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 1934For
      the quarterly period ended September 30,
  2008OR[  ]
            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)
      722-3040Issuer’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




The
Registrant had 51,514,662 shares of Common Stock outstanding as of November 14,
2008.









Page
      No.PART I –
      FINANCIAL INFORMATIONItem
      1.
            Unaudited Financial StatementsCondensed Consolidated Balance Sheets – September 30, 2008
      andDecember 31, 2007
            1Condensed Consolidated Statements of Operations
      -Three and Nine Months Ended September 30, 2008 and
      2007
            2Condensed Consolidated Statements of Cash Flows
      –Nine Months ended September 30, 2008 and
      2007
            3Notes to Condensed Consolidated Financial
      Statements
            4Item
      2.
            Management’s Discussion and Analysis of Financial
      Condition
              and Results of Operations
            10Item
      3.
            Quantitative and Qualitative Disclosures About Market
      Risk
            12Item
      4.
            Controls and Procedures
            12PART II –
      OTHER INFORMATIONItem
      1.
            Legal Proceedings
            12Item 1A.
            Risk Factors
            12Item 2.
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            12Item 3.
            Defaults Upon Senior
      Securities
            13Item 4.
            Submission of Matters to a Vote of Security
      Holders
            13Item
      5.
            Other
      Information
            13Item 6.
            Exhibits
            13SIGNATURES
            14













China Crescent Enterprises, Inc.Consolidated
      Balance SheetASSETS
              
              September
      30, 2008
              
              
              December
      31, 2007CURRENT
      ASSETS
              
              (Unaudited)Cash
      and cash equivalents
              
              $
              959,435
              
              
              $
              1,488,774Accounts
      receivable
              
              
              5,289,060
              
              
              
              3,674,523Inventory
              
              
              2,028,215
              
              
              
              1,582,734Supplier
      advances and prepaid expenses
              
              
              776,102
              
              
              
              305,723Advances
      to affiliate
              
              
              483,497
              
              
              
              -Assets
      of discontinued operations
              
              
              9,377
              
              
              
              9,377Other
      current assets
              
              
              1,604
              
              
              
              49,804Total
      current assets
              
              
              9,547,290
              
              
              
              7,110,935PROPERTY
      AND EQUIPMENT, NET
              
              
              98,297
              
              
              
              95,171INTANGIBLE
      ASSETS
              
              
              3,380
              
              
              
              3,167Total
      assets
              
              $
              9,648,967
              
              
              $
              7,209,273LIABILITIES,
      STOCKHOLDERS' EQUITY AND MINORITY INTERESTCURRENT
      LIABILITIESAccounts
      payable
              
              $
              1,789,359
              
              
              $
              2,057,733Short-term
      borrowing
              
              
              1,034,478
              
              
              
              584,046Accrued
      expenses and other liabilities
              
              
              774,206
              
              
              
              365,468Advances
      from affiliate
              
              
              -
              
              
              
              334,124Liabilities
      of discontinued operations
              
              
              308,683
              
              
              
              308,683Total
      current liabilities
              
              
              3,906,726
              
              
              
              3,650,054Long-term
      debt
              
              
              151,128
              
              
              
              0Total
      liabilities
              
              
              4,057,854
              
              
              
              3,650,054Minority
      interest in subsidiaries
              
              
              1,496,169
              
              
              
              999,444STOCKHOLDERS'
      EQUITYCommon
      stock; $.001 par value; 200,000,000 shares authorized;46,814,662
      and 26,754,662 shares issued and outstandingat
      September 30, 2008 and December 31, 2007, respectively
              
              
              46,814
              
              
              
              26,754Preferred
      stock; $.001 par value; 20,000,000 shares authorized;250,000
      shares Series A issued and outstandingat
      September 30, 2008 and December 31, 2007, respectively
              
              
              250
              
              
              
              250Additional
      paid-in capital
              
              
              2,052,950
              
              
              
              1,451,510Accumulated
      comprehensive income
              
              
              723,757
              
              
              
              327,087Retained
      earnings
              
              
              1,271,173
              
              
              
              754,174Total
      stockholders' equity
              
              
              4,094,944
              
              
              
              2,559,775Total
      liabilities and stockholders' equity
              
              $
              9,648,967
              
              
              $
              7,209,273See
      accompanying notes to consolidated financial
  statements.





