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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

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

For the Fiscal Year Ended December 31, 2009

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

For the transition period from ________________ to
________________.

Commission file number **000-52728**

NORTHPORT NETWORK SYSTEMS, INC.(Exact name of registrant as specified in its charter)

|Washington                                                           | 76-0674579                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation of
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|601 Union Street, Suite #4200, Seattle, Washington                   | 98101                               
|(Address of Principal Executive Offices)                             | (Zip Code)                          

(206) 652-3451(Registrants telephone
number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

|Common Stock, $0.001 par value | NASD OTC BB                                
|------------------------------ | -------------------------------------------
|(Title of class)               | (Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act.:
**None**

Indicate by check mark if registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes [  
]    No [X]

Indicate by check mark if registrant is not required to file
reports pursuant to Rule 13 or Section 15(d) of the Act. Yes [ 
 ]    No [X]

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

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will be contained, to the best of registrants knowledge,
in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

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 (Check one):

Large accelerated filer [  
]      Accelerated filer [ 
 ]      Non-accelerated filer [  
]      Smaller reporting company [X]

Our revenue for the year ended December 31, 2009 was: $755,678

1

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The aggregate market value of the common stock held by
non-affiliates of the issuer, based on the last sale price of $0.55 as
reported on the NASD OTC BB on April 8, 2010 was $18,810,007. ($0.55 times 34,
200, 012 shares)

The number of shares of our common stock outstanding as of April
8, 2010 was: **34,200,012.**

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, No Par Value(Title of
class)

Indicate by checkmark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ 
 ]    No [X]

The registrant had 34,200,012shares of common stock
outstanding as of April 8, 2010.

__________

2

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FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements that
involve risks and uncertainties. Any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as
may, will, should, expect, plan, intend, anticipate, believe,
estimate, predict, potential or continue, the negative of such terms or
other comparable terminology. In evaluating these statements, you should
consider various factors, including the assumptions, risks and uncertainties
outlined in this annual report under Risk Factors. These factors or any of
them may cause our actual results to differ materially from any forward-looking
statement made in this annual report. Forward-looking statements in this annual
report include, among others, statements regarding:

- our capital needs;
- business plans; and
- expectations.

While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding future events, our actual results will likely vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein. Some of the risks and assumptions include:

- our need for additional financing;
- our limited operating history;
- our history of operating losses;
- the competitive environment in which we operate;
- changes in governmental regulation and administrative practices;
- our dependence on key personnel;
- our ability to fully implement our business plan;
- our ability to effectively manage our growth; and
- other regulatory, legislative and judicial developments.

We advise the reader that these cautionary remarks expressly
qualify in their entirety all forward-looking statements attributable to us or
persons acting on our behalf. Important factors that you should also consider,
include, but are not limited to, the factors discussed under Risk Factors in
this annual report.

The forward-looking statements in this annual report are made
as of the date of this annual report and we do not intend or undertake to update
any of the forward-looking statements to conform these statements to actual
results, except as required by applicable law, including the securities laws of
the United States.

AVAILABLE INFORMATION

Northport Network Systems, Inc. files annual, quarterly and
current reports, proxy statements, and other information with the Securities and
Exchange Commission (the SEC). You may read and copy documents referred to in
this Annual Report on Form 10-K that have been filed with the SEC at the SECs
Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the
SECs website at http://www.sec.gov.

REFERENCES

As used in this annual report: (i) the terms we, us, our,
 Northport Network, Northport and the Company mean Northport Network
Systems, Inc.; (ii) SEC refers to the Securities and Exchange Commission;
(iii) Securities Act refers to the United States Securities Act of
1933, as amended; (iv) Exchange Act refers to the United States
Securities Exchange Act of 1934, as amended; and (v) all dollar amounts
refer to United States dollars unless otherwise indicated.

__________

3

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TABLEOFCONTENTS

|PART 1  |                                                                                                                          |   
|------- | ------------------------------------------------------------------------------------------------------------------------ | --
|ITEM 1  | DESCRIPTION OF BUSINESS                                                                                                  | 5 
|ITEM 1A | RISK FACTORS                                                                                                             | 13
|ITEM 1B | UNRESOLVED STAFF COMMENTS                                                                                                | 23
|ITEM 2  | PROPERTIES                                                                                                               | 23
|ITEM 3  | LEGAL PROCEDINGS                                                                                                         | 24
|ITEM 4  | SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                | 24
|ITEM 5  | MARKET FOR REGISTRANTS
      COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES | 24
|ITEM 6  | SELECTED
      FINANCIAL DATA                                                                                            | 25
|ITEM 7  | MANAGEMENTS DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                              | 26
|ITEM 7A | QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                         | 38
|ITEM 8  | FINANCIAL STATEMENTS                                                                                                     | 38
|ITEM 9  | CHANGES IN
      AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                               | 38
|ITEM 9A | CONTROLS AND PROCEDURES                                                                                                  | 39
|ITEM 9B | OTHER
      INFORMATION                                                                                                  | 40
|ITEM 10 | DIRECTORS, EXECUTIVE
      OFFICERS AND CORPORATE GOVERNANCE                                                             | 40
|ITEM 11 | EXECUTIVE
      COMPENSATION                                                                                             | 43
|ITEM 12 | SECURITY OWNERSHIP OF
      CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                     | 44
|ITEM 13 | CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE                                           | 45
|ITEM 14 | PRINCIPAL ACCOUNTING FEES
      AND SERVICES                                                                             | 46
|ITEM 15 | EXHIBITS AND
      REPORTS ON FORM 8-K                                                                                   | 47

NOTEREGARDINGFORWARDLOOKINGSTATEMENTS

This
annual report contains forward-looking statements as that term is defined in
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In some cases, you can identify
forward-looking statements by terminology such as may, should, expect,
plan, anticipate, believe, estimate, predict, potential, continue,
intend, and other variations of these words or comparable words. In addition,
any statements that refer to expectations, projections or other
characterizations of events, circumstances or trends and that do not relate to
historical matters are forward-looking statements. These forward-looking
statements are based largely on our expectations or forecasts of future events,
can be affected by inaccurate assumptions, and are subject to various business
risks and known and unknown uncertainties, a number of which are beyond our
control. Therefore, actual results could differ materially from the
forward-looking statements contained in this document, and you are cautioned not
to place undue reliance on such forward-looking statements. These statements are
only predictions and involve known and unknown risks, uncertainties and other
factors, including the risks in the section entitled Risk Factors, that may
cause our or our industrys actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements.

Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. You should not place undue reliance on these forward-looking
statements, which speak only as of the date of this report. Except as required
by law, we do not undertake to update or revise any of the forward-looking
statements to conform these statements to actual results, whether as a result of
new information, future events or otherwise.

As
used in this annual report, Northport Network Systems Inc., Northport, the
Company, we, us, or our refer to Northport Network Systems, Inc., unless
otherwise indicated.

