                                                              
                                                              5,021,369
                                                              
                                                              
                                                              
                                                              4,238,294Inventory
                                                              
                                                              
                                                              2,134,965
                                                              
                                                              
                                                              
                                                              1,858,233Supplier
      advances
                                                              
                                                              
                                                              1,005,984
                                                              
                                                              
                                                              
                                                              787,149Advances
      to affiliate
                                                              
                                                              
                                                              942,760
                                                              
                                                              
                                                              
                                                              687,567Assets
      of discontinued operations
                                                              
                                                              
                                                              9,377
                                                              
                                                              
                                                              
                                                              9,377Other
      current assets
                                                              
                                                              
                                                              76,772
                                                              
                                                              
                                                              
                                                              68,840Total
      current assets
                                                              
                                                              
                                                              11,450,423
                                                              
                                                              
                                                              
                                                              10,249,958PROPERTY
      AND EQUIPMENT, NET
                                                              
                                                              
                                                              83,161
                                                              
                                                              
                                                              
                                                              93,185INTANGIBLE
      ASSETS
                                                              
                                                              
                                                              2,989
                                                              
                                                              
                                                              
                                                              2,993Total
      assets
                                                              
                                                              $
                                                              11,536,572
                                                              
                                                              
                                                              $
                                                              10,346,136LIABILITIES
      AND EQUITYCURRENT
      LIABILITIESAccounts
      payable
                                                              
                                                              $
                                                              1,399,085
                                                              
                                                              
                                                              $
                                                              1,573,643Short-term
      debt
                                                              
                                                              
                                                              995,420
                                                              
                                                              
                                                              
                                                              1,798,542Accrued
      expenses and other liabilities
                                                              
                                                              
                                                              565,235
                                                              
                                                              
                                                              
                                                              445,258Liabilities
      of discontinued operations
                                                              
                                                              
                                                              308,683
                                                              
                                                              
                                                              
                                                              308,683Total
      current liabilities
                                                              
                                                              
                                                              3,268,423
                                                              
                                                              
                                                              
                                                              4,126,126Long-term
      debt
                                                              
                                                              
                                                              167,142
                                                              
                                                              
                                                              
                                                              151,041Total
      liabilities
                                                              
                                                              
                                                              3,435,565
                                                              
                                                              
                                                              
                                                              4,277,167EQUITYCommon
      stock; $.001 par value; 1,000,000,000 shares authorized;20,030,240
      and 1,070,186 shares issued and outstanding
                                                              
                                                              
                                                              20,030
                                                              
                                                              
                                                              
                                                              1,070at
      June 30, 2009 and December 31, 2008, respectivelyPreferred
      stock; $.001 par value; 20,000,000 shares authorized;
                                                              
                                                              
                                                              -Series
      A 250,000 and 250,000; Series B 750 and 0 shares issued
                                                              
                                                              
                                                              251
                                                              
                                                              
                                                              
                                                              250and
      outstanding at June 30, 2009 and December 31, 2008,
      respectivelyAdditional
      paid-in capital
                                                              
                                                              
                                                              3,965,872
                                                              
                                                              
                                                              
                                                              2,241,694Accumulated
      comprehensive income
                                                              
                                                              
                                                              357,079
                                                              
                                                              
                                                              
                                                              820,699Retained
      earnings
                                                              
                                                              
                                                              2,707,920
                                                              
                                                              
                                                              
                                                              1,392,493Total
      China Crescent Enterprises, Inc. stockholders' equity
                                                              
                                                              
                                                              7,051,152
                                                              
                                                              
                                                              
                                                              4,456,206Noncontrolling
      interest
                                                              
                                                              
                                                              1,049,855
                                                              
                                                              
                                                              
                                                              1,612,763Total
      equity
                                                              
                                                              
                                                              8,101,007
                                                              
                                                              
                                                              
                                                              6,068,969Total
      liabilities and equity
                                                              
                                                              $
                                                              11,536,572
                                                              
                                                              
                                                              $
                                                              10,346,136See
      accompanying notes to consolidated financial statements.






1




China
      Crescent Enterprises, Inc.Consolidated Statement of Operations(Unaudited)Three
      Months Ended
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          Six
      Months EndedJune
      30,
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          June
      30,2009
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          2008
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          2009
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          2008REVENUE
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          9,556,566
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          10,674,855
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          16,985,874
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          19,190,739COST
      OF SALES
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          7,942,007
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          9,880,910
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          14,932,862
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          17,953,568Gross
      Margin
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,614,559
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          793,945
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          2,053,012
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,237,171OPERATING
      EXPENSESSelling,
      general and administrative expenses
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          315,314
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          271,730
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          529,324
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          549,003Depreciation
      and amortization
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          5,242
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,357
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          6,392
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          5,803Total
      expenses
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          320,556
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          273,087
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          535,716
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          554,806Income
      (loss) from operations
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,294,003
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          520,858
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,517,296
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          682,365OTHER
      INCOME (EXPENSE)Interest
      income
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (79
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          468
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          902
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          468Interest
      expense
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (54,711
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (47,294
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (101,940
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (55,529
                                                                                                                                          )Other
      income
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          45,624
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          57,547
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          89,582
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          101,534Other
      expense
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (1,627
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (1,659
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (3,351
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (2,710
                                                                                                                                          )Total
      other income (expense)
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (10,793
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          9,062
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (14,807
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          43,763Net
      income before income tax (credit) andnoncontrolling
      interest
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,283,210
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          529,920
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,502,489
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          726,128Foreign
      income tax
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (10,515
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          -
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (16,088
                                                                                                                                          )Noncontrolling
      interest in consolidated subsidiary
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (259,970
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (254,509
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (367,417
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (347,920
                                                                                                                                          )Net
      income
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,023,240
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          264,896
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,135,072
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          362,120Other
      comprehensive income (loss)Gain
      (loss) on investment security
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (210
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (1,627
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (1,023
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (1,394
                                                                                                                                          )Foreign
      currency translation gain (loss)
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (674,198
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          34,053
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          (462,597
                                                                                                                                          )
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          358,079Comprehensive
      income
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          348,832
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          297,322
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          671,452
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          718,805Income
      per weighted-average common share-basic
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.11
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.20
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.17
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.29Income
      per weighted-average common share-diluted
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.07
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.13
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.11
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          $
                                                                                                                                          0.19Number
      of weighted average common shares o/s-basic
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          9,378,599
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,325,641
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          6,610,607
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,244,785Number
      of weighted average common shares o/s-diluted
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          14,067,899
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,988,462
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          9,915,911
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          
                                                                                                                                          1,867,178See
      accompanying notes to consolidated financial statements.