1




China Crescent Enterprises, Inc.Consolidated
      Statement of Operations(Unaudited)Three
      Months Ended
              
              
              Nine
      Months EndedSeptember
      30,
              
              
              September
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007REVENUE
              
              $
              11,144,564
              
              
              $
              10,651,864
              
              
              $
              30,335,303
              
              
              $
              27,921,698COST
      OF SALES
              
              
              10,511,971
              
              
              
              10,125,811
              
              
              
              28,465,539
              
              
              
              26,914,481Gross
      Margin
              
              
              632,593
              
              
              
              526,053
              
              
              
              1,869,764
              
              
              
              1,007,217OPERATING
      EXPENSESSelling,
      general and administrative expenses
              
              
              267,216
              
              
              
              380,819
              
              
              
              816,219
              
              
              
              795,279Depreciation
      and amortization
              
              
              5,183
              
              
              
              7,338
              
              
              
              10,986
              
              
              
              64,604Total
      expenses
              
              
              272,399
              
              
              
              388,157
              
              
              
              827,205
              
              
              
              859,883Income
      from operations
              
              
              360,194
              
              
              
              137,896
              
              
              
              1,042,559
              
              
              
              147,334OTHER
      INCOME (EXPENSE)Interest
      income
              
              
              11
              
              
              
              -
              
              
              
              479
              
              
              
              8Interest
      expense
              
              
              (77,645
              )
              
              
              (13,452
              )
              
              
              (133,174
              )
              
              
              (51,061
              )Other
      income
              
              
              31,542
              
              
              
              (19,361
              )
              
              
              133,076
              
              
              
              27,718Other
      expense
              
              
              (1,501
              )
              
              
              (1,289
              )
              
              
              (4,211
              )
              
              
              (6,769
              )Total
      other income (expense)
              
              
              (47,593
              )
              
              
              (34,102
              )
              
              
              (3,830
              )
              
              
              (30,104
              )Net
      income before income tax (credit) andminority
      interest
              
              
              312,601
              
              
              
              103,794
              
              
              
              1,038,729
              
              
              
              117,230Foreign
      income tax
              
              
              (8,917
              )
              
              
              (11,316
              )
              
              
              (25,005
              )
              
              
              (46,630
              )Minority
      interest in consolidated subsidiary
              
              
              (148,805
              )
              
              
              (34,590
              )
              
              
              (496,725
              )
              
              
              (34,590
              )Net
      income
              
              
              154,879
              
              
              
              57,888
              
              
              
              516,999
              
              
              
              36,010Other
      comprehensive income (loss)(Loss)
      on investment security
              
              
              (2,348
              )
              
              
              
              
              
              
              (3,742
              )Foreign
      currency translation gain (loss)
              
              
              42,333
              
              
              
              (468,966
              )
              
              
              400,412
              
              
              
              492,050Comprehensive
      income
              
              $
              194,864
              
              
              $
              (411,078
              )
              
              $
              913,669
              
              
              $
              528,060Income
      per weighted-average common share-basic
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.02
              
              
              $
              0.00Income
      per weighted-average common share-diluted
              
              $
              0.00
              
              
              $
              0.00
              
              
              $
              0.01
              
              
              $
              0.00Number
      of weighted average common shares o/s-basic
              
              
              38,408,779
              
              
              
              26,215,223
              
              
              
              33,435,358
              
              
              
              26,108,558Number
      of weighted average common shares o/s-diluted
              
              
              96,021,948
              
              
              
              65,538,058
              
              
              
              83,588,395
              
              
              
              65,271,395See
      accompanying notes to consolidated financial
  statements.








