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 September 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





The
Registrant had 124,749,303 shares of Common Stock outstanding as of November 16,
2009.










PART
      I – FINANCIAL INFORMATION
            Page No.Item 1. Unaudited Financial StatementsConsolidated Balance Sheets –September 30, 2009 and December 31,
    2008
            1Consolidated Statements of Operations
    –Three  and Nine Months Ended September 30,
      2009 and 2008
            2Consolidated Statement of Changes in Equity
      –December 31, 2008 through September 30,
      2009
            3Consolidated Statements of Cash Flows
    –Nine Months Ended September 30, 2009 and
      2008
            4Notes to Condensed Consolidated Financial
      Statements
            5Item 2.  Management’s Discussion and Analysis of
      Financial Condition and Results of Operations
            11Item 3. Quantitative and Qualitative Disclosures About
      Market Risk
            13Item 4. Controls and Procedures
            13PART
      II – OTHER INFORMATIONItem 1.  Legal Proceedings – Not
      Applicable
            14Item 2.  Unregistered Sales of Equity
      Securities and Use of Proceeds
            14Item 3.  Defaults Upon Senior Securities –
      Not
      Applicable
            14Item 4.  Submission of Matters to a Vote of
      Security Holders
            14Item 5.  Other Information – Not
      Applicable
            14Item 6.  Exhibits
            14SIGNATURES
            15











Item
1.  Unaudited Financial Statements




China Crescent Enterprises, Inc.Consolidated
      Balance SheetASSETS
              
              September
      30, 2009
              
              
              December
      31, 2008(Unaudited)CURRENT
      ASSETSCash
      and cash equivalents
              
              $
              2,347,018
              
              
              $
              2,600,498Accounts
      receivable
              
              
              6,768,180
              
              
              
              4,238,294Inventory
              
              
              2,398,446
              
              
              
              1,858,233Supplier
      advances
              
              
              1,779,766
              
              
              
              787,149Advances
      to affiliate
              
              
              1,000,000
              
              
              
              687,567Assets
      of discontinued operations
              
              
              9,337
              
              
              
              9,377Other
      current assets
              
              
              
              
              
              
              68,840Total
      current assets
              
              
              14,302,747
              
              
              
              10,249,958PROPERTY
      AND EQUIPMENT, NET
              
              
              78,565
              
              
              
              93,185INTANGIBLE
      ASSETS
              
              
              2,993
              
              
              
              2,993Total
      assets
              
              $
              14,384,305
              
              
              $
              10,346,136LIABILITIES
      AND EQUITYCURRENT
      LIABILITIESAccounts
      payable
              
              $
              1,323,081
              
              
              $
              1,573,643Short-term
      debt
              
              
              672,142
              
              
              
              1,798,542Accrued
      expenses and other liabilities
              
              
              709,953
              
              
              
              445,258Liabilities
      of discontinued operations
              
              
              308,683
              
              
              
              308,683Total
      current liabilities
              
              
              3,013,859
              
              
              
              4,126,126Long-term
      debt
              
              
              720,555
              
              
              
              151,041Total
      liabilities
              
              
              3,734,414
              
              
              
              4,277,167EQUITYCommon
      stock; $.001 par value; 1,000,000,000 shares authorized;81,638,107
      and 1,070,186 shares issued and outstandingat
      September 30, 2009 and December 31, 2008, respectively
              
              
              81,638
              
              
              
              1,070Preferred
      stock; $.001 par value; 20,000,000 shares authorized;Series
      A 250,000 and 250,000; Series B 750 and 0 shares issuedand
      outstanding at September 30, 2009 and December 31, 2008,
      respectively
              
              
              251
              
              
              
              250Additional
      paid-in capital
              
              
              5,302,592
              
              
              
              2,241,694Accumulated
      comprehensive income
              
              
              505,153
              
              
              
              820,699Retained
      earnings
              
              
              3,451,802
              
              
              
              1,392,493Total
      China Crescent Enterprises, Inc. stockholders' equity
              
              
              9,341,436
              
              
              
              4,456,206Noncontrolling
      interest
              
              
              1,308,455
              
              
              
              1,612,763Total
      equity
              
              
              10,649,891
              
              
              
              6,068,969Total
      liabilities and equity
              
              $
              14,384,305
              
              
              $
              10,346,136See
      accompanying notes to consolidated financial statements.