2




China
      Crescent Enterprises, Inc.Consolidated Statement of Stockholder's
      Equity(Unaudited)Additional
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        AccumulatedNumber
      of Shares
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Par
      Value of Stock
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Paid-In
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Comprehensive
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Retained
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        TotalPreferred
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Common
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Preferred
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Common
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Capital
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Income/(Loss)
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        Earnings
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        EquityBEGINNING BALANCE,
      January 1, 2009
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        250,000
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        2,786,186
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        250
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        2,786
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        2,239,978
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        820,699
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        1,392,493
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        4,456,206Issuance
      of shares for exchange of debt
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        17,244,053
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        17,244
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        975,895
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        993,139Issuance
      of preferred shares for purchase ofadditional
      interest in subsidiary
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        750
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        749,999
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        180,355
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        930,355Other
      comprehensive income
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (463,620
                                                                                                                                                                        )
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        (463,620
                                                                                                                                                                        )Net
      income
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,135,072
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        1,135,072BALANCE,June 30,
      2009
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        250,750
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        20,030,239
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        251
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        20,030
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        3,965,872
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        357,079
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        2,707,920
                                                                                                                                                                        
                                                                                                                                                                        
                                                                                                                                                                        $
                                                                                                                                                                        7,051,152See
      accompanying notes to consolidated financial statements.





3




China
      Crescent Enterprises, Inc.Consolidated Statement of Cash Flows(Unaudited)Six
      Months EndedJune
      30,2009
                                                                
                                                                
                                                                2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income
                                                                
                                                                $
                                                                1,135,072
                                                                
                                                                
                                                                $
                                                                362,120Adjustments
      to  reconcile net earnings to net cashprovided
      (used) by operating activities:Noncontrolling
      interest in consolidated subsidiary
                                                                
                                                                
                                                                367,417
                                                                
                                                                
                                                                
                                                                347,920Depreciation
                                                                
                                                                
                                                                6,392
                                                                
                                                                
                                                                
                                                                5,803Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
                                                                
                                                                
                                                                (783,075
                                                                )
                                                                
                                                                
                                                                (1,163,931
                                                                )(Increase)
      decrease in supplier advances and other assets
                                                                
                                                                
                                                                (226,767
                                                                )
                                                                
                                                                
                                                                (414,204
                                                                )(Increase)
      decrease in inventory
                                                                
                                                                
                                                                (276,732
                                                                )
                                                                
                                                                
                                                                18,593Increase
      (decrease) in accounts payable
                                                                
                                                                
                                                                (174,558
                                                                )
                                                                
                                                                
                                                                (729,012
                                                                )Increase
      (decrease) in accrued expenses and other payables
                                                                
                                                                
                                                                119,977
                                                                
                                                                
                                                                
                                                                75,991Net
      cash provided/(used) by operating activities
                                                                
                                                                
                                                                167,726
                                                                
                                                                
                                                                
                                                                (1,496,720
                                                                )CASH
      FLOWS FROM INVESTING ACTIVITIES:Sale
      of property and equipment
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -Net
      cash provided by investing activities
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                -CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from short-term debt
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                680,832Proceeds
      from long-term debt
                                                                
                                                                
                                                                -
                                                                
                                                                
                                                                
                                                                113,472Advances
      to affiliates
                                                                
                                                                
                                                                (255,193
                                                                )
                                                                
                                                                
                                                                -Net
      cash provided/(used) by financing activities
                                                                
                                                                
                                                                (255,193
                                                                )
                                                                
                                                                
                                                                794,304Effect
      of exchange rates on cash
                                                                
                                                                
                                                                (253,836
                                                                )
                                                                
                                                                
                                                                (24,221
                                                                )Net
      increase (decrease) in cash and equivalents
                                                                
                                                                
                                                                (341,303
                                                                )
                                                                
                                                                
                                                                (726,637
                                                                )CASH, beginning of
      period
                                                                
                                                                
                                                                2,600,498
                                                                
                                                                
                                                                
                                                                1,488,774CASH, end of
      period
                                                                
                                                                $
                                                                2,259,195
                                                                
                                                                
                                                                $
                                                                762,137See
      accompanying notes to consolidated financial statements.