2





China Crescent Enterprises, Inc.Consolidated
      Statement of Cash FlowsNine
      months ended September 30,(Unaudited)2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income
              
              $
              516,999
              
              
              $
              36,010Adjustments
      to  reconcile net earnings to net cashprovided
      (used) by operating activities:Minority
      interest in consolidated subsidiary
              
              
              496,725
              
              
              
              34,590Depreciation
              
              
              10,986
              
              
              
              64,604Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
              
              
              (1,665,245
              )
              
              
              (2,496,584
              )(Increase)
      decrease in deposits and other assets
              
              
              (856,877
              )
              
              
              (288,076
              )(Increase)
      decrease in inventory
              
              
              (312,478
              )
              
              
              (543,696
              )Increase
      (decrease) in accounts payable
              
              
              (302,049
              )
              
              
              128,682Increase
      (decrease) in accrued expenses and other payables
              
              
              540,486
              
              
              
              3,274,826Net
      cash provided/(used) by operating activities
              
              
              (1,571,453
              )
              
              
              210,356CASH
      FLOWS FROM INVESTING ACTIVITIES:Sale
      of property and equipment
              
              
              -
              
              
              
              845Net
      cash provided by investing activities
              
              
              -
              
              
              
              845CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from short-term borrowings
              
              
              688,176
              
              
              
              -Proceeds
      from long-term debt
              
              
              148,101
              
              
              
              -Payments
      on short-term borrowings
              
              
              -
              
              
              
              (917,422
              )Net
      cash provided/(used) by financing activities
              
              
              836,277
              
              
              
              (917,422
              )Effect
      of exchange rates on cash
              
              
              205,837
              
              
              
              285,181Net
      decrease in cash and equivalents
              
              
              (529,339
              )
              
              
              (421,040
              )CASH, beginning of
      period
              
              
              1,488,774
              
              
              
              1,168,344CASH, end of
      period
              
              $
              959,435
              
              
              $
              747,304SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATIONNon-Cash
      Financing Activities:Common
      stock issued to settle debt
              
              $
              621,500
              
              
              $
              -See
      accompanying notes to consolidated financial
  statements.





3




CHINA CRESCENT ENTERPRISES, INC. AND SUBSIDIARIES


Notes to
Condensed Consolidated Financial Statements (Unaudited)


September
30, 2008








1.  BASIS OF
PRESENTATION, BUSINESS 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 (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 the Company’s Annual Report on Form 10-KSB.  Operating
results for interim periods presented are not necessarily indicative or the
results that may be expected for the year ending December 31, 2008.




BASIS
OF PRESENTATION





The
Company prepares its financials statements on 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 Company’s wholly-owned subsidiary
Brunetti DEC, LLC, (“Brunetti”) a Colorado limited liability company and the
Company’s Chinese wholly-owned foreign entity, Clipper Technology, Inc.
(“CLPTEC”).





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.





FAIR
VALUE OF FINANCIAL INSTRUMENTS





The fair
values of the Company’s cash and cash equivalents, accounts receivable, accounts
payable, and lines of credit approximate their carrying amounts due to the short
maturities of these instruments.




4





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 ($1,604
at September 30, 2008) 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)





The
principal operations of the Company are located in China. The Company invoices
in RMB, the local currency, and if the Company payment is denominated in a
foreign currency, the Company translates the payment and 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
a  stock  option  plans which permit the grant of
shares to
attract,  retain  and  motivate  employees,  directors  and
consultants.  Options are generally granted with an exercise price
equal to the Company's market price of its common stock 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  September 30, 2008,
and all options granted prior to the
adoption  of  SFAS  123(R)  and  outstanding  during  the  periods  presented
were fully vested.




