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 June 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) 722-3040


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 [    ]
            
            Smaller Reporting Company
      [ü]





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


Yes o     No
þ














PART
      I – FINANCIAL INFORMATION
              Page No.Item
      1.
              Unaudited
      Financial StatementsCondensed Consolidated Balance Sheets – June 30, 2008
      andDecember 31, 2007
              1Condensed Consolidated Statements of Operations
      -Three and Six Months Ended June 30, 2008 and
      2007
              2Condensed Consolidated Statements of Cash Flows
      –Six Months ended June 30, 2008 and
    2007
              3Notes to Condensed Consolidated Financial
      Statements
              4Item 2.
              Management’s Discussion and Analysis of Financial
      Conditionand Results of Operations
              10Item 3.
              Quantitative and Qualitative Disclosures About Market Risk–
      Not
      Applicable
              11Item 4.
              Controls and Procedures
              12PART II – OTHER INFORMATIONItem 1.
              Legal Proceedings – Not
      Applicable
              12Item 2.
              Unregistered Sales of Equity Securities and Use of
      Proceeds
              12Item 3.
              Defaults Upon Senior Securities – Not
      Applicable
              12Item 4.
              Submission of Matters to a Vote of Security
      Holders
              12Item 5.
              Other Information – Not
      Applicable
              13Item 6.
              Exhibits
              13SIGNATURES
              14











China Crescent Enterprises, Inc.Consolidated
      Balance SheetASSETS
              
              June
      30, 2008
              
              
              December
      31, 2007CURRENT
      ASSETSCash
      and cash equivalents
              
              $
              762,137
              
              
              $
              1,488,774Accounts
      receivable
              
              
              4,778,949
              
              
              
              3,674,523Inventory
              
              
              1,564,141
              
              
              
              1,582,734Supplier
      advances
              
              
              769,731
              
              
              
              305,723Advances
      to affiliate
              
              
              430,500
              
              
              
              -Assets
      of discontinued operations
              
              
              9,377
              
              
              
              9,377Other
      current assets
              
              
              52,997
              
              
              
              49,804Total
      current assets
              
              
              8,367,832
              
              
              
              7,110,935PROPERTY
      AND EQUIPMENT, NET
              
              
              102,949
              
              
              
              95,171INTANGIBLE
      ASSETS
              
              
              3,370
              
              
              
              3,167Total
      assets
              
              $
              8,474,151
              
              
              $
              7,209,273LIABILITIES,
      STOCKHOLDERS' EQUITY AND MINORITY INTERESTCURRENT
      LIABILITIESAccounts
      payable
              
              $
              1,328,721
              
              
              $
              2,057,733Short-term
      borrowing
              
              
              1,221,854
              
              
              
              584,046Accrued
      expenses and other liabilities
              
              
              441,459
              
              
              
              365,468Advances
      from affiliate
              
              
              -
              
              
              
              334,124Liabilities
      of discontinued operations
              
              
              308,683
              
              
              
              308,683Total
      current liabilities
              
              
              3,300,717
              
              
              
              3,650,054Long-term
      debt
              
              
              116,720
              
              
              
              0Total
      liabilities
              
              
              3,417,437
              
              
              
              3,650,054Minority
      interest in subsidiaries
              
              
              1,347,634
              
              
              
              999,444STOCKHOLDERS'
      EQUITYCommon
      stock; $.001 par value; 200,000,000 shares authorized;37,264,662
      and 26,754,662 shares issued and outstanding
              
              
              37,264
              
              
              
              26,754Preferred
      stock; $.001 par value; 20,000,000 shares authorized;250,000
      shares Series A issued and outstanding
              
              
              250
              
              
              
              250Additional
      paid-in capital
              
              
              1,871,500
              
              
              
              1,451,510Accumulated
      comprehensive income
              
              
              683,772
              
              
              
              327,087Retained
      earnings
              
              
              1,116,294
              
              
              
              754,174Total
      stockholders' equity
              
              
              3,709,080
              
              
              
              2,559,775Total
      liabilities and stockholders' equity
              
              $
              8,474,151
              
              
              $
              7,209,273See
      accompanying notes to consolidated financial statements.