4




CHINA
CRESCENT ENTERPRISES, INC. AND SUBSIDIARIES


Notes to CondensedConsolidated Financial Statements
(Unaudited)


June
30, 2009








1.  BASIS
OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES:





Unaudited
Interim Financial Statements





The
accompanying unaudited interim consolidated financial statements include the
accounts of China Crescent Enterprises, Inc. (formerly known as NewMarket China,
Inc. or “NewMarket China”) a Nevada corporation (“we”, “our” or the
“Company”),  These statements have been prepared in accordance with
accounting principles generally accepted in the United States and applicable
Securities and Exchange Commission (“SEC”) regulations for interim financial
information.  These financial statements are unaudited and, in the
opinion of management, include all adjustments necessary to present fairly the
balance sheets, statements of operations and statements of cash flows for the
periods presented in accordance with accounting principles generally accepted in
the United States.  Certain information and footnote disclosures
normally found in financial statements prepared in accordance with accounting
principles generally accepted in the United States have been condensed or
omitted pursuant to SEC rules and regulations.  It is presumed that
users of this interim financial information have read or have access to the
audited financial statements and footnote disclosure for the preceding year
contained in our Annual Report on Form 10-K.  Operating results for
interim periods presented are not necessarily indicative or the results that may
be expected for the year ending December 31, 2009.





In October
2004, we discontinued the operations of Brunetti and implemented steps to
liquidate the assets of Brunetti.  On March 1, 2005, Brunetti filed a
voluntary petition for relief in the United States Bankruptcy Court, District of
Colorado under Chapter 7 of Title 7 of the U.S. Bankruptcy Code (Note
3).





On March 16, 2005, the Company (the
Debtors) filed a voluntary petition for relief in the United States Bankruptcy
Court, District of Colorado under Chapter 11 of Title 11 of the U.S. Bankruptcy
Code.  Under Chapter 11, certain claims against the Debtor in
existence prior to the filing of the petitions for relief under the U.S.
Bankruptcy Code are stayed while the Debtor continues business operations as
Debtor-in-possession.  On April 5, 2006, the United States Bankruptcy
Court, District of Colorado dismissed the Chapter 11
proceedings.





Basis
of Presentation





The
Company prepares its financial statements using the accrual basis of
accounting.  All significant intercompany accounts and transactions
have been eliminated in consolidation.    Investments in
subsidiaries are reported using the equity method.  The financial
statements include the accounts of the wholly-owned subsidiaries Brunetti DEC,
LLC, (“Brunetti”) a Colorado limited liability company and Clipper Technology,
Inc. (“ClpTec”), a Chinese wholly-owned foreign entity.





Use
of Estimates





The
preparation of consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and reported amounts of
revenues and expenses during the reporting periods.  Actual results
could differ from those estimates.





Principles
of Consolidation





The
Company accounts for investments in subsidiaries in accordance with Statement of
Financial Accounting Standard (“SFAS”) No. 94, “Consolidation of all
Majority-owned Subsidiaries”, and Accounting Research Bulletin (“ARB”) No. 51,
“Consolidated Financial Statements.”  The Company uses the
consolidation method to report its investment in its subsidiaries and other
companies when the Company owns a majority of the voting stock of the
subsidiary.  All inter-company balances and transactions have been
eliminated.






5




Fair
Value Instruments





Statement
of Financial Accounting Standards (“SFAS”) 157, “Fair Value Measurements”,
defines fair value, establishes a framework for measuring fair value and expands
disclosures for each major asset and liability category measured at fair value
on either a recurring or nonrecurring basis.  As a basis for
considering assumptions, SFAS 157 established a three-tier hierarchy which
prioritizes the inputs used in measuring fair value as follows:





·
            Level
      1 – Quoted prices for identical instruments in active
    markets


·
            Level
      2 – Quoted prices for similar instruments in active markets, quoted prices
      for identical or similar instruments in non-active markets, or
      model-driven valuations in which all significant inputs are observable in
      active markets


·
            Level
      3 – Unobservable inputs in which there is little or no market data, which
      require the reporting entity to develop its own
  assumptions





SFAS 157
does not impose fair value measurements on items not already accounted for at
fair value; it applies to other accounting pronouncements that either require or
permit fair value measurements.





Certain
assets and liabilities are measured at fair-value on a non-recurring
basis.  These assets include goodwill and intangible assets and are
the result of acquisitions.  Items valued using internally generated
valuation techniques are classified according to the lowest level
input.  Thus an item may be classified as Level 3 and such instruments
are not measured at fair value on  n ongoing basis but are subject to
fair value adjustments in certain circumstances, for example when there is
evidence of impairment.





Cash
and Cash Equivalents





The
Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash
equivalents.





Inventory





Inventory,
which consists primarily of finished goods, is stated at the lower of cost or
market.  Cost is determined using the weighted average
method.





Other
Assets





Available-for-sale
securities consist of 23,245 shares of common stock of Vyta Corp (“Vyta”) (Note
4).  These securities are carried at fair value ($139 at June 30,
2009) based upon quoted market prices.  Unrealized gains and losses
are computed on the average cost basis and are reported as a separate component
of comprehensive income, included as a separate item in stockholders’
equity.  Realized gains, realized losses, and declines in value,
judged to be other-than temporary, are included in other income
(expense).





Property
and Equipment





Property
and equipment are stated at cost.  Depreciation is provided by use of
the accelerated method over the estimated useful lives of the related assets,
which range from five to seven years.





Revenue
Recognition





The
Company is engaged in the business of resale of computer hardware and software
and IT consulting services in the People’s Republic of China
(“China”).  Revenue from product sales, which accounts for the
substantial majority of revenue, is recognized upon delivery.  IT
Consulting services are invoiced under a time and materials
contract.  Revenue is recognized as time is spent on hourly rates,
which are negotiated with the customer, plus the cost of any allowable material
costs and out-of-pocket expenses.