5





INCOME
(LOSS) PER SHARE





SFAS 128,
“Earnings Per Share”, requires dual presentation of basic and diluted earnings
per share (“EPS”) with a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted EPS
computation.  Basic EPS excludes dilution.  Diluted EPS
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
(loss) per share of common stock is computed based on the weighted average
number of common shares outstanding during the year.  Stock options
and warrants are not considered in the calculation at September 30, 2008, as the
impact of the potential common shares would be to decrease income (loss) per
share. Therefore, diluted income (loss) per share is equivalent to basic income
(loss) per share.





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 the Company’s 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
September 2006, the Financial Accounting Standards Board (“FASB”) issued SFAS
157, “Fair Value Measurements” (“SFAS 157”).  This statement defines
fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value
measurements.  This statement applies under other accounting
pronouncements that require or permit fair value measurements.  SFAS
157 was effective for the Company for its fiscal year beginning on January 1,
2008.  For assets and liabilities that are measured at fair value on a
recurring basis, SFAS 157 requires disclosure of information that enables users
of financial statements to assess the inputs used to determine fair value based
on an established hierarchy.





In
February 2007, FASB issued SFAS 159, “The Fair Value Option for Financial Assets
and Financial Liabilities-Including an Amendment of SFAS 115” (“SFAS
159”).  SFAS 159 permits entities to choose to measure eligible items
at fair value at specified election dates and report unrealized gains and losses
on items for which the fair value option has been elected in earnings at each
subsequent reporting date.  SFAS 159 was effective for the Company on
January 1, 2008.  However, the Company has not elected to apply the
provisions of SFAS 159 to any of its financial assets and financial liabilities
as permitted by the Statement.





In
December 2007, FASB issued SFAS 141(R), “Business Combinations” (“SFAS 141(R)”)
which replaces SFAS 141, “Business Combinations”, and requires the acquirer of a
business to recognize and measure the identifiable assets acquired, the
liabilities assumed, and any non-controlling interest in the acquired entity at
fair value.  SFAS 141(R) also requires transaction costs related to
the business combination to be expensed at incurred.  SFAS 141(R) is
effective for business combinations for which the acquisition date is on or
after fiscal years beginning December 15, 2008.  Management does not
believe that the adoption of SFAS 141(R) will have a material impact on the
Company’s financial position or results of operations.





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
(NCI) 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 will adopt this standard in fiscal 2009. The
Company does not believe that this recent accounting pronouncement will have a
material impact on its financial position or results of operations.




6





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 Company believes that the future requirements of SFAS 161
will not have a material effect on its consolidated financial
statements.





In
May 2008, FASB issued SFAS 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”) which provides a consistent framework for
determining what accounting principles should be used when preparing financial
statements under generally accepted accounting principles in the U.S.  SFAS
162 is effective 60 days following the SEC’s approval of the Public Company
Accounting Oversight Board (“PCAOB”) amendments to AU Section 411, “The
Meaning of Present Fairly in Conformity With Generally Accepted Accounting
Principles.”  The adoption of SFAS 162 is not expected to have an impact on
the Company’s results of operations or financial condition.





2.
REORGANIZATION:





In October
2006, Intercell International Corporation (“Intercell”) executed an Agreement
and Plan of Reorganization (“the Agreement”) with NewMarket China, Inc., a
wholly-owned subsidiary of NewMarket Technology, Inc. (“NewMarket
Technology”).  The Agreement, provided for Intercell to acquire from
NewMarket Technology its 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, Inc. 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 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 the issued and
outstanding common stock of the Company, any time after August 31, 2007. The
shares have a voting right equal to 60% of the issued and outstanding common
stock of the Company.





As a
result of this reorganization, the Company’s stockholders’ equity (deficit) has
been adjusted to reflect the effect of this transaction.





In June
2008, the Company’s name was changed 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.




7





At
September 30, 2008, 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 September 30,
2008.  Operations related to Brunetti resulted in a net loss during
the year ended December 31, 2007 and 2006 of $0 and $0,
respectively.  Brunetti did not incur any income taxes during these
periods.