4

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PART I

ITEM 1. DESCRIPTION OF BUSINESS

Our Business

We conduct business in North America under the name of
Northport Network Systems, Inc. We own a Chinese company, Dalian Beigang
Information Industry Development Company Limited (Dalian Beigang), that
operates two separate businesses- (1) the Company has developed a digital photo
processing kiosk technology, which operates under the trade name Colorstar,
and which business is now ready to be fully commercialized in China. The
technology has been developed on a platform basis and this initial application
is presented in a modular kiosk format. This application is presented as a
stand-alone, digital photo processing kiosk, allowing users to select and print
standard size photos for a fee. Other applications are currently being
developed.; and (2) Dalian Beigang owns a 51% equity interest in Shenyang Ling
Xiao Aviation Service Company Limited, (Ling Xiao), which operates
online and call center travel booking operations in the Chinese cities of Dalian
and Shenyang and which will use a terminal version of the Colorstar platform in
their travel booking locations. During the year, we discontinued operations of a
third business, our Tenet, tax filing software division as a result of changes
to the China National Tax Bureau filing access procedures.

In addition, during the year we commenced development of an
e-commerce website known as UrMart.net which we intend to launch in 2010 and
generate revenues from sales made through the site. The website UrMart.net was
at its trial stage at the end of 2009, and the revenue derived therefrom was
insignificant and recorded on receipt of subscription fees from members. UrMart
is an online trading platform designed for registered shopping guide members and
is also an online shopping platform for the general buying public. Shopping
guide members can make decisions such as analyzing and evaluating merchants
product information and price strategies, which are released by merchants on our
platform. General shopping guide members can operate their own business by using
our no-cost and zero-risk platform located at www.urmart.net..

The Company maintains its primary office in North America at
#4200, 601 Union Street, Seattle, Washington, 98101. The telephone numbers used
at the location are 206-508-3689, 206-652-3451 and the facsimile number is
206-652-3205.

The Companys Dalian Colorstar business operates from an office
facility located at Suite #512, A. No. 1 Huoju Road Qixianlinq Industrial Base 
High-Tech Zone in Dalian, China.

The Ling Xiao business in Dalian operates from leased office
space in the central area of Dalian at Rooms 2704, 2705, 2706, and 1101 in the
Yue Xiu Building, No.82 Xin Kai Road, Xi Gang District, Dalian, China. Ling Xiao
in Shenyang operates from office and dormitory facilities located at No. 109-
6-1 Nanjing North Street, Peace District, Shenyang, China.

Corporate History

We were originally incorporated in Colorado as
dotcom.netmgmt.com Inc. on July 25, 2000. The authorized number of common shares
was set at 25,000,000 at a par value of $0.001 with no preferred shares
authorized.

The original planned business was an Internet website designed
to assist small business owners. From formation until 2004, we engaged in no
significant operations other than organizational activities. We received no
revenues during this period.

On April 28, 2004, we held a special shareholders meeting at
which our authorized capital was increased from 25,000,000 common shares, $0.001
par value to 100,000,000 common shares, $0.001 par value. At the same meeting
the two original directors and officers resigned and Zhao Yan, Zhong Bo Jia and
James Wang were elected as new directors. Zhao Yan was appointed president and
James Wang appointed as secretary/treasurer. At the same meeting the issued
common shares of 6,250,000 were split on a four to one basis resulting in a new
total of 25,000,000 issued common shares and retained the same par value of
$.001. At the same meeting our name was changed from dotcom-netmgmt.com Inc to
Northport Capital Inc.

5

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We entered into an agreement dated June 23, 2005, to acquire
100% of Dalian Beigang, an existing Chinese tax software and data processing
business. The June 23, 2005 agreement required Company shareholder approval as
well as PRC government approval by way of the issuance of a business license for
the revised corporate structure, which would be a Wholly Owned Foreign
Enterprise (WOFE). Pursuant to Chinese laws, within one year after approval of
a business license for a WOFE by the Chinese government, the Purchaser must pay
the full purchase price to the Sellers.

The Chinese government approved the business license for the
WOFE on May 17, 2006, at which time the acquisition closed. A total of 1,500,000
treasury shares of the Company were issued as the purchase price for the
acquisition. Subsequently on January 10, 2008, 1,000,000 restricted, common
shares were authorized to be issued to Xiao Jun, an employee of the Company and
the original developer of the Companys Colorstar digital photo technology, as
an employment incentive. We registered certain of our shares by way of a Form
SB2 filing which was declared effective by the Securities and Exchange
Commission (the SEC) on July 13, 2007. Our common shares began trading on the
OTCBB on January 16, 2008 under the symbol NPCA.

On October 9, 2008 at our annual shareholders meeting held in
Dalian, China, our shareholders approved the election of our existing three
directors and also approved:

-a plan of merger for the reincorporation of the Company from
  the State of Colorado to the State of Washington and the change of the name
  of the Company to Northport Network Systems, Inc.;
  - the authorization of 100,000,000 shares of preferred stock with a par value
  of $.001 to be adopted in the Articles of Incorporation, governed by the Washington
  Business Corporation Act in connection with the reincorporation merger; 
  - the requirement that not less than 25% of all the votes entitled to be cast
  on an issue will have the right to call a special meeting of the shareholders
  by submitting a written demand to the Company;
  -the Companys proposed 2008 Stock Option Plan authorizing the amount of
  2,750,000 shares of common stock; and
  -ratified the appointment of Jimmy C.H. Cheung & Co as the Companys
  independent registered public accountants for the fiscal year ending December
  31, 2008.

Our original trading symbol was revised to NNWS upon approval
of our corporate name change in Washington State to Northport Network Systems,
Inc. in November 2008.

Our authorized capital stock now consists of 100,000,000 shares
of common stock, $0.001 par value per share, of which 34,200,012 shares have
been issued and outstanding, fully paid and non-assessable as of December 31,
2009. We also have 100,000,000 preferred shares authorized at a par value of
$.001 of which none are currently issued.There are no outstanding options,
warrants or calls pursuant to which any person has the right to purchase any of
our authorized and unissued common or other securities.

Throughout this Form 10K report, we have used an exchange rate
of $1.00 US = 6.84 Rmb (Chinese yuan) for all conversions except those taken
directly from our audited financial statements which may vary marginally from
this rate. The value of RMB against US$ and other currencies may fluctuate and
is affected by, among other things, changes in Chinas political and economic
conditions, and significant revaluation of RMB may materially affect the
Companys financial condition in terms of US$ reporting.

Dalian Beigang is duly organized, validly existing and in good
standing under the laws of the Peoples Republic of China. The original business
enterprise was incorporated in the PRC on June 20, 1997. The original business
license issued to Dalian Beigang ended on June 19, 2007 and has been renewed
until June 8, 2026.