China Crescent Enterprises, Inc.Consolidated
      Statement of OperationsThree
      and Six months ended June 30,Three
      Months Ended
              
              
              Six
      Months EndedJune
      30,
              
              
              June
      30,2008
              
              
              2007
              
              
              2008
              
              
              2007REVENUE
              
              $
              10,674,855
              
              
              $
              10,190,040
              
              
              $
              19,190,739
              
              
              $
              17,269,834COST
      OF SALES
              
              
              9,880,910
              
              
              
              9,909,296
              
              
              
              17,953,568
              
              
              
              16,788,670Gross
      Margin
              
              
              793,945
              
              
              
              280,744
              
              
              
              1,237,171
              
              
              
              481,164OPERATING
      EXPENSESSelling,
      general and administrative expenses
              
              
              271,730
              
              
              
              231,589
              
              
              
              549,003
              
              
              
              414,460Depreciation
      and amortization
              
              
              1,357
              
              
              
              8,493
              
              
              
              5,803
              
              
              
              57,266Total
      expenses
              
              
              273,087
              
              
              
              240,082
              
              
              
              554,806
              
              
              
              471,726Income
      (loss) from operations
              
              
              520,858
              
              
              
              40,662
              
              
              
              682,365
              
              
              
              9,438OTHER
      INCOME (EXPENSE)Interest
      income
              
              
              468
              
              
              
              -
              
              
              
              468
              
              
              
              8Interest
      expense
              
              
              (47,294
              )
              
              
              (21,575
              )
              
              
              (55,529
              )
              
              
              (37,609
              )Other
      income
              
              
              57,547
              
              
              
              22,670
              
              
              
              101,534
              
              
              
              47,079Other
      expense
              
              
              (1,659
              )
              
              
              (3,689
              )
              
              
              (2,710
              )
              
              
              (5,480
              )Total
      other income (expense)
              
              
              9,062
              
              
              
              (2,594
              )
              
              
              43,763
              
              
              
              3,998Net
      income before income tax (credit) andminority
      interest
              
              
              529,920
              
              
              
              38,068
              
              
              
              726,128
              
              
              
              13,436Foreign
      income tax
              
              
              (10,515
              )
              
              
              (27,518
              )
              
              
              (16,088
              )
              
              
              (35,314
              )Minority
      interest in consolidated subsidiary
              
              
              (254,509
              )
              
              
              (15,890
              )
              
              
              (347,920
              )
              
              
              -Net
      income (loss)
              
              
              264,896
              
              
              
              (5,340
              )
              
              
              362,120
              
              
              
              (21,878
              )Other
      comprehensive income (loss)Gain
      (loss) on investment security
              
              
              (1,627
              )
              
              
              
              
              
              
              (1,394
              )Foreign
      currency translation gain (loss)
              
              
              34,053
              
              
              
              481,709
              
              
              
              358,079
              
              
              
              961,016Comprehensive
      income
              
              $
              297,322
              
              
              $
              476,369
              
              
              $
              718,805
              
              
              $
              939,138Loss
      per weighted-average common share-basic
              
              $
              0.01
              
              
              $
              (0.00
              )
              
              $
              0.01
              
              
              $
              (0.00
              )Loss
      per weighted-average common share-diluted
              
              $
              0.01
              
              
              $
              (0.00
              )
              
              $
              0.01
              
              
              $
              (0.00
              )Number
      of weighted average common shares o/s-basic
              
              
              33,141,036
              
              
              
              26,146,960
              
              
              
              31,119,634
              
              
              
              26,086,558Number
      of weighted average common shares o/s-diluted
              
              
              33,141,036
              
              
              
              31,613,219
              
              
              
              31,119,634
              
              
              
              31,613,219See
      accompanying notes to consolidated financial statements.