4. INVESTMENT IN VYTA
CORP.:





At
September 30, 2008, 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 its 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
September 30, 2008, 23,245 shares of Vyta were available for sale and had a fair
market value of $1,604 based on a closing price of $0.069 per
share.  The Company did not sell any available for sale securities
during the three months ended September 30, 2008.





5.  STOCKHOLDERS’
EQUITY:





The
following is a schedule of changes in shareholders’ equity for the nine months
ended September 30, 2008:





Number
      of Shares
            
            
            Par
      Value of Stock
            
            
            Additional
              Paid-In
            
            
            Accum
              Comp.
            
            
            Retained
            
            
            Total
              Stockholders’Pfd
            
            
            Common
            
            
            Pfd
            
            
            Common
            
            
            Capital
            
            
            Income
            
            
            Earnings
            
            
            EquityBALANCE,December 31,
      2007
            
            
            250,000
            
            
            
            26,754,662
            
            
            $
            250
            
            
            $
            26,754
            
            
            $
            1,451,510
            
            
            $
            327,087
            
            
            $
            754,174
            
            
            $
            2,559,775Common
      stock issued for exchange of debt
            
            
            0
            
            
            
            20,060,000
            
            
            
            0
            
            
            
            20,060
            
            
            
            601,440
            
            
            
            0
            
            
            
            0
            
            
            
            621,500Other
      comprehensive income (loss)
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            396,670
            
            
            
            0
            
            
            
            396,670Net
      income
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            0
            
            
            
            516,999
            
            
            
            516,999ENDING BALANCE,September 30, 2008 (Unaudited)
            
            
            250,000
            
            
            
            46,814,662
            
            
            $
            250
            
            
            $
            46,814
            
            
            $
            2,052,950
            
            
            $
            723,757
            
            
            $
            1,271,173
            
            
            $
            4,094,944





6.  STOCK OPTIONS
AND WARRANTS:








STOCK
OPTIONS





The
Company had 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.




8





The
following table summarizes information about stock options outstanding as of
September 30, 2008:




Options
      Outstanding
            
            Options
      ExercisableRange
      of
              Exercise
      Prices
            
            
            Number
      of
              Options
            
            Remaining
              Contractual
      Life
            
            Weighted
              Average
              Exercise
      Price
            
            
            Number
      of
              Options
            
            
            Exercise
      Price$
            0.14-0.51
            
            
            
            4,750,000
            
            5-6
      years
            
            $
            0.43
            
            
            
            4,750,000
            
            
            $
            0.14-0.51





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
September 30, 2008.





WARRANTS





At
September 30, 2008, the following warrants to purchase common stock were
outstanding:





Number
      of common
              shares
      covered
              by
      warrants
            
            
            Exercise
      Price
            
            Expiration
      Date3,222,734
            
            
            $
            0.10
            
            October  2008700,000
            
            
            $
            0.25
            
            February  20094,832,734




During the
three month period ended September 30, 2008, 910,000 warrants
expired.





9




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





Cautionary
Note Regarding Forward-Looking Statements





Certain
statements contained in this Form 10-Q contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995 and
involve risks and uncertainties that could cause actual results to differ
materially from the results, financial or otherwise, or other expectations
described in such forward-looking statements.  Any forward-looking
statement or statements speak only as of the date on which such statements were
made, and the Company undertakes no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statements are made or reflect the occurrence of unanticipated
events.  Therefore, forward-looking statements should not be relied
upon as prediction of actual future results.   For further
information, refer to the Company’s annual report on Form 10-KSB for the year
ended December 31, 2007, as filed with the Securities and Exchange
Commission.




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. 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 the Annual Report on our Form
10-KSB for the year ended December 31, 2007, as filed with the Securities and
Exchange Commission.  There have been no material changes to these
critical accounting policies as of September 30, 2008.