In accordance with the Chinese Articles of Association, the registered
  capital of Dalian Beigang at the date of incorporation of June 20, 1997, was
  $144,928 (RMB 1,200,000) which was fully paid on June 19, 1997, in cash by the
  stockholders. On October 24, 2007, the registered capital of Dalian Beigang
  was increased from $144,928 (Rmb1.2 million) to $30,144,928 (Rmb220 million)
  to allow for new investment of foreign capital either in the form of equity
  or debt. According to the amended Articles of Association, and as at December
  31, 2007, Dalian Beigang was required to fulfill a total registered capital
  contribution of $30 million of which $10 million was payable on or before April
  16, 2008 subject to extension allowances. The remaining balance is payable on
  or before January 16, 2010. The Company was unable to fully pay the increased
  capital portion during 2008 and as a result, the registered capital of Dalian
  Beigang remains the actual capital contribution to date of $144,928.

6

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On October 9, 2008, Dalian Beigang entered into a definitive
  agreement with the stockholders of Ling Xiao to acquire a 51% equity interest
  of Ling Xiao for 2,700,000 shares of treasury stock of the Company at a fair
  value of $3,240,000 based on the closing price of the Companys common
  stock as quoted on the Over-the-Counter Bulletin Board as of the date of the
  closing of the transaction. The stockholders of Ling Xiao did not have any prior
  affiliation with the Company. According to the terms of the definitive agreement,
  the consideration amount is determined on the basis of a formula of 51% of 5
  times the planned Ling Xiao net earnings for the year ended March 31, 2009.
  After completion of the review of the Ling Xiaos operation and the audited
  financial statements for the year ended March 31, 2009, additional treasury
  shares of the Company were to be issued if the net earnings is in excess of
  the net earning as projected in the formula estimate of 2,700,000 shares. Upon
  review, no such additional shares were issued.

On August 11, 2009, the Company entered into a Subscription
Agreement with a subscriber relating to the issuance of 3,000,000 shares of
restricted common stock of the Company to the subscriber in two tranches at a
price of $0.75 per share for a total purchase price of $2,250,000.

On August 28, 2009, the Company issued 1,500,000 shares of
common stock valued at $1,125,000 to the subscriber who has paid $900,359 in
cash to the Company. The remaining balance of $224,641 was recorded as stock
subscription receivables as of December 31, 2009. The subscriber was
subsequently appointed director of the Company on October 27, 2009.

Principal Products

**(A.)
Tenet tax filing software- now discontinued**

The State Administration of Taxation governs the national tax
bureaus in different Chinese provincial capital cities, which are responsible
for the national tax bureau offices as well as local tax bureaus in different
cities in their province. With the upgrade of these offices complete, the shift
now moves to getting its users, the commercial taxpayers, filing and paying
taxes online with software systems that are compatible with the Federal system.
National tax bureaus handle all aspects of federal taxes as compared to local
taxes payable to, and collected by, local city tax bureaus. The business of the
National tax bureau covers (product) transaction value added taxes, business
income tax, with the tax collected to be handed to the national treasury
directly, constituting national fiscal income.

The business of the local tax bureaus covers enterprise
business and personal income tax, with the tax collected handed in part to the
national treasury and the rest kept as local fiscal income.

Management of Dalian Beigang was advised that their Tenet tax
reporting and payment system was Chinas first online federal tax reporting/tax
payment system. The Tenet system is an intranet based online tax filing and
payment transfer system, which has been approved by the National Tax Bureau.
Only those business users having an agreement for Tenet use with Dalian Beigang
can access that system.Revenue flows from subscription agreements with
commercial taxpayers.

Following the successful beta test in late 2001 with 2000 of
Dalians commercial taxpayers, the Tenet system was officially launched and
began the sign up of Dalians commercial federal taxpayers. The local city of
Dalian newspaper, the Dalian Daily on Friday, July 13, 2001, contained an
article written by reporter Zhi Bin Dong as follows: Yesterday, the Dalian
National Tax Bureau announced that, starting from August 1, 2001, business tax
payers of Dalian will use the new intranet system to file and to pay their
federal taxes. The new system is designed and developed by Dalian Beigang
Information Industry and Development Co., Ltd. . See, Exhibit 99.5 in our SB-2
filing.

As of December 31, 2008, there were approximately 8243 subscribers
  in Dalian and an additional 886 subscribers in Yingkou, Liaoning province, which
  business was operated under a cooperation agreement between Dalian Beigang and
  Lenovo Corporation.Management opted to launch its first city operation
  of Tenet outside of Dalian in Yingkou, the nearest large city, and only 200
  km from Dalian. The local partner in Yingkou was Yingkou City Beigang Network
  Information Industry Service Co., Ltd., a wholly owned subsidiary of Lenovo
  Corporation, a Chinese computer manufacturer and retailer. Lenovo Yingkou is
  a large computer dealer and service provider in Yingkou maintaining a good relationship
  with the national tax bureau there.

7

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Initial subscribers pay a fee of 1200 Rmb for the initial year
and then decreases on an incremental basis over three years to a base of 600 Rmb
per year thereafter.

Although there are security and service problems with many
available, competitive systems, most are free and have attracted business users.
As a result, the number of users of the Tenet system had continually declined
since its initial introduction.

In late 2008, the China State Administration of Taxation
installed a systematic black box on its website, designed to guarantee network
safety for the system. As a result, Dalian Beigang was thereafter unable to
upgrade its TENET tax filing system. We negotiated with representatives of the
Federal Administration of Taxation in the Dalian Office on how to deal with the
problems that have risen as a result. Because we were unable to update the Tenet
system for our subscribers and were unable to bill for services or access- we
had no option but to discontinue Tenet operations as of June 2009.

**(B.)
Graphic Printing Technology-Colorstar**

In mid 2005, management of Dalian Beigang was introduced to a
digital photo processing technology being developed by a Beijing engineer. The
project required funding and the Companys management approved a decision to
invest funds to develop the technology to a level where it could be commercially
analyzed. Key aspects of the technology that differentiate it from other kiosk
digital photo systems include silver halide print technology instead of thermal
print processes, reduced print times and lower cost per processed photo- this
allowing for lower price points. A trade name of Colorstar was registered with
the China State Administration for Industry and Commerce in China as well as a
Chinese patent applied for on the technology. Total expenditures on research and
development undertaken by Dalian Beigang on this project were charged to general
and administrative expenses for the years ended December 31, 2008 and 2009, and
such expenditures amounted to $162,894 and $0, respectively.

The project has involved the development of a digital
platform with an initial application to be a user-operated, stand alone,
digital photo developing and printing network operating system controlled
through a proprietary network server with terminals and self serve digital photo
developing printers- with user interfaces contained in a kiosk format. The
stand-alone devices provide users with print images equivalent to regular
photographic pictures.

Over the past two years various test units were developed and
installed in commercial locations in Dalian so as to generate consumer response
and also to measure unit operating characteristics. Twelve units of the latest
test model have been installed in various locations in and around Dalian since
June 2007, including malls, hotels, telephone retail shops, etc and four units
were in operation as at December 31, 2009.