China Crescent Enterprises, Inc.Consolidated
      Statement of Cash FlowsSix
      months ended June 30,2008
              
              
              2007CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      Income/(Loss)
              
              $
              362,120
              
              
              $
              (21,878
              )Adjustments
      to  reconcile net earnings to net cashprovided
      (used) by operating activities:Minority
      interest in consolidated subsidiary
              
              
              347,920
              
              
              
              -Depreciation
              
              
              5,803
              
              
              
              57,266Changes
      in operating assets and liabilities:(Increase)
      decrease in accounts receivable
              
              
              (1,163,931
              )
              
              
              (1,981,575
              )(Increase)
      decrease in deposits and other assets
              
              
              (414,204
              )
              
              
              (763,311
              )(Increase)
      decrease in inventory
              
              
              18,593
              
              
              
              (510,301
              )Increase
      (decrease) in accounts payable
              
              
              (729,012
              )
              
              
              534,709Increase
      (decrease) in accrued expenses and other payables
              
              
              75,991
              
              
              
              1,500,650Net
      cash used by operating activities
              
              
              (1,496,720
              )
              
              
              (1,184,440
              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Sale
      of property and equipment
              
              
              -
              
              
              
              840Net
      cash provided by investing activities
              
              
              -
              
              
              
              840CASH
      FLOWS FROM FINANCING ACTIVITIES:Proceeds
      from short-term borrowings
              
              
              680,832
              
              
              
              316,750Proceeds
      from long-term debt
              
              
              113,472
              
              
              
              -Net
      cash provided by financing activities
              
              
              794,304
              
              
              
              316,750Effect
      of exchange rates on cash
              
              
              (24,221
              )
              
              
              823,661Net
      increase (decrease) in cash and equivalents
              
              
              (726,637
              )
              
              
              (43,189
              )CASH, beginning of
      period
              
              
              1,488,774
              
              
              
              1,168,344CASH, end of
      period
              
              $
              762,137
              
              
              $
              1,125,155See
      accompanying notes to consolidated financial statements.









CHINA CRESCENT ENTERPRISES, INC. AND SUBSIDIARIES


Notes to
Condensed Consolidated Financial Statements (Unaudited)


June 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.





In October
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 (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 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.









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 ($3,952
at June 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  June 30, 2008, and
all options granted prior to the
adoption  of  SFAS  123(R)  and  outstanding  during  the  periods  presented
were fully vested.











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 June 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 2008. The
Company does not believe that this recent accounting pronouncement will have a
material impact on its financial position or results of operations.












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.





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, 2006. 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.





At June
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 June 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 June
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 June
30, 2008, 23,245 shares of Vyta were available for sale and had a fair market
value of $3,952 based on a closing price of $0.17 per share.  The
Company did not sell any available for sale securities during the three months
ended June 30, 2008.





5.  STOCKHOLDERS’
EQUITY:





The
following is a schedule of changes in shareholders’ equity for the six months
ended June 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
            
            10,510,000
            
            0
            
            10,510
            
            419,990
            
            0
            
            0
            
            430,500Other
      comprehensive income (loss)
            0
            
            0
            
            0
            
            0
            
            0
            
            356,685
            
            0
            
            356,685Net
      income
            0
            
            0
            
            0
            
            0
            
            0
            
            0
            
            362,120
            
            362,120ENDING BALANCE,June 30,
      2008 (Unaudited)
            250,000
            
            37,264,662
            
            $250
            
            $37,264
            
            $1,871,500
            
            $683,772
            
            $1,116,294
            
            $3,709,080





6.  STOCK OPTIONS
AND WARRANTS:








STOCK
OPTIONS





The
Company has established a Compensatory Stock Option Plan (the “1995 Plan” or the
“Option Plan”) and has reserved 10,000,000 shares of common stock for issuance
under the Option Plan.  Incentive stock options can be 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 can be 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 are
determined by the board of directors.  All stock options expire 10
years from the date of grant.





The
following table summarizes information about stock options outstanding as of
June 30, 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
            
            6-7
      years
            
            $
      0.43
            
            4,750,000
            
            $
      0.14-0.51











During the
three months ended June 30, 2008, options to purchase up to 7,500 shares of
common stock expired.





WARRANTS





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





Number
      of common
              shares
      covered
              by
      warrants
            
            Exercise
      Price
            
            Expiration
      Date4,132,734
            
            $
            0.10
            
            September-
      October 2008700,000
            
            $
            0.25
            
            February  20094,832,734








During the
three month period ended June 30, 2008, no warrants were exercised.