Foreign
Currency Transaction and Translation Gains (Losses)






6




The
Company’s principal operations are located in China. The Company invoices
customers in RMB, the local currency, and if the payment received is denominated
in a foreign currency, the payment is translated and the Company records a
foreign currency transaction gain or loss in accordance with Statement of
Financial Accounting Standards (“SFAS”) 52, “Foreign Currency
Translation”.





Derivative
Instruments





SFAS 133,
“Accounting for Derivative Instruments and Hedging Activities”, as amended, establishes
accounting and reporting standards requiring that every derivative instrument be
recorded in the balance sheet as either an asset or liability measured at fair
value, and that changes in fair value be recognized currently in earnings (loss)
unless specific hedge accounting criteria are met.





Stock-Based
Compensation





The
Company has two  stock  option  plans which permit
the granting of shares to
attract,  retain  and  motivate  employees,  directors  and
consultants.  Options are generally granted with an exercise price
equal to the market price of the common stock of the Company on the date of the
grant and with vesting rates, as determined by the Board of
Directors.  The Company accounts for stock-based compensation in
accordance with SFAS 123(R), “Share-Based Payment” which requires measurement of
compensation cost for all stock-based awards at fair value on the date of
grant.  Determining the fair value of share-based awards at the grant
date requires the use of estimates.  Actual results, and future
changes in estimates, may differ from the current estimates.





There were
no options granted during the three months ended  June 30, 2009, and
all options granted prior to the
adoption  of  SFAS  123(R)  and  outstanding  during  the  periods  presented
were fully vested.





Net
Income Per Share





The
Company has adopted SFAS 128, “Earnings Per Share”, specifying the computation,
presentation and disclosure requirements of earnings per share
information.  Basic earnings per share have been calculated based upon
the weighted average number of common shares outstanding. excludes Diluted
earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity.





Income
Taxes





Income
taxes are accounted for by the asset and liability method.  Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carry forwards.  Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled.  The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income (loss) in the
period that includes the enactment date.  A valuation allowance is
established when necessary to reduce deferred tax assets to amounts expected to
be realized.





Comprehensive
Income





SFAS 130,
“Reporting Comprehensive Income”, requires the reporting and display of
comprehensive income and its components.  SFAS 130 requires unrealized
gains and losses on our available for sale securities to be included in
comprehensive income as well as gains or losses due to foreign currency
translation adjustments.





Recently
Issued Accounting Standards





In
December 2007, FASB issued SFAS 160, “Noncontrolling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”
(“SFAS 160”). SFAS 160 will change the accounting and reporting for
minority interests, which will be recharacterized as noncontrolling interests
and classified as a component of equity. This new consolidation method will
significantly change the account with minority interest holders. SFAS 160
is effective for fiscal years beginning after December 15, 2008 and, as
such, the Company has adopted this standard in fiscal 2009.  The
adoption of SFAS 160 did not have a material impact on the Company’s
consolidated financial statements.






7




In
February 2008, FASB issued Financial Staff Position (“FSP”) No. FAS 157-2,
“Effective Date of FASB Statement No. 157”, which delays the effective date of
SFAS No. 157 to January 1, 2009, for all nonfinancial assets and nonfinancial
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least
annually).  The adoption of the delayed items of SFAS No. 157 did not
have a material impact on the Company’s consolidated financial
statements.





In March
2008, FASB issued SFAS 161, “Disclosures about Derivative Instruments and
Hedging Activities, an Amendment of SFAS 133” (“SFAS 161”).  SFAS 161
amends and expands the disclosure requirements of SFAS 133 with the intent to
provide users of financial statements with an enhanced understanding of how and
why an entity uses derivative instruments, how derivative instruments and
related hedged items are accounted for under SFAS 133 and its related
interpretations, and how derivative instruments and related hedged items affect
an entity’s financial position, financial performance, and cash
flows.  SFAS 161 is effective for financial statements issued for
fiscal years and interim periods beginning after November 15,
2008.  The adoption of SFAS 161 did not have a material effect on the
Company’s consolidated financial statements.





In April
2008, FASB issued FSP 142-3, “Determination of Useful Life of Intangible
Assets”. FSP 142-3 amends the factors that should be considered in developing
the renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under SFAS 142, “Goodwill and Other Intangible
Assets.” FSP 142-3 also requires expanded disclosure regarding the determination
of intangible asset useful lives. FSP 142-3 is effective for fiscal years
beginning after December 15, 2008. The adoption of FSP 142-3 did not have a
material impact on the Company’s consolidated financial statements.





In April
2009, the FASB issued FSP SFAS No. 107-1 and Accounting Principles Board (“APB”)
Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial
Instruments” (“FSP SFAS No. 107-1 and APB Opinion No. 28-1”).  FSP
SFAS No. 107-1 and APB Opinion No. 28-1 amends SFAS No. 107, “Disclosures about
Fair Value of Financial Instruments” and APB Opinion No. 28, “Interim Financial
Reporting,” to require disclosures about fair value of financial instruments for
interim reporting periods.  The adoption of FSP SFAS No. 107-1 and APB
Opinion No. 28-1 for the period ended June 30, 2009 did not have a material
impact on the Company’s consolidated financial
statements.





In
May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS No.
165”).  SFAS No. 165 requires an entity to disclose the date through which
the entity has evaluated subsequent events and whether that evaluation date is
the date financial statements are issued. SFAS 165 is effective for interim
reporting periods after June 15, 2009.  The adoption of SFAS 165 did not
have a material effect on the Company’s consolidated financial
statements.