Dalian Beigang entered into an agreement on March 1, 2008 to
supply a total of 542 Colorstar units to various Internet cafe locations and
also retail telephone store locations in Liaoning Province in China. The
agreement partner was China Netcom, a significant Chinese landline and broadband
supplier with annual revenues in excess of $1.0 billion US. The agreement called
for monthly service fees to be paid to China Netcom and revenues to be divided
on an 85-15 percent basis between Dalian Beigang and China Netcom. Only a total
of only 24 units were produced due to production and design issues.

Shortly after the original China Netcom contract was signed,
the China Netcom Network system was closed and did not accept any new business
from May 1st to October 30, 2008 for the sake of ensuring the safety of the
Beijing Olympic Games. The network system was opened again in November 2008, but
China Netcom and its planned merger partner China Unicom commenced a
re-structure program, including a name change to China Unicom. The agreement
terminated on February 1, 2009 and was not renewed.

An enhanced modular version of the kiosk design is near
completion but commercial production awaits availability of funding to cover
manufacturing costs.

The design and manufacture of the network and the self-help digital
  photo-developing printer are the most important components of the project, and
  various test machines were developed. The original model, although capable of
  operation, had no promotion value; a second model was unusable because of low
  output speed and long waiting times; and a third model machine realized all
  design functions but because of large volume requirements, high cost and questionable
  intellectual property rights, it was not suitable for commercial development.
  The fourth design also proved unsuccessful due to manufacturing costs. The fifth
  version, based upon a modular design, is near completion.

8

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The Digital Photo Processing Market in Northeast China

Dalian Beigang retained the services of independent research
companies in northeast China in order to assist management in determining the
present status of the northeast China digital printing market as well as
determination of possible market acceptance and development of the Colorstar
project.

The research was undertaken in Beijing, Shenyang and Dalian and
included sampling from consumers (local citizens, tourists and professionals),
imaging shop proprietors (color film processing shops and photo-printing
collection agencies), as well as convenience stores, lottery shops and
advertising agencies and companies.

Management determined that the Chinese market is in a stage of
rapid increase of sales of digital cameras. Since the end of 2005, increases of
30% to 50% in demand for digital printing have been shown in larger cities  in
fact, higher than for traditional film printing. In addition, there are now a
total of over 550 million cellular telephones in use in China, of which 70% of
these mobile phones come with a camera function. Colorstar units allow for print
operations from Cellular telephones.

Traditional digital color printing shops in the Chinese
domestic market utilize equipment technology of one of four brands including
Kodak, Fuji, Konica and Lucky. Kiosk models in use in China include those
developed by Kodak and Sony, both models that have been introduced in the North
American marketplace as well.

Fuji digital printing machine technology has also been in a
leading position in the China industry, enjoying the capability for producing
stand alone devices and establishing network platforms, as well as providing
customer financing. Doli, a China domestic manufacturer of production-type
digital printing machines, has good quality equipment but has little strength in
providing additional functions and network operating management platforms.

Analysis of data collected showed that both the operational
mode and technological advantages of the Colorstar project were recognized by
the China market. However, the project needed to improve its technological
level, perfect its equipment quality, and also establish and implement detailed
and effective marketing plans, in order for it to be commercially viable. Dalian
Beigang has now completed these.

Colorstar Operations

In China, management has entered into negotiations with a
number of organizations that operate retail facilities. Agreement relationships
are planned to entail Dalian Beigang manufacturing and installing kiosk units in
partner locations and revenues split on an 85/15 percentage basis between the
partners. A typical agreement is expected to be initially two years in length
and renewable if agreed to by both parties. All Colorstar units will remain in
the ownership of the Company. All unit operations, repairs, maintenance, cash
handling and accounting functions are handled by Dalian Beigang. The kiosk
design currently produces only a 4 inch by 6 inch size photo.

Based on results of test units installed in various retail
locations in Dalian city, average usage has been 35% and each user averages 20
photos per session. Average retail purchase pricing has been set at $.085 per
photo. The current design has an initial processing period for each user order
followed by a much faster production time for the individual photos. Each 20
photo order takes approximately 8 minutes to complete after adding times for
selection, payment and production.

To date, units have had a Company staff person in attendance at
all times to ensure customer familiarity with Colorstar operational features and
to explain questions or issues that users may have. The plan is for these
attendant functions to be handled by the retail partner staff after an initial
operating period, likely 90 days. Since each unit is always connected to the
Colorstar central server, management will always be able to identify
maintenance, usage numbers or repair issues that arise for each individual unit.

Revenue from the sale of color photo printing services is
derived from its own and affiliate operations, which consist of franchise agency
and licensing programs.

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The franchise agent acts as the Company's agent in a similar
manner as a branch manager in the Company-owned locations. In the franchise
arrangement, the Company has the direct contractual relationships with its
customers and contracts with customers are binding to the Company. The Company
is also obligated for the employee payroll, electricity and related overheads
regardless of customer acceptance of the services.

The Company also has a licensing program whereby the licensee
had the direct contractual relationships with the customers, held title to the
related customer receivables and was the legal employer of the employees.
Accordingly, net sales and costs of services generated by the license operation
are included in the Company's consolidated financial statements. Fees are paid
to the Company based on a fixed price for each of the photo printed and such
license fees are recorded by the Company as revenue.

For sales from its own operation, revenue is recognized after
the photos are printed and delivered to the customers and cash has been
collected.

Currently we have two Colorstar units located in Vancouver,
Canada where they are being analyzed to determine any and all issues that could
affect performance and regulatory compliance if the units were to be introduced
into the North American marketplace. We are currently awaiting the adaptation of
these units to the new modular design prior to completing a full analysis. We
expect that such adaptations and analysis will be completed by the end of 2010,
after which the North American Colorstar business plan is expected to be
finalized.

Sales and Marketing

In China, marketing of Colorstar to date has involved Company
personnel making direct sales calls to potential joint venture partners such as
China Netcom and others. In addition, there are a number of potential
franchise-type relationships being discussed with individuals in Dalian city
itself. These franchise-type arrangements await completion of formal
documentation and availability of manufacturing financing. A total of 4 test
units have been installed at locations under an informal franchise arrangement.
Agreements with other potential partners await various approvals.

**(C.)
Ling Xiao Aviation Booking Operations**

Ling Xiao was registered with the Shenyang Industrial and
Commercial Administration on September 26, 2007 and its business term is
approved until September 2017. Ling Xiao is principally engaged in the
air-ticketing agency business. In addition to its operation in the city of
Shenyang, Liaoning Province in the PRC, Ling Xiao assumed all of the business
operations of Dalian Ling Xiao Aviation Service Co., Ltd (Dalian Ling Xiao) on
October 10, 2008. Dalian Ling Xiao is owned by the stockholders of Ling Xiao and
is principally engaged in an air-ticketing agency business in the City of
Dalian.

Since we provide travel-related services through our website,
we are subject to all of the PRC laws and regulations relating to the
telecommunications industry and Internet, and regulated by various government
authorities, including the Ministry of Information Industry and the State
General Administration of Industry and Commerce.