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 June 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 June 30, 2008 compared to three months ended June 30,
2007:





Net sales
increased 5% from $10,190,040 for the quarter ended June 30, 2007 to $10,674,855
for the quarter ended June 30, 2008. This was due to increased sales of computer
hardware in the Ningbo region.   Cost of sales decreased 0.3%
from $9,909,296 for the quarter ended June 30, 2007 to $9,880,910 for the
quarter ended June 30, 2008. This minor decrease was primarily due to improved
vendor pricing as a result of increased sales volume.   Cost of
sales, as a percentage of sales was approximately 93% and 97% for the three
months ended June 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.












General
and administrative expenses during the three months ended June 30, 2008 were
$271,730, compared to $231,589 for the three months ended June 30, 2007, an
increase of 17%.  The increase is primarily attributable to increased
administrative and engineering headcount required due to the Company’s sales
expansion in the Hangzhou region.





During the
three months ended June 30, 2008, the Company recognized net income of $264,896
after accounting for the minority interest in a consolidated subsidiary,
compared to a net loss of $5,340 during the three months ended June 30,
2007.  The increase in net income is attributable to an increase in
overall sales as well as an increase in gross margin as a percentage of
sales.  Comprehensive income for the three months ended June 30, 2008
was $297,322 compared to comprehensive income of $476,369 for three months ended
June 30, 2007.  Comprehensive income or loss includes foreign currency
translation adjustments and gains or losses on investment securities
held.





Six
months ended June 30, 2008 compared to six months ended June 30,
2007:





Net sales
increased 11% from $17,269,834 for the six months ended June 30, 2007 to
$19,190,739 for the quarter ended June 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 six months ended June 30, 2008, product sales and IT
consulting services represented 93% and 7% of revenue, respectively. Cost of
sales increased 7% from 16,788,670 for the six months ended June 30, 2007 to
$17,953,568 for the six months ended June 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 97% for the six months
ended June 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 six months ended June 30, 2008 were
$549,003, compared to $414,460 for the six months ended June 30, 2007, an
increase of 32%.  The increase is primarily attributable to increased
administrative and engineering headcount required due to the aforementioned
sales expansion in the Hangzhou region.





During the
six months ended June 30, 2008, the Company recognized net income of $362,120
after accounting for the minority interest in a consolidated subsidiary,
compared to a net loss of $21,878 during the six months ended June 30,
2007.  The increase in net income is attributable to an increase in
overall sales as well as an increase in gross margin as a percentage of
sales.  Comprehensive income for the six months ended June 30, 2008
was $718,805 compared to comprehensive income of $939,138 for six months ended
June 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 June 30, 2008
decreased  $726,637  from $1,488,774 as of December 31,
2007, to  $762,137.  The decrease was the result of cash
used in operating activities of $1,496,720 and the effect of exchange rates on
cash of $24,221, offset by cash provided by financing activities of
$794,304.  Operating activities for the six months ended June 30, 2008
exclusive of changes in operating assets and liabilities provided $715,843, as
well as an increase in accrued expenses $75,991 and a decrease in inventory of
$18,593, offset by an increase in accounts receivable and other assets of
$1,578,135 and a decrease in accounts payable of $729,012.





As of June
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 June 30, 2008, all 23,245 shares of Vyta Corp common
stock are tradable, and based upon the closing price of $0.17 per share, the
market value of the Vyta common shares at June 30, 2008, was
$3,952.





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.












Item 3.  Quantitative and Qualitative Disclosures About
Market Risk





Not
applicable.





Item 4.  Controls and Procedures





Evaluation of Disclosure
Controls and Procedures





As of June
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 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 June 30,
2008:





·
            In
      June, 2008, the Company issued 4,750,000 shares of common stock pursuant
      to an agreement to exchange $142,500 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.





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 June 30,
      2008, the Company filed the following Current Reports on Form
      8-K:None.












SIGNATURES





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





CHINA
      CRESCENT ENTERPRISES, INC.(Registrant)Date:   
      August 14, 2008
              /s/ Paul K. DannerPaul
      K. Danner,Chief
      Executive Officer/s/  Philip J.
    RauchPhilip
      J. Rauch,Chief
      Financial Officer