In July
2009, the FASB issued SFAS No. 168, “FASB Accounting Standards
Codification” (“SFAS No. 168”), as the single source of authoritative
nongovernmental U.S. GAAP.  All existing accounting standards are
superseded as described in SFAS No. 168. All other accounting literature not
included in the codification is non-authoritative. SFAS No. 168 is effective for
interim and annual periods ending after September 15, 2009. The
Company does not expect SFAS No. 168 to materially affect its consolidated
financial statements.





2.  DESCRIPTION
OF BUSINESS:





NewMarket
China was formed in 2006 as a wholly-owned subsidiary of NewMarket Technology,
Inc. (“NewMarket Technology”), a technology and systems integration company
based in Dallas, Texas.   The Company’s headquarters is located
in Dallas but the primary operations are currently in the People’s Republic of
China (“China”).  To date, the majority of the Company’s sales have
been information technology products and services sold within
China.  These services are provided through the Company’s subsidiaries
as detailed below:





·
            Clipper Technology, Ltd.
      (“ClpTec”):  A Wholly Owned Foreign Entity (“WOFE”) registered
      in Shanghai, China, which provides consulting, development,
      implementation, and maintenance of technology systems which include both
      software and hardware peripherals for computing, communication, and data
      exchanges related to general business applications as well as the
      specialty fields of medical, security, military and homeland defense
      applications.






8




·
            Clipper Huali Co., Ltd.
      (“Clipper-Huali”).  Clipper Huali was originally formed as a
      collaborative business enterprise between ClpTec and a consortium of
      Chinese technology firms called The Huali Group, Ltd. (“Huali”).
      Clipper-Huali is registered in the City of Ningbo, China. Effective April
      1, 2009, Clipper-Huali is owned 76% by ClpTec and 24% by Huali.
      Clipper-Huali is engaged in the sales, distribution and integration of IT
      products including notebook and desktop computers, printers, servers,
      network equipment, and peripheral devices from a number of global brand
      partners and is also an authorized reseller of operating systems,
      database, middleware and other software
  applications.





In October
2006, Intercell International Corporation (“Intercell”) executed an Agreement
and Plan of Reorganization (“the Agreement”) with NewMarket China,
Inc.  The Agreement, provided for Intercell to acquire from NewMarket
Technology our subsidiary  through the exchange of  all of
the issued and outstanding stock of NewMarket China, Inc., one thousand (1,000)
shares held by NewMarket Technology for  two million (2,000,000)
restricted common shares of Intercell. As a result of the Agreement, NewMarket
China became a wholly-owned subsidiary of Intercell.





In a
separate agreement, NewMarket Technology agreed to purchase 250,000 shares of a
Series A Preferred Stock (“Series A Preferred”) from Intercell for $250,000. The
shares have a par value of $0.001 per share and a purchase price of $1.00 per
share and bear no dividend.  The shares are convertible into 60% of
our issued and outstanding common stock any time after August 31, 2006. The
shares have a voting right equal to 60% of our issued and outstanding common
stock.





As a
result of this reorganization, stockholders’ equity has been adjusted to reflect
the effect of this transaction.





In June
2008, the Company changed its name to China Crescent Enterprises,
Inc.





3.
DISCONTINUED OPERATIONS:





Brunetti
Acquisition





On October
20, 2003, the Company acquired a controlling 60% equity interest in Brunetti in
exchange for a $700,000 cash contribution to Brunetti.  On January 30,
2004, the Company acquired the remaining 40% equity interest in Brunetti in
exchange for a $300,000 cash contribution to Brunetti.





On October
11, 2004, the Company discontinued the operations of Brunetti and implemented
steps to liquidate the assets of Brunetti.  On March 1, 2005, Brunetti
filed a voluntary petition for relief in the United States Bankruptcy Court,
District of Colorado under Chapter 7 of Title 7 of the U.S. Bankruptcy
Code.





At June
30, 2009, the carrying values of Brunetti’s assets and liabilities (presented as
assets and liabilities of discontinued operations) are as follows:








Cash
                          
                          $
                          9,377Total
      assets
                            (all
      current)
                          
                          $
                          9,377Accounts
      payable
                          
                          $
                          179,473Related
      party payable
                          
                          
                          25,035Line
      of credit
                          
                          
                          10,735Accrued
      payroll
                          
                          
                          93,440Total
      liabilities
                            (all
      current)
                          
                          $
                          308,683





Brunetti
reported no revenues or income during the three months ended June 30,
2009.  Operations related to Brunetti resulted in a net loss during
the year ended December 31, 2008 and 2007 of $0 and $0,
respectively.  Brunetti did not incur any income taxes during these
periods.







9




4.
INVESTMENT IN VYTA CORP.:





At June
30, 2009, the Company owns 23,245 shares of the common stock of Vyta
Corp.  Beginning October 21, 2003, based on factors which indicated
that the Company did not have the ability to exercise significant influence, the
Company changed the method of accounting for the Vyta Corp shares (except for
those which are subject to underlying warrants, which are carried at cost) to
the method of accounting prescribed by SFAS No. 115, “Accounting for Certain
Investments in Debt and Equity Securities”.  The Company has
classified its investment in these Vyta Corp shares as available-for-sale
securities, in which unrealized gains (losses) are computed on the average cost
basis, and are recorded in other comprehensive income (loss).  At June
30, 2009, 23,245 shares of Vyta were available for sale and had a fair market
value of $139 based on a closing price of $0.006 per share.  The
Company did not sell any available for sale securities during the three months
ended June 30, 2009.