China Crescent Enterprises, Inc.Consolidated
      Statement of Operations(Unaudited)Three
      Months Ended
              
              
              Nine
      Months EndedSeptember
      30,
              
              
              September
      30,2009
              
              
              2008
              
              
              2009
              
              
              2008REVENUE
              
              $
              13,344,273
              
              
              $
              11,144,564
              
              
              $
              30,330,147
              
              
              $
              30,335,303COST
      OF SALES
              
              
              12,072,141
              
              
              
              10,511,971
              
              
              
              27,005,003
              
              
              
              28,465,539Gross
      Margin
              
              
              1,272,132
              
              
              
              632,593
              
              
              
              3,325,144
              
              
              
              1,869,764OPERATING
      EXPENSESSelling,
      general and administrative expenses
              
              
              285,020
              
              
              
              267,216
              
              
              
              814,344
              
              
              
              816,219Depreciation
      and amortization
              
              
              5,270
              
              
              
              5,183
              
              
              
              11,662
              
              
              
              10,986Total
      expenses
              
              
              290,290
              
              
              
              272,399
              
              
              
              826,006
              
              
              
              827,205Income
      (loss) from operations
              
              
              981,842
              
              
              
              360,194
              
              
              
              2,499,138
              
              
              
              1,042,559OTHER
      INCOME (EXPENSE)Interest
      income
              
              
              -
              
              
              
              11
              
              
              
              902
              
              
              
              479Interest
      expense
              
              
              (38,401
              )
              
              
              (77,645
              )
              
              
              (140,341
              )
              
              
              (133,174
              )Other
      income
              
              
              73,525
              
              
              
              31,542
              
              
              
              163,107
              
              
              
              133,076Other
      expense
              
              
              (1,424
              )
              
              
              (1,501
              )
              
              
              (4,775
              )
              
              
              (4,211
              )Total
      other income (expense)
              
              
              33,700
              
              
              
              (47,593
              )
              
              
              18,893
              
              
              
              (3,830
              )Net
      income before income tax (credit) andnoncontrolling
      interest
              
              
              1,015,542
              
              
              
              312,601
              
              
              
              2,518,031
              
              
              
              1,038,729Foreign
      income tax
              
              
              (13,060
              )
              
              
              (8,917
              )
              
              
              (13,060
              )
              
              
              (25,005
              )Noncontrolling
      interest in consolidated subsidiary
              
              
              (258,600
              )
              
              
              (148,805
              )
              
              
              (626,017
              )
              
              
              (496,725
              )Net
      income
              
              
              743,882
              
              
              
              154,879
              
              
              
              1,878,954
              
              
              
              516,999Other
      comprehensive income (loss)Gain
      (loss) on investment security
              
              
              (139
              )
              
              
              (2,348
              )
              
              
              (1,162
              )
              
              
              (3,742
              )Foreign
      currency translation gain (loss)
              
              
              148,213
              
              
              
              42,333
              
              
              
              (314,384
              )
              
              
              400,412Comprehensive
      income
              
              
              891,956
              
              
              
              194,864
              
              
              
              1,563,408
              
              
              
              913,669Income
      per weighted-average common share-basic
              
              $
              0.01
              
              
              $
              0.10
              
              
              $
              0.09
              
              
              $
              0.39Income
      per weighted-average common share-diluted
              
              $
              0.01
              
              
              $
              0.04
              
              
              $
              0.04
              
              
              $
              0.15Number
      of weighted average common shares o/s-basic
              
              
              49,607,610
              
              
              
              1,536,351
              
              
              
              21,200,439
              
              
              
              1,337,414Number
      of weighted average common shares o/s-diluted
              
              
              124,019,025
              
              
              
              3,840,878
              
              
              
              53,001,098
              
              
              
              3,343,536See
      accompanying notes to consolidated financial statements.