The travel industry in China is subject to the supervision of
  the China National Tourism Administration and local tourism administrations.
  The principal regulatory regulations governing travel agencies in China include:
  - Administration of Travel Agencies Regulations (1996), as amended; 
  -Telecommunications Regulations (2000);
  -The Administrative Measures for Telecommunications Business Operating Licenses
  (2001)

Under these regulations, a travel agency must obtain a license
from the China National Tourism Administration to conduct cross-border travel
business, and a license from the provincial-level tourism administration to
conduct domestic travel agency business.

In China, the business of air ticket bookings being conducted
online still remains in its early stages. Currently, it is only promoted in the
larger cities and not in medium and smaller cities. Published statistics show
that in 2008, there were some 192 million passenger flights that were booked
online in China, among them 8.22 million in Dalian and 6.80 million in Shenyang.
The quantity of booking air ticket online in Liaoning Province accounted

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for 7.82% of total China bookings. To start up an online
booking service in a particular city, it is necessary to obtain a business
license and a franchise license (or special permits) issued by the China Air
Transportation Association. Typically the business license is valid for 10 years
and the franchise license is valid for 1 year, after which the enterprise must
pass a rigid evaluation and examination. If successful, a new license will be
issued.

Ling Xiao is a leading retailer of air tickets in northeast
China. We aggregate information on flights and enable our customers to make
informed and cost-effective flight bookings. We also sell charter flight
seating. We target our services primarily at business and individual travelers
in our area of focus in northeast China. We act as agent in substantially all of
our transactions . We derive our air-ticketing revenues mainly through
commissions. The business of Ling Xiao is subject to certain risks and
concentrations including dependence on relationships with travel suppliers,
primarily airlines and exposure to risks associated with online commerce
security.

No individual customer contributed to more than 10% of total
revenues for the years ended December 31, 2009 and 2008. No individual customer
accounted for more than 10% of accounts receivable as of December 31, 2009 and
2008.

The business of Ling Xiao is subject to certain risks and
concentrations including dependence on relationships with travel suppliers,
primarily airlines and exposure to risks associated with online commerce
security. Agency commission from an airline accounted for 79% and 84 % of the
Companys total revenues for the year ended December 31, 2009 and 2008
respectively. As of December 31, 2009 and 2008, accounts receivable from this
airline were $41,059 and $272,678 respectively.

We believe that we are the largest air ticket booking facility
in Dalian in terms of the number of air tickets booked and sold and are rapidly
expanding our business in Shenyang. Once established there, we intend to expand
elsewhere in other northeast China urban areas. Our airline ticket suppliers
include all major Chinese airlines and many international airlines that operate
flights originating from China. We are among the few airline ticket booking
entities in China that maintain a centralized reservation system and ticket
fulfillment infrastructure. Our customers can make flight reservations on their
chosen routes and arrange ticket payment and delivery through us directly or
third-party agencies located in northeast China.

We offer our services to customers through an advanced
transaction and service platform consisting of our centralized toll-free, 24
hour customer service center and website. In 2009, transactions effected through
our customer service center accounted for over 90% of our transaction volume.

We sell air tickets for all major domestic Chinese airlines,
including Air China, China Eastern Airlines, China Southern Airlines, Hainan
Airlines and Shanghai Airlines and a number of international airlines operating
flights that originate from cities in China.

In air-ticketing transactions, a customer generally pays the
ticket delivery agent upon delivery of the ticket. The customer has the option
of picking up a ticket at a Ling Xiao ticketing office or obtaining an
electronic ticket. In 2008, China has mandated, full scale use of electronic
ticketing, or E-ticketing, systems for all air travel. We believe that
E-ticketing allows us to execute air-ticketing transactions more efficiently.
E-ticketing also makes our business expansion into other northeastern China
cities easier and more efficient. The airline industry, including airline ticket
pricing, is regulated. Therefore, we have no discretion in offering discounts on
the air tickets we sell. Our commission rate per ticket usually increases as the
total number of tickets we sell for an airline increases.

Other products and services accounted for a small portion of
our total revenue in 2009.

Transaction and Service Platform

Our customers can reach us for their travel-related needs
through either our toll-free customer service center or our website.

Our centralized toll-free customer service center is located in
Dalian, China and is operated 24 hours a day and seven days a week. Customers
can call our toll free number to consult with customer service representatives,
receive flight information and make travel bookings. As of December 31, 2009, we
employed 99 customer service representatives, all of whom participated in formal
training programs before commencing work.

We have a Chinese-language website located at www.lingxiao.net.

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Environmental Impact

None of the Company's activities utilize any hazardous
materials or results in any discharge of pollutants into the environment. The
Company believes it complies fully with all environmental laws and regulations.

Intellectual Property

Our ability to compete effectively will depend on our success
in protecting our proprietary technology, both in China, in the United States
and elsewhere. We have filed for patent protection in China and certain other
countries to cover proprietary design aspects of our Colorstar products.

These patent applications are under review by the Chinese
Patent Office and, to date, we have not been issued any patent approvals in
China or elsewhere. No assurance can be given that any patents relating to our
existing technology will be issued from any patent offices; that we will receive
any patent approvals in the future based on our continued development of our
technology; or that any patent protection, once approved, will be sufficient to
deter others, legally or otherwise, from developing or marketing competitive
products utilizing our technologies.

In addition to seeking patent protection, we rely on trade
secrets, know-how and continuing technological advancement to seek to achieve
and thereafter maintain a competitive advantage. Although we have entered into
or intend to enter into confidentiality and invention agreements with our
employees, consultants and advisors, no assurance can be given that such
agreements will be honored or that we will be able to effectively protect our
rights to our unpatented trade secrets and know-how. Moreover, no assurance can
be given that others will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to our trade
secrets and know-how.

In addition to the patent filing, we have registered the trade
names Colorstar and Tenet in China. The name Colorstar has also been
registered in Canada.

Employees and Staffing

We had 143 full-time employees as of December 31, 2009. Our
employees are not covered by any collective bargaining agreement and we have
never experienced a work stoppage. We believe that our relations with our
employees are good. The Company currently operates with a staff of 43 in Dalian.
The Ling Xiao subsidiary operates with 75 staff in Dalian and 24 in Shenyang.
One director operates from North American offices located in Seattle,
Washington.

All of our management personnel have university degrees.
Customer support personnel require a junior college or technical college degree.
Software engineers require a minimum of a computer science degree.

The 143 current staff members are employed as follows:

|Management                    | 5  
|----------------------------- | ---
|Accounting                    | 3  
|Marketing                     | 4  
|Software Design/R and D       | 20 
|Colorstar Operations          | 11 
|                              |    
|Ling Xiao Dalian              | 75 
|Ling Xiao Shenyang            | 24 
|North American Seattle Office | 1  
|                              |    
|Total                         | 143

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ITEM 1A. RISK FACTORS

Prospective investors should carefully consider the risks
described below, in conjunction with other information and our consolidated
financial statements and related notes included elsewhere in this Form 10K.. You
should pay particular attention to the fact that we conduct our operations in
China and are governed by a legal and regulatory environment that in some
respects differs significantly from the environment that may prevail in other
countries that you may be familiar with. Our business, financial condition and
results of operations could be affected materially and adversely by any or all
of these risks. Where financial results for our China operations are commented
upon in US dollars, an exchange rate of $1.00 = 6.84 Renminbi (Yuan) has been
used, except where numbers are directly taken from our audited financial
statements.