5.  STOCKHOLDER’S
EQUITY:





Common
Stock





The
Company has authorized 1,000,000,000 shares of $0.001 par value of common
stock.  The Company had 20,030,240 shares of common stock issued and
outstanding at June 30, 2009.





During the
second quarter of 2009, the Company issued 15,592,472 shares of common stock as
follows:





·
            In
      April 2009, the Company issued 1,660,268 shares of common stock pursuant
      to an agreement to exchange $145,275 in debt for
  equity.


·
            In
      May 2009, the Company issued 5,768,343 shares of common stock pursuant to
      an agreement to exchange $238,400 in debt for
  equity.


·
            In
      June 2009, the Company issued 8,163,861 shares of common stock pursuant to
      an agreement to exchange $245,000 in debt for
  equity.





On May 12,
2009, the Company announced the effectiveness of a 25-for-1 reverse stock
split.  The financial statements have been adjusted to reflect this
change in stockholder’s equity.  Additionally, the Company’s new
trading symbol for the common stock on the OTC Bulletin Board is
CCTR.





Preferred
Stock





The
Company has authorized 20,000,000 shares of $0.001 par value preferred
stock.  The rights and privileges of the preferred stock are
determined by the Board of Directors prior to issuance.  The Company
had 250,000 shares of Series A Preferred and 750 shares of Series B Preferred
stock issued and outstanding at June 30, 2009.





On April
1, 2009, the Company issued 750 shares of Series B Convertible Preferred Stock,
$.001 par value, $1,000 per share stated value, in conjunction with the
previously announced acquisition by ClpTec of an additional 25% interest in
Clipper-Huali from Huali, bringing its total ownership in Clipper-Huali to 76%
and reducing Huali’s ownership interest to 24%.








6.  STOCK
OPTIONS AND WARRANTS:





Stock
Options





The
Company established a Compensatory Stock Option Plan (the “1995 Plan” or the
“Option Plan”) and had reserved 10,000,000 shares of common stock for issuance
under the Option Plan.  Incentive stock options were granted under the
Option Plan at prices not less than 110% of the fair market value of the stock
at the date of grant, and nonqualified options were granted at not less than 50%
of the stock’s fair market value at the date of grant or the date the exercise
price of any such option is modified.  Vesting provisions were
determined by the Board of Directors.  All stock options expire 10
years from the date of grant.





The
following table summarizes information about stock options outstanding as of
June 30, 2009:






10




Options Outstanding
                              Options ExercisableRange
      of
                                Exercise Prices
                              Number
      of
                                Options
                              Remaining
                                Contractual Life
                              Weighted
                                Average
                                Exercise Price
                              Number
      of
                                Options
                              Exercise Price$3.50-12.75
                              190,000
                              4-5
      years
                              $
      10.75
                              190,000
                              $3.50-12.75





In August
2008, the Company established a Stock Option and Award Plan (the “2008 Plan”)
and has reserved 10,000,000 shares of common stock for issuance under the 2008
Plan.  Under the 2008 Plan, incentive stock options are granted at
prices not less than 100% of the fair market value of the stock at the date of
grant, and nonqualified options are granted at prices determined by the Board of
Directors.  Vesting provisions are determined by the Board of
Directors.  There have been no grants made under the 2008 Plan as of
June 30, 2009.





Warrants





At June
30, 2009, there were no warrants to purchase common stock
outstanding.





7.  SUBSEQUENT
EVENTS:





In March
2009, NewMarket Technology, the holder of the Company’s Series A Preferred,
announced their intention to exchange their shares of Series A Preferred for two
new classes of preferred stock.  One of these classes will be a
non-convertible preferred stock which will represent a controlling interest in
the Company.  The other class of preferred stock will be designated
for conversion into common stock to be used as a stock dividend distribution to
NewMarket Technology shareholders. It is anticipated that this share exchange
will be completed in the third quarter of 2009.






11




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







Safe
Harbor for Forward-Looking Statements







The
following discussion should be read in conjunction with our condensed
consolidated financial statements and the related notes included elsewhere in
this report.





Information
contained herein contains forward-looking statements, You should not place undue
reliance on those statements because they are subject to numerous uncertainties
and factors relating to our operations and business environment, all of which
are difficult to predict and many of which are beyond our
control.  Forward-looking statements include information concerning
our possible and assumed future results of operations, including descriptions of
our business strategy.  The statements often include words such as
“may,” “will,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,”
“estimate” or other similar expressions.  These statements are based
on assumptions that we have made in light of our experience and well as
perceptions of historical trends, current conditions, expected future
developments, and other factors we believe are appropriate under the
circumstances.  Although we believe that these forward-looking
statements are based on reasonable assumptions, you should be aware that many
factors could affect our actual financials results or results of operations and
could cause actual results to differ materially from those on the
forward-looking statements.  These factors include, but are not
limited to, competition from existing and future competitors, failure to
maintain and develop business, failure to increase or maintain the number of
customers we have, downturns in the economies and/or industries that we serve,
and the failure to attract or keep qualified professionals we
employ.  These factors and others discussed in detail in our filings
with the Securities and Exchange Commission, including our Annual Report on Form
10-K for the fiscal year ended December 31, 2008 under the headings “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and
Results of Operations.” You should keep in mind that any forward-looking
statements made by us herein, or elsewhere, speaks only as of the date on which
we made it.  New risks and uncertainties come up from time to time,
and it is impossible for us to predict these events or how they may affect
us.  We have no obligation to update any forward-looking statements
after the date hereof, except as required by federal securities
laws.





Links to
all of our filings, including our Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, information statements and other
material information concerning us are available on our website at www.ChinaCrescent.com
..