Results
of Operations





On March
16, 2005, the Company 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, the Company acquired a controlling 60% equity interest in Brunetti for
a $700,000 cash contribution to Brunetti. On January 30, 2004, the Company
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, the Company began
to account for the operations of Brunetti as discontinued
operations.





In October
2006, the Company 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, the Company changed its name to China Crescent Enterprises,
Inc.  In July 2008, Paul K. Danner was appointed President and Chief
Executive Officer of the Company.





Three
months ended September 30, 2008 compared to three months ended September 30,
2007:





Net sales
increased 5% from $10,651,864 for the quarter ended September 30, 2007 to
$11,144,564 for the quarter ended September 30, 2008. This was due to increased
sales of computer hardware in the Hangzhou region.   Cost of
sales increased 4% from $10,125,811 for the quarter ended September 30, 2007 to
$10,511,971 for the quarter ended September 30, 2008. This increase was
primarily due to of the corresponding increase in sales
volume.   Cost of sales, as a percentage of sales was
approximately 94% and 95% for the three months ended September 30, 2008 and
2007, respectively. Management plans to continue to pursue strategies to reduce
the overall cost of sales as a percentage of sales as the company grows.
Management will leverage the increased purchasing volume to improve purchasing
contracts and reduce overall cost of sales.




10





General
and administrative expenses during the three months ended September 30, 2008
were $267,216, compared to $380,819 for the three months ended September 30,
2007, a decrease of 30%.  The decrease is primarily attributable to
decreased administrative headcount in the Shanghai region.





During the
three months ended September 30, 2008, the Company recognized net income of
$154,879 after accounting for the minority interest in a consolidated
subsidiary, compared to net income of $57,888 during the three months ended
September 30, 2007, a 168% increase.  The increase in net income is
attributable to an increase in overall sales as well as a decrease in general
and administrative expenses for the quarter.  Comprehensive income for
the three months ended September 30, 2008 was $194,864 compared to a
comprehensive loss of $411,078 for three months ended September 30,
2007.  Comprehensive income or loss includes foreign currency
translation adjustments and gains or losses on investment securities
held.





Nine
months ended September 30, 2008 compared to nine months ended September 30,
2007:





Net sales
increased 9% from $27,921,698 for the nine months ended September 30, 2007 to
$30,335,303 for the nine months ended September 30, 2008. This increase was
primarily due to the expansion of the Company’s Clipper/Huali subsidiary into
the Hangzhou region of China and an increase in computer hardware sales in the
Ningbo region.  For the nine months ended September 30, 2008, product
sales and IT consulting services represented 93% and 7% of revenue,
respectively. Cost of sales increased 6% from $26,914,481 for the nine months
ended September 30, 2007 to $28,465,539 for the nine months ended September 30,
2008. This increase was primarily due to the corresponding increase in overall
sales.   Cost of sales, as a percentage of sales was
approximately 94% and 96% for the nine months ended September 30, 2008 and 2007,
respectively.  The improvement in gross margin was primarily due to
improved vendor pricing as a result of increased sales volume. Management plans
to continue to pursue strategies to reduce the overall cost of sales as a
percentage of sales as the company grows. Management will leverage the increased
purchasing volume to improve purchasing contracts and reduce overall cost of
sales.





General
and administrative expenses during the nine months ended September 30, 2008 were
$816,219, compared to $795,279 for the nine months ended September 30, 2007, an
increase of 3%.  The increase is primarily attributable to increased
administrative and engineering headcount required due to the aforementioned
sales expansion in the Hangzhou region, offset by reduced headcount in the
Shanghai region.





During the
nine months ended September 30, 2008, the Company recognized net income of
$516,999 after accounting for the minority interest in a consolidated
subsidiary, compared to net income of $36,010 during the nine months ended
September 30, 2007, a 1336% increase.  The increase in net income is
attributable to an increase in overall sales as well as a small increase in
gross margin as a percentage of sales.  Comprehensive income for the
nine months ended September 30, 2008 was $913,699 compared to comprehensive
income of $528,060 for nine months ended September 30,
2007.  Comprehensive income or loss includes foreign currency
translation adjustments and gains or losses on investment securities
held.