Risk Factors Relating to the Company and its Businesses

We have yet to attain profitable operations and our
accountants believe there is substantial doubt about our ability to continue as
a going concern.

As reflected in the accompanying financial statements, the
Company has an accumulated deficit of $5,532,209 at December 31, 2009. The
Companys current liabilities also exceed its current assets by $260,834 and the
Company used cash in operations during the year ended December 31, 2009 of
$633,960. These factors raise substantial doubt about our ability to continue as
a going concern. In view of the matters described above, continued operation of
the Company is dependent upon the Companys ability to raise additional capital,
reduce its operating expenses, obtain financing and succeed in its future
operations. Management is taking steps to revise its operating and financial
requirements, which it believes will be sufficient to provide the Company with
the ability to continue operations.

As of December 31, 2009 and 2008, the Company owed $251,312 and
$173,432 respectively to a stockholder as unsecured loan and imputed interest is
computed at 5% per annum on the amount due. The balance is repayable on demand.
Total imputed interest expenses recorded as additional paid-in capital amounted
to $11,125 and $3,659 for the years ended December 31, 2009 and 2008
respectively.

As of December 31, 2009, a related company owed $99,209 to the
Company which arises during the normal course of business and is under the same
terms as other customers.

Revenues for the year ended December 31, 2009, were increased
to $755,678 from $485,752 during the previous fiscal year ended December 31,
2008.

The Company is actively pursuing additional equity funding,
bank financing for its planned Colorstar operations, a potential e-mall website,
Ling Xiao expansion, potential merger or acquisition candidates and strategic
partners; any of which would enhance stockholders investment.

As yet, the Company has not finalized arrangements for such
additional financing and there is no guarantee that such financing can be raised
or that such financing will be available at terms acceptable to the Company.

Limitations on liability and indemnification of directors
and officers may result in expenditures by the Company.

The Companys bylaws provide that it must indemnify its
directors and officers to the fullest extent permitted under Washington law
against all liabilities incurred by reason of the fact that the person is or was
a director or officer of the Company or a fiduciary of an employee benefit plan,
or is or was serving at the request of the Company as a director or officer, or
fiduciary of an employee benefit plan, of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise.

The effect of these provisions is potentially to indemnify the
Companys directors and officers from all costs and expenses of liability
incurred by them in connection with any action, suit or proceeding in which they
are involved by reason of their affiliation with the Company. Pursuant to
Washington law, a corporation may indemnify a director, provided that such
indemnity shall not apply on account of: (a) acts or omissions of the director
finally adjudged to be intentional misconduct or a knowing violation of law; (b)
unlawful distributions;

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or (c) any transaction with respect to which it was finally
adjudged that such director personally received a benefit in money, property, or
services to which the director was not legally entitled.

The Companys bylaws also permit it to maintain insurance on
behalf of its officers, directors, employees and agents against any liability
asserted against and incurred by that person whether or not the Company has the
power to indemnify such person against liability for any of those acts.

Due to the indemnification and limitation of liability of our
directors and officers, any limitation on the liability of any director, or
indemnification of directors, officer, or employees, could result in substantial
expenditures being made by the Company in covering any liability of such persons
or in indemnifying them.

We have sustained losses in the past and may experience earnings
  declines or net losses in the future.

We sustained net losses in the periods prior to, and including,
2009. We cannot assure you that we can attain profitability or avoid net losses
in the future. We expect that our operating expenses will increase and the
degree of increase in these expenses will be largely based on anticipated
organizational growth and revenue trends. As a result, any decrease or delay in
generating additional sales volume and revenue could result in substantial
operating losses.

We may be subject to litigation for information provided on
our websites, which may be time-consuming to defend.

Our websites contain information about the various divisions of
our business operations, both in English and Chinese print. It is possible that
if any information, accessible on our websites, contains errors or false or
misleading information, third parties could take action against us for losses
incurred in connection with the use of such information. Any such claims, with
or without merit, could be time consuming and costly to defend, result in
litigation and divert managements attention and resources.

We could be liable for breaches of security on our websites
  and fraudulent transactions by users of our websites.

We conduct a portion of our transactions through our websites.
In such transactions, secured transmission of confidential information (such as
customers air ticket reservation information, credit card information, personal
information and billing addresses) over public networks is essential to maintain
consumer and supplier confidence. Our current security measures may not be
adequate. Security breaches could expose us to litigation and possible liability
for failing to secure confidential customer or supplier information and could
harm our reputation and ability to attract customers.

If we are unable to attract, train and retain key individuals
  and highly skilled employees, our business may be adversely affected.

If our business continues to expand, we will need to hire
additional employees, including management personnel to maintain and expand our
networks, information technology and engineering personnel to maintain and
expand our websites, customer service centers and systems, and customer service
representatives to serve an increasing number of customers for Colorstar, Ling
Xiao and other planned operations in China and in North America. If we are
unable to identify, attract, hire, train and retain sufficient employees in
these areas, users of our websites and Colorstar equipment may have negative
experiences and turn to our competitors, which could adversely affect our
business and results of operations.

A slow-down of economic growth in China may adversely affect
  our growth and profitability.

Our business and operations are primarily based in China and
almost all of our revenues are derived from our operations in China.
Accordingly, our financial results have been, and are expected to continue to
be, affected by the growth in the economy in China. Although the economy in
China has grown significantly in the past decades, we cannot assure you that
growth will continue or that any slow-down will not have a negative effect on
our businesses. For our Ling Xiao business, any slow-down of economic growth in
China could reduce expenditures for travel, which in turn may adversely affect
our operating results and financial condition.

Our limited operating history makes evaluating our business
  and prospects difficult.

We began our operations in 2006. As a result, we have a limited
operating history for you to evaluate our business. It is also difficult to
evaluate our prospective business, because we may not have sufficient experience
to address the risks frequently encountered by early stage companies using new
and unproven business models

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and entering new and rapidly evolving markets, including
markets for online commerce including air ticket booking. These risks include
our potential failure to:

- obtain new customers at reasonable cost, retain existing customers,
  encourage repeat purchases or convert visitors to our websites into customers;
- increase awareness of our Colorstar and Ling Xiao brand sand continue to
  build user loyalty;
- adequately and efficiently operate, upgrade and develop our platform
  systems that we use to develop additional applications for the technology;
- maintain adequate control of our expenses;
- attract and retain qualified personnel;
- respond to technological changes; and
- respond to competitive market conditions.

If we are unsuccessful in addressing any of these risks, our
business could be materially and adversely affected.

The requirement for additional financing will affect future
profitability.