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
              
              
              
              
              
              
              78,851,921
              
              
              
              
              
              
              
              78,852
              
              
              
              2,312,615
              
              
              
              
              
              
              
              
              
              
              
              2,391,467Issuance
      of preferred shares for purchase ofadditional
      interest in subsidiary
              
              
              750
              
              
              
              
              
              
              
              1
              
              
              
              
              
              
              
              749,999
              
              
              
              
              
              
              
              180,355
              
              
              
              930,355Other
      comprehensive income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (315,546
              )
              
              
              
              
              
              
              (315,546
              )Net
      income
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,878,954
              
              
              
              1,878,954ENDING BALANCE,September 30, 2009
              
              
              250,750
              
              
              
              81,638,107
              
              
              $
              251
              
              
              $
              81,638
              
              
              $
              5,302,592
              
              
              $
              505,153
              
              
              $
              3,451,802
              
              
              $
              9,341,436See
      accompanying notes to consolidated financial statements.









China Crescent Enterprises, Inc.Consolidated
      Statement of Cash Flows(Unaudited)Nine
      Months EndedSeptember
      30,2009
            
            
            2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income
            
            $
            1,878,954
            
            
            $
            516,999Adjustments
      to  reconcile net earnings to net cashprovided
      (used) by operating activities:Noncontrolling
      interest in consolidated subsidiary
            
            
            626,017
            
            
            
            496,725Depreciation
            
            
            11,662
            
            
            
            10,986Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
            
            
            (2,529,886
            )
            
            
            (1,665,245
            )(Increase)
      decrease in supplier advances and other assets
            
            
            (981,122
            )
            
            
            (856,877
            )(Increase)
      decrease in inventory
            
            
            (538,213
            )
            
            
            (312,478
            )Increase
      (decrease) in accounts payable
            
            
            (243,675
            )
            
            
            (302,049
            )Increase
      (decrease) in accrued expenses and other payables
            
            
            271,184
            
            
            
            540,486Net
      cash used by operating activities
            
            
            (1,505,079
            )
            
            
            (1,571,453
            )CASH
      FLOWS FROM INVESTING ACTIVITIES:Sale
      of property and equipment
            
            
            10,116
            
            
            
            -Net
      cash provided by investing activities
            
            
            10,116
            
            
            
            -CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from short-term debt
            
            
            262,897
            
            
            
            688,176Proceeds
      from long-term debt
            
            
            585,122
            
            
            
            148,101Advances
      to affiliates
            
            
            (272,433
            )
            
            
            -Net
      cash provided by financing activities
            
            
            575,586
            
            
            
            836,277Effect
      of exchange rates on cash
            
            
            665,897
            
            
            
            205,837Net
      decrease in cash and equivalents
            
            
            (253,480
            )
            
            
            (529,339
            )CASH, beginning of
      period
            
            
            2,600,498
            
            
            
            1,488,774CASH, end of
      period
            
            $
            2,347,018
            
            
            $
            959,435SUPPLEMENTAL
      DISCLOSURE OF CASH FLOW INFORMATION:Non-Cash
      Financing Activities:Common
      stock issued to settle debt
            
            $
            1,398,328
            
            
            $
            621,500See
      accompanying notes to consolidated financial statements.












CHINA CRESCENT ENTERPRISES, INC. AND SUBSIDIARIES


Notes
to Condensed Consolidated Financial Statements (Unaudited)


September
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 financials 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.











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.