Liquidity
and Capital Resources





The
Company's cash balance at September 30, 2008 decreased $529,339, from $1,488,774
as of December 31, 2007, to $959,435.  The decrease was the result of
cash used in operating activities of $1,571,453, offset by cash provided by
financing activities of $836,277 and the effect of exchange rates on cash of
$205,837 .  Operating activities for the nine months ended September
30, 2008 exclusive of changes in operating assets and liabilities provided
$1,024,710, as well as an increase in accrued expenses $540,486, offset by an
increase in inventory of $312,478, an increase in accounts receivable and other
assets of $2,522,122 and a decrease in accounts payable of
$302,049.





As of
September 30, 2008, the Company owns 23,245 shares of common stock of Vyta Corp
(“Vyta”). The Company has classified its investment in Vyta as available for
sale securities in which unrealized gains (losses) are recorded to shareholders’
equity.  At September 30, 2008, all 23,245 shares of Vyta Corp common
stock are tradable, and based upon the closing price of $0.069 per share, the
market value of the Vyta common shares at September 30, 2008, was
$1,604.





To the
extent the Company's operations are not sufficient to fund the Company's capital
requirements, the Company 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 debt, or sell
shares of Vyta Corp. common stock held as an investment by the
Company.




11





Item 3.   Quantitative and Qualitative Disclosures
About Market Risk





The
Company is 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.   The Company does not utilize derivative financial
instruments to manage foreign currency fluctuation risk.





Item 4.   Controls and Procedures





Evaluation of Disclosure
Controls and Procedures





As of
September 30, 2008, the Company conducted an evaluation, under the supervision
and participation of management, including the Company’s Chief Executive Officer
and Chief Financial Officer (the “Certifying Officers”) to evaluate the
effectiveness of the Company’s 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 the Company 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, the Company becomes involved in various legal
proceedings.  Although the final outcome of such proceedings cannot be
predicted, the Company is not currently aware of any such legal proceedings or
claims that it believes will have, individually or in the aggregate, a material
adverse effect on the Company’s business, financial condition, or results of
operations.





Item 1A.  Risk Factors





As of
September 30, 2008, there have been no material changes to the risk factors
disclosed in Part I, Item 1 to the Company’s annual report on Form 10-KSB for
the year ended December 31, 2007.





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





Set forth
below is information regarding the issuance and sale of the Company’s securities
without registration during the three month period ended September 30,
2008:





●
            In
      September, 2008, the Company issued 9,550,000 shares of common stock
      pursuant to an agreement to exchange $191,000 of 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.




12




Item 3.  Defaults Upon Senior
Securities





None





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





None





Item 5.  Other Information





None





Item 6.  Exhibits




(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
2002Exhibit
      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
2002Exhibit
      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
      September 30, 2008, the Company filed the following Current Reports on
      Form 8-K:Current Report on
      Form 8-K filed on August 20, 2008 which included disclosure under Item
      5.02 related to the appointment of Paul K. Danner as President and Chief
      Executive Officer of the Company, effective July 1,
  2008.Current Report on
      Form 8-K filed on August 28, 2008 which included disclosure under Items
      5.03 and 8.01 related to the change in the Company’s name from NewMarket
      China, Inc. to China Crescent Enterprises, Inc. effective June 2, 2008 and
      the adoption on August 1, 2008 by the Company’s Board of Directors of a
      Stock Option and Award Plan.







13


.


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: November 14,
      2008
            /s/
      Paul K. DannerPaul K.
      Danner,Chief Executive
      Officer/s/  Philip
      J. RauchPhilip J.
      Rauch,Chief Financial
      Officer








14