We continue to experience cash shortages from ongoing
development of the Colorstar technology. We will require additional cash
infusions to finance the expected growth of our Colorstar business, including
purchases of inventory and computer equipment. The Company anticipates raising
minimum funding of $500,000 over the next 12 months and that such funding would
involve the new issuance of stock of at least 1,000,000 shares. Failure to
generate such funding will have a direct effect on our expansion plans, cash
flows and profitability of China operations and ultimately on our operations.

As at December 31, 2009 the corporate cash resources were such
that we had a negative working capital position of $260,834. We estimate that
cash flows from ongoing shareholder loans and launch of our planned e-commerce
website, UrMart.net during 2010, will be sufficient to allow continuing
operations for the next twelve months.

Directors and officers are non-residents of the United
States and could be beyond reach in the event of litigation.

Because two of our directors and officers reside outside of the
United States, it may be difficult for shareholders to enforce your rights
against them or enforce U.S. court judgments against them in the PRC or Canada.
Our current operations are conducted in China. In addition, two of our directors
and officers are nationals of countries other than the United States. Zhao Yan
and Zhong Bo Jia are both citizens and residents of the PRC. James Wang is a
citizen of Canada but a resident in Washington State under a US L-1 visa. Dr.
Jim Howell Qian is a resident of California.

Each director maintains his or her principal assets in their
country of residence. As a result, it may be difficult for you to effect service
of process within the United States upon those persons residing outside of the
United States. In addition, there is uncertainty as to whether the courts of
China would recognize or enforce judgments of United States courts obtained
against us or such persons predicated upon the civil liability provisions of the
securities laws of the United States or any state thereof, or be competent to
hear original actions brought in these countries against us or such persons
predicated upon the securities laws of the United States or any state thereof.

We rely on key members of management, the loss of whose
services would have a material adverse effect on our success and development.

Our success depends to a certain degree upon certain key
members of the management. These individuals are a significant factor in our
growth and success. In particular, our success is highly dependent upon the
efforts of our President, our Chief Executive Officer, our Vice President, and
our directors; the loss of whose services would have a material adverse effect
on our success and development.

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All of our management team located in China currently have
signed employment agreements with us. These individuals are a significant factor
in our growth and success. The loss of the service of members of the management
could have a material adverse effect on us. None of the executives have key life
insurance policies on their lives and the loss of any one of them could have a
negative cash effect on our business.

Risks Related to Conducting Business in China

Chinese government policies could have potential negative
impacts on our businesses.

Policies of the Chinese government can have significant effects
on the economic conditions of China. The Chinese government has confirmed that
economic development will follow a model of market economy under socialism.
Under this direction, we believe that the PRC will continue to strengthen its
economic and trading relationships with foreign countries and business
development in China will follow market forces. While we believe that this trend
will continue, there can be no assurance that such will be the case. Our
interests could be adversely affected through:

- Changes in laws, regulations or the interpretation thereof;
- Confiscatory taxation;
- Restrictions on currency conversion, imports or sources of supplies; or
- The expropriation or nationalization of private enterprises.

Although the Chinese government has been pursuing economic
reform policies for approximately two decades, there is no assurance that the
government will continue to pursue such policies or that such policies may not
be significantly altered, especially in the event of a change in leadership,
social or political disruption, or other circumstances affecting China's
political, economic and social life.

As this may specifically relate to our business segments, we
face an emerging economy where laws and regulations are continually changing.
Increased requirements for system security and integrity could result in the
requirement for us to expend additional funds to enhance our systems to meet new
regulatory rules.

China tax rules regarding repatriation of profits and payment
of dividends could be increased which could affect our ability to generate cash
flows from our subsidiary. All such policies could materially affect our future
business operations in China.

Our business may be adversely affected by relationships
between the United States and any country in which we do business which may
impede our ability to operate in the countries in which we are located.

We are a Washington corporation and subject to the laws of the
United States. Our principal business is conducted through a wholly-owned
subsidiary that operates in China. Our business is directly affected by
political and economic conditions in China. Our business may be adversely
affected by the diplomatic and political relationship between the U.S. and
China. This relationship may adversely influence the Chinese government and
public opinion of U.S. corporations conducting business in that country and may
affect our ability to obtain or maintain regulatory approvals to operate in
China.

Our business may be adversely affected by internal Chinese
issues such as boycotts, strikes, protests and government sanctions which may
impede our ability to operate our business in China.

Our business in China could be affected by government sanctions,
  or strikes, boycotts, protests and other actions which could result from political
  issues between the United States and China. These are issues of which we would
  have no control over. Should such events occur, we would attempt to distance
  ourselves as much as possible from local negative actions and could even consider
  shutting our business down until such time as the negative actions have subsided.
  To date no such actions have occurred that affected our China business and we
  anticipate no such actions occurring in Dalian, Shenyang or elsewhere in northeast
  China, based on our understanding of current events in that region of China.

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Chinese laws and regulations could have potential negative
  impact on us.

The Company and Dalian Beigang are considered foreign persons
  or foreign funded enterprisesunder PRC laws and, as a result, we are
  required to comply with PRC laws and regulations. The Chinese legal system is
  a civil law system based on written statutes. Unlike common law systems, it
  is a system in which decided legal cases have little precedential value. In
  the late 1970s, the Chinese government began to promulgate a comprehensive system
  of laws and regulations governing economic matters. The overall effect of legislation
  enacted over the past 20 years has significantly enhanced the protections afforded
  to foreign invested enterprises in China. However, these laws, regulations and
  legal requirements are relatively recent, are evolving rapidly, and their interpretation
  and enforcement involves uncertainties. The effectiveness of newly enacted laws,
  regulations or amendments may be delayed, resulting in detrimental reliance
  by foreign investors. These uncertainties could limit the legal protections
  available to foreign investors, such as the right of foreign invested enterprises
  to hold and/or maintain licenses and permits such as requisite business licenses.
  New laws and regulations that affect existing and proposed future businesses
  may also be applied retroactively. In addition, the PRC authorities retain broad
  discretion in dealing with violations of laws and regulations, including levying
  fines, revoking business licenses and requiring actions necessary for compliance.
  In particular, licenses, permits and beneficial treatments issued or granted
  to us by relevant governmental bodies may be revoked at a later time under contrary
  findings of higher regulatory bodies. We may be subject to sanctions, including
  fines, and could be required to restructure our operations. As a result of these
  substantial uncertainties, we cannot assure you that we will not be found in
  violation of any current or future PRC laws or regulations.

China is still a developing nation and therefore the rules,
regulations and practices are not necessarily as transparent as western
investors may be used to. China has made significant changes to its legal and
accounting rules and has recently allowed international accounting firms to
audit domestic Chinese companies.

Management is unaware of any additional current regulations, or
any new regulations that are pending introduction, that are currently required
by Dalian Beigang in respect to its business operations or its Ling Xiao or
planned Colorstar systems. Neither the Company nor Dalian Beigang has ever been
found to be in violation of any PRC law or regulation.

Adverse changes in economic and political policies of the
  PRC government could have a material and adverse effect on the overall economic
  growth of China, which could adversely affect our business.