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
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. 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 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 June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets, an Amendment of FASB Statement No. 140” (“SFAS No.
166”).  SFAS No. 166 eliminates the concept of a “qualifying
special-purpose entity,” changes the requirements for derecognizing financial
assets, and requires additional disclosures about transfers of financial
assets.  SFAS No. 166 is effective for annual reporting periods after
November 15 2009.  The adoption of the provisions of SFAS No. 166 is
not anticipated to have a material impact on the Company’s consolidated
financial statements.





In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R)” (“SFAS No. 167”). SFAS No. 167, among other things, requires a
qualitative rather than a quantitative analysis to determine the primary
beneficiary of a variable interest entity (“VIE”), amends FIN 46(R)’s
consideration of related party relationships in the determination of the primary
beneficiary of a VIE, requires continuous assessment of whether an enterprise is
the primary beneficiary of a VIE, and requires enhanced disclosures about an
enterprise’s involvement with a VIE.  SFAS No. 167 is effective for
annual reporting periods after November 15 2009.  The adoption of the
provisions of SFAS No. 167 is not anticipated to have a material impact
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
adoption of the provisions of SFAS No. 168 is not anticipated to have a material
impact on the Company’s 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.


·
            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
September 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 September 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.





4.
INVESTMENT IN VYTA CORP.:





At
September 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 had
previosuly 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).  On May 15, 2009, the management of Vyta announced that the
company had ceased operations.  As a result, the remaining value of
the investment ($139 as of June 30, 2009) has been written off as of September
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 81,638,107 shares of common stock issued and
outstanding at September 30, 2009.





During the
third quarter of 2009, the Company issued 61,607,867 shares of common stock as
follows:










·
            In
      July 2009, the Company issued 18,192,312 shares of common stock pursuant
      to an agreement to exchange  $363,847 in short-term debt for
      equity.


·
            In
      August 2009, the Company issued 25,716,333 shares of common stock pursuant
      to an agreement to exchange $592,000 in short-term debt for
      equity.


·
            In
      September 2009, the Company issued 17,699,222 shares of common stock
      pursuant to an agreement to exchange $442,481 in short-term 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 September 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
September 30, 2009:




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
September 30, 2009.





Warrants





At
September 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.  The proposed Series C Preferred
Shares will be a non-convertible preferred stock which will represent a
controlling interest in the Company.  The proposed Series D Preferred
Shares will be designated for conversion into common stock to be used as a stock
dividend distribution to NewMarket Technology, Inc. shareholders. This share
exchange will be completed in the fourth quarter of 2009.











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 the Investor Relations page
of 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 September 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.











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 September 30, 2009 compared to three months ended September 30,
2008:





Net sales
increased 20% from $11,144,564 for the quarter ended September 30, 2008 to
$13,344,273 for the quarter ended September 30, 2009.  A 13% decrease
in sales of products through our Clipper-Huali subsidiary in the Ningbo region
was offset by revenue generated through a new outsourcing services agreement
executed last quarter in Shanghai.   Cost of sales also increased
15% from $10,511,971 for the quarter ended September 30, 2008 to $12,072,141 for
the quarter ended September 30, 2009. This increase was due to of the
corresponding increase in sales volume.   Cost of sales, as a
percentage of revenue was approximately 90% and 94% for the three months ended
September 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 September 30, 2009
were $285,020 compared to $267,216 for the three months ended September 30,
2008, an increase of 7%.  The increase is primarily attributable to
increased headcount in the Shanghai region to accommodate the new outsourcing
arrangement with Beijing Chuangzhitongda. General and administrative expenses as
a percentage of revenue were 2% and 2% for the three months ended September 30,
2009 and 2008, respectively.





During the
three months ended September 30, 2009, the Company recognized net income of
$743,882 after accounting for the noncontrolling interest in our Clipper-Huali
consolidated subsidiary, compared to net income of $154,879 during the three
months ended September 30, 2008, a 380% increase.  The increase in net
income is attributable to an increase in gross margin for the quarter and the
purchase of an additional 25% interest in the Clipper-Huali subsidiary from our
minority interest holder.  Comprehensive income for the three months
ended September 30, 2009 was $891,956 compared to $194,864 for three months
ended September 30, 2008.  Comprehensive income or loss includes gains
or losses in foreign currency translation adjustments and unrealized gains or
losses on investment securities held.