Critical accounting policies






The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
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. Our management evaluates these estimates on an on-going basis
including those related to the collection of accounts receivable, inventory,
sales returns, and non-monetary transactions such as stock-based compensation,
impairment of intangible assets and derivative liabilities. Actual results may
differ from these estimates. A discussion of critical accounting policies and
the related judgments and estimates affecting the preparation of the
consolidated financial statements is included in our Annual Report on our Form
10-K for the year ended December 31, 2008, as filed with the Securities and
Exchange Commission.  There have been no material changes to these
critical accounting policies as of June 30, 2009.







Results
of Operations





On March
16, 2005, we filed a voluntary petition for relief in the United States
Bankruptcy Court, District of Colorado under Chapter 11 of Title 11 of the U.S.
Bankruptcy Code.  On April 5, 2006, the United States Bankruptcy
Court, District of Colorado dismissed the Chapter 11 proceedings.





On October
20, 2003, we acquired a controlling 60% equity interest in Brunetti for a
$700,000 cash contribution to Brunetti. On January 30, 2004, we acquired the
remaining 40% equity interest in Brunetti for a $300,000 cash contribution to
Brunetti. In October 2004, the operations of Brunetti were ceased and on March
1, 2005, Brunetti filed a voluntary petition for relief in the United States
Bankruptcy Court, District of Colorado under Chapter 7 of Title 7 of the U.S.
Bankruptcy Code.  At such time, we began to account for the operations
of Brunetti as discontinued operations.






12




In October
2006, we executed an Agreement and Plan of Reorganization (“the Agreement”) with
NewMarket China, Inc. (“NewMarket China” or “the Company”), a wholly-owned
subsidiary of NewMarket Technology, Inc. (“NewMarket
Technology”).  The Agreement, provided for Intercell to acquire from
NewMarket Technology its subsidiary, NewMarket China through the exchange
of  all of the issued and outstanding stock of NewMarket China, one
thousand (1,000) shares held by NewMarket Technology for  two million
(2,000,000) restricted common shares of Intercell. As a result of the Agreement,
NewMarket China became a wholly-owned subsidiary of Intercell.





In
June 2008, we changed the Company name to China Crescent Enterprises,
Inc.  In July 2008, Paul K. Danner was appointed President and Chief
Executive Officer of the Company.





On April
1, 2009, we issued 750 shares of Series B Convertible Preferred Stock, $.001 par
value, $1,000 per share stated value, in conjunction with the previously
announced acquisition by ClpTec of an additional 25% interest in Clipper-Huali
from Huali, bringing our total ownership in Clipper-Huali to 76% and reducing
Huali’s ownership interest to 24%.





Three
months ended June 30, 2009 compared to three months ended June 30,
2008:





Net sales
decreased 10% from $10,674,855 for the quarter ended June 30, 2008 to $9,556,566
for the quarter ended June 30, 2009. This was due to decreased sales of our
products primarily in the Ningbo region.   Cost of sales also
decreased 20% from $9,880,910 for the quarter ended June 30, 2008 compared to
$7,942,007 for the quarter ended June 30, 2009. This decrease was due
to  the corresponding decrease in sales volume.   Cost
of sales, as a percentage of revenue was approximately 83% and 93% for the three
months ended June 30, 2009 and 2008, respectively. Our management will continue
to pursue strategies to reduce the overall cost of sales as a percentage of
sales as the company grows. Management will try to leverage the increased
purchasing volume to improve purchasing contracts and reduce overall cost of
sales.





General
and administrative expenses during the three months ended June 30, 2009 were
$315,314 compared to $271,730 for the three months ended June 30, 2008, an
increase of 16%.  The increase is primarily attributable to increased
headcount in the Hangzhou region. General and administrative expenses as a
percentage of revenue were 3% and 3% for the three months ended June 30, 2009
and 2008, respectively.





During the
three months ended June 30, 2009, the Company recognized net income of
$1,023,240 after accounting for the noncontrolling interest in a consolidated
subsidiary, compared to net income of $264,896 during the three months ended
June 30, 2008, a 286% increase.  The increase in net income is
attributable to an increase in gross margin for the
quarter.  Comprehensive income for the three months ended June 30,
2009 was $348,832 compared to $297,322 for three months ended June 30,
2008.  Comprehensive income or loss includes gains or losses in
foreign currency translation adjustments and unrealized gains or losses on
investment securities held.





Six
months ended June 30, 2009 compared to six months ended June 30,
2008:





Net sales
decreased 11% from $19,190,739 for the six months ended June 30, 2008 to
$16,985,874 for the six months ended June 30, 2009. This was due to decreased
sales of our products primarily in the Ningbo region.   Cost of
sales decreased 17% from $17,953,568 for the six months ended June 30, 2008 to
$14,932,862 for the six months ended June 30, 2009. This decrease was primarily
due to of the corresponding decrease in sales volume.   Cost of
sales, as a percentage of revenue was approximately 88% and 94% for the six
months ended June 30, 2009 and 2008, respectively. Management will continue to
pursue strategies to reduce the overall cost of sales as a percentage of sales
as the company grows. Management will try to leverage the increased purchasing
volume to improve purchasing contracts and reduce overall cost of
sales.





General
and administrative expenses during the six months ended June 30, 2009 were
$529,324 compared to $549,003 for the six months ended June 30, 2008, a decrease
of 4%.  The decrease is primarily attributable to decreased headcount
in the Ningbo region. General and administrative expenses as a percentage of
revenue were 3% and 3% for the six months ended June 30, 2009 and 2008,
respectively.