Substantially all of our business operations are conducted in
China. Accordingly, our results of operations, financial condition and prospects
are subject to a significant degree to economic, political and legal
developments in China. Chinas economy differs from the economies of most
developed countries in many respects, including with respect to the amount of
government involvement, level of development, growth rate, control of foreign
exchange and allocation of resources. While the PRC economy has experienced
significant growth in the past 20 years, growth has been uneven across different
regions and among various economic sectors of China. The PRC government has
implemented various measures to encourage economic development and guide the
allocation of resources. Some of these measures benefit the overall PRC economy,
but may also have a negative effect on us. For example, our financial condition
and results of operations may be adversely affected by government control over
capital investments or changes in tax regulations that are applicable to us.
Since early 2004, the PRC government has implemented certain measures to control
the pace of economic growth. Such measures may cause a decrease in the level of
economic activity in China, which in turn could adversely affect our results of
operations and financial condition.

Restrictions on currency exchange may limit our ability to
  receive and use our revenues effectively.

Because substantially all of our revenues are currently in the
form of RMB, any restrictions on currency exchange may limit our ability to use
revenue generated in RMB to fund our business activities outside China or to
make dividend payments in U.S. dollars. The principal regulation governing
foreign currency exchange in China is the Foreign Currency Administration Rules
(1996), as amended. Under the Rules, RMB is freely convertible for trade and
service-related foreign exchange transactions, but not for direct investment,
loan or investment in securities outside China unless the prior approval of the
State Administration of Foreign Exchange of the Peoples Republic of China is
obtained. Although the PRC government regulations now allow greater
convertibility of RMB for current account transactions, significant restrictions
still remain. For example, foreign exchange transactions under our subsidiaries
capital account, including principal payments in respect of foreign
currency-denominated obligations, remain subject to significant foreign exchange
controls and the approval of the State Administration of Foreign Exchange. These
limitations could affect our ability to obtain foreign exchange for capital
expenditures. We cannot be certain that the PRC regulatory authorities will not
impose more stringent restrictions on the convertibility of RMB, especially with
respect to foreign exchange transactions.

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Online payment systems in China are at an early stage of development
  and may restrict our ability to expand our online commerce service business.

Online payment systems in China are at an early stage of
development. Although major Chinese banks are instituting online payment
systems, these systems are not as widely available or acceptable to consumers in
China as in the United States and other developed countries. In addition, only a
limited number of consumers in China have credit cards or debit cards, relative
to countries like the United States. The lack of adequate online payment systems
may limit the number of online commerce transactions that we can service. If
online payment services do not develop, our ability to grow our online commerce
business may be limited.

The Internet market has not been proven as an effective commercial
  medium in China.

The market for Internet products and services in China has only
recently begun to develop. The Internet penetration rate in China is lower than
those in the United States and other developed countries. Since the Internet is
an unproven medium for commerce in China, our future operating results from
online services will depend substantially upon the increased use and acceptance
of the Internet for distribution of products and services and facilitation of
commerce in China.

The Internet may not become a viable commercial marketplace in
China for various reasons in the foreseeable future. Issues that could detract
from Internet development in China include:

- consumer dependence on traditional means of commerce;
- inexperience with the Internet as a sales and distribution channel;
- inadequate development of the necessary infrastructure to facilitate online
  commerce;
- concerns about security, reliability, cost, ease of deployment,
  administration and quality of service associated with conducting business over
  the Internet;
- inexperience with credit card usage or with other means of electronic
  payment; and
- limited use of personal computers.

If the Internet is not widely accepted as a medium for online
commerce in China, our ability to grow our online business would be impeded.

Uncertainties with respect to the PRC legal system could adversely
  affect us.

We conduct our business primarily through our wholly-owned
subsidiaries incorporated in China. Our subsidiaries are generally subject to
laws and regulations applicable to foreign investment in China and, in
particular, laws applicable to wholly foreign-owned enterprises. In addition, we
depend on several affiliated Chinese entities in China to honor their service
agreements with us. Almost all of these agreements are governed by PRC law and
disputes arising out of these agreements are expected to be decided by
arbitration in China. The PRC legal system is based on written statutes. Prior
court decisions may be cited for reference but have limited precedential value.
Since 1979, PRC legislation and regulations have significantly enhanced the
protections afforded to various forms of foreign investments in China. However,
since the PRC legal system is still evolving, the interpretations of many laws,
regulations and rules are not always uniform and enforcement of these laws,
regulations and rules involve uncertainties, which may limit remedies available
to us. In addition, any litigation in China may be protracted and result in
substantial costs and diversion of resources and management attention.

The continued growth of Chinese Internet market depends on
  the establishment of an adequate telecommunications infrastructure.

In China, almost all access to the Internet is maintained
through state-owned telecommunication operations under the administrative
control and regulatory supervision of Chinas Ministry of Information Industry.
In addition, the national networks in China connect to the Internet through
government-controlled international gateways. These international gateways are
the only channels through which a domestic Chinese user can connect to the
international Internet network. We rely on this infrastructure, China Telecom
and China Unicom to provide data communications capacity primarily through local
telecommunications lines. Although the government has announced plans to develop
aggressively the national information infrastructure, we cannot assure you that
this infrastructure will be developed. In addition, we will have no access to
alternative networks and services, on a timely basis if at all, in the event of
any infrastructure disruption or failure. The Internet infrastructure in China
may not support the demands associated with continued growth in Internet usage.

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The lack of availability in China of business liability
insurance could materially affect our business.

The insurance industry in China is still at an early stage of
development. Insurance companies in China offer limited business insurance
products and do not, to our knowledge, offer business liability insurance. As a
result, we do not have any business liability insurance coverage for our
operations. Moreover, while business disruption insurance is available, we have
determined that the risks of disruption and cost of the insurance are such that
we do not require it at this time. Any business disruption, litigation or
natural disaster might result in substantial costs and diversion of resources.

Restrictions on dividends imposed by the Chinese government
could negatively affect our business.

Chinese legal restrictions could affect the Companys ability
to distribute dividends. Chinese legal restrictions permit payment of dividends
only out of its net income, if any, determined in accordance with Chinese
accounting standards and regulations.

Under current Chinese regulations, the payment of dividends,
trade and service-related foreign transactions to a foreign investor or a
foreign-invested enterprise is treated as a current account payment for which
the approval of the State Administration of Foreign Exchange is not required.
However, in order to distribute dividends the Company must file documentation to
a designated foreign exchange bank that certifies that all requirements have
been met, such as payment of taxes, board of directors approval and a capital
verification report issued by an accounting firm. A return of capital, which
includes foreign direct investment, upon the dissolution of a foreign-invested
enterprise, is treated as a capital account payment and requires the State
Administration of Foreign Exchange approval in addition to the filing of
documentation. Restrictions on dividends flow through to the parent company
could adversely affect cash flows and the US companys ability to honor its
financial obligations including providing dividends to our shareholders. In this
document, we have disclosed all figures in US dollars other than the disclosures
on annual fees paid by Tenet subscribers.