Nine
months ended September 30, 2009 compared to nine months ended September 30,
2008:





Net sales
decreased slightly from $30,335,303 for the nine months ended September 30, 2008
to $30,330,147 for the nine months ended September 30, 2009. A decrease in sales
of products through our Clipper-Huali subsidiary in the Ningbo region was offset
by revenue generated through the afore-mentioned outsourcing services agreement
executed last quarter in Shanghai.   Cost of sales decreased 5%
from $28,465,539 for the nine months ended September 30, 2008 to $27,005,003 for
the nine months ended September 30, 2009. This decrease was primarily due to the
effect of higher gross margin revenue from the Outsourcing Services
Agreement.   Cost of sales, as a percentage of revenue was
approximately 89% and 94% for the nine months ended September 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 nine months ended September 30, 2009 were
$814,344 compared to $816,219 for the nine months ended September 30, 2008, a
decrease of .2%.  The decrease is primarily attributable to decreased
headcount in the Ningbo region, which was offset by a small increase in
headcount in Shanghai during the third quarter. General and administrative
expenses as a percentage of revenue were 3% and 3% for the nine months ended
September 30, 2009 and 2008, respectively.











During the
nine months ended September 30, 2009, the Company recognized net income of
$1,878,954 after accounting for the noncontrolling interest in a consolidated
subsidiary, compared to net income of $516,999 during the nine months ended
September 30, 2008, a 263% increase.  The increase in net income is
attributable to an increase in gross margin during the third quarter and the
purchase of an additional 25% interest in the Clipper-Huali subsidiary from our
minority interest holder in the second quarter of 2009. Comprehensive income for
the nine months ended September 30, 2009 was $1,563,408 compared to $913,669 for
nine months ended September 30, 2008.  Comprehensive income or loss
includes gains or losses in foreign currency translation adjustments and
unrealized gains or losses on investment securities held.








Liquidity
and Capital Resources





Our cash
balance at September 30, 2009 decreased $253,480, from $2,600,498 as of December
31, 2008, to $2,347,018. The decrease was the result of cash used in operating
activities of $1,505,079, offset by cash provided by investing activities of
$10,226, cash provided by financing activities of $575,586  and the
effect of exchange rates on cash of $665,897. Operating activities for the nine
months ended September 30, 2009 exclusive of changes in operating assets and
liabilities provided $2,516,633, as well as an increase in accrued
expenses  and other payables of $271,184, offset by an increase in
accounts receivable and inventory of $3,068,099, an increase in supplier
advances of $981,122, and a decrease in accounts payable of
$243,675.





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
September 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
September 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.





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 September 30,
2009:





·
            In
      July 2009, the Company issued 18,192,312 shares of common stock pursuant
      to an agreement to exchange $363,847 in short-term debt for
      equity.


·
            In
      August 2009, the Company issued 25,716,333 shares of common stock pursuant
      to an agreement to exchange $592,000 in short-term debt for
      equity.


·
            In
      September 2009, the Company issued 17,699,222 shares of common stock
      pursuant to an agreement to exchange $442,481 in short-term 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





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, 2009, we filed the following Current Reports on Form
    8-K:  
  Current
      Report on Form 8-K filed on August 19, 2009 which included disclosure
      under Item 4.01  related to the acceptance by the Audit
      Committee of the Board of Directors of the Company of the resignation of
      the Pollard-Kelley Auditing Services, Inc., the Company’s independent
      auditors and the appointment effective August 3, 2009, of Hamilton, PC as
      the Company’s new independent registered
  auditor.





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
      19, 2009
            /s/ Paul K. DannerPaul
      K. Danner,Chief
      Executive Officer/s/  Philip J.
    RauchPhilip
      J. Rauch,Chief
      Financial Officer