During the
six months ended June 30, 2009, the Company recognized net income of $1,135,072
after accounting for the noncontrolling interest in a consolidated subsidiary,
compared to net income of $362,120 during the six months ended June 30, 2008, a
213% increase.  The increase in net income is attributable to an
increase in gross margin as well as a slight decrease in general and
administrative expenses for the six month period. Comprehensive income for the
six months ended June 30, 2009 was $671,452 compared to $718,805 for six months
ended June 30, 2008.  Comprehensive income or loss includes gains or
losses in foreign currency translation adjustments and unrealized gains or
losses on investment securities held.







13




Liquidity
and Capital Resources





Our cash
balance at June 30, 2009 decreased $341,303, from $2,600,498 as of December 31,
2008, to $2,259,195. The decrease was the result of cash provided by operating
activities of $167,726, cash used in financing activities of $255,193 and the
effect of exchange rates on cash of $253,836. Operating activities for the six
months ended June 30, 2009 exclusive of changes in operating assets and
liabilities provided $1,508,881, as well as an increase in accrued expenses
$119,977, offset by an increase in accounts receivable and inventory of
$1,059,807, an increase in supplier advances of $226,767, and a decrease in
accounts payable of $174,558.





To the
extent our operations are not sufficient to fund our capital requirements, we
may enter into a revolving loan agreement with a financial institution, attempt
to raise additional capital through the sale of additional common or preferred
stock or through the issuance of additional debt.





Item 3.  Quantitative and Qualitative Disclosures About
Market Risk





We are
exposed to market risk from changes in foreign currency exchange rates,
including fluctuations in the functional currency of foreign
operations.  The functional currency of operations outside the United
States is the respective local currency.  Foreign currency translation
effects are included in accumulated comprehensive income in shareholder’s
equity.   We do not utilize derivative financial instruments to
manage foreign currency fluctuation risk.





Item
4.  Controls and Procedures





Evaluation of Disclosure
Controls and Procedures





As of June
30, 2009, we conducted an evaluation, under the supervision and participation of
management, including our Chief Executive Officer and Chief Financial Officer
(the “Certifying Officers”) to evaluate the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this report, as
required by Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
“Exchange Act”).  Based on that evaluation, the Certifying Officers
have concluded that our disclosure controls and procedures were effective at the
reasonable assurance level to timely alert management of information required to
be disclosed by the Company in reports filed under the Exchange
Act.  In designing and evaluating the disclosure controls and
procedures, management recognized that any controls system cannot provide
absolute assurance that the objectives of the controls system are met, and no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been
detected.





Changes in Internal Controls
over Financial Reporting





There were
no changes in internal controls over financial reporting that occurred during
the period covered by this report that have materially affected, or are
reasonably likely to affect, internal control over financial
reporting.





PART II – OTHER INFORMATION








Item
1.   Legal Proceedings





In the
normal course of business, we become involved in various legal
proceedings.  Although the final outcome of such proceedings cannot be
predicted, we are not currently aware of any such legal proceedings or claims
that we believe will have, individually or in the aggregate, a material adverse
effect on our business, financial condition, or results of
operations.





Item
1A.   Risk Factors





As of June
30, 2009, there have been no material changes to the risk factors disclosed in
Part I, Item 1 to our  annual report on Form 10-K for the year ended
December 31, 2008.






14




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





Set forth
below is information regarding the issuance and sale of our securities without
registration during the three month period ended June 30, 2009:





·
            In
      April 2009, the Company issued 1,660,268 shares of common stock pursuant
      to an agreement to exchange  $145,275 in debt for
      equity.


·
            In
      May 2009, the Company issued 5,768,343 shares of common stock pursuant to
      an agreement to exchange $238,400 in debt for
  equity.


·
            In
      June 2009, the Company issued 8,163,861 shares of common stock pursuant to
      an agreement to exchange $245,000 in debt for
  equity.





Each of
the above issuances was deemed to be exempt under rule 506 of Regulation D
and/or 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 our company or executive officers of our
company, and transfer was restricted by our company 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.




Item
3.  Defaults Upon Senior Securities





None





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





In March
2009, we filed a Definitive Information Statement on Schedule 14C indicating
that our Board of Directors had authorized a reverse split of the common stock
issued and outstanding on a one new share for twenty-five old shares basis.
Additionally, our Articles of Incorporation were amended to increase the number
of authorized common shares from two hundred million (200,000,000) to one
billion (1,000,000,000).  This action was effective on May 12,
2009.





Item
5.  Other Information





None





Item
6.      Exhibits




a
            (a)
            Exhibits.The
      following is a complete list of exhibits filed as part of this Form
      10-Q:





Exhibit
      31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
      of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act
      of 2002





Exhibit
      31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
      of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act
      of 2002





Exhibit
      32.1 Certification of Chief Executive Officer and Chief Financial Officer,
      pursuant to 18 U.S.C. Section 1350 as enacted by Section 906 of the
      Sarbanes-Oxley Act of 2002





(b)
            Reports on Form
      8-K.During the three-month period ended June 30,
      2009, we filed the following Current Reports on Form
  8-K:





Current
Report on Form 8-K filed on June 3, 2009 which included disclosure under Item
1.01  related to the execution by the Company of an Outsourcing
Services Agreement with Beijing Chuangzhitongda Technology Development Co.,
Ltd.






15




SIGNATURES





Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.





CHINA CRESCENT ENTERPRISES,
INC.


(Registrant)





Date:        August
19,
2009                                                                                     /s/ Paul K.
Danner


Paul K. Danner,


Chief Executive Officer








/s/  Philip J.
Rauch


Philip J. Rauch,


Chief Financial
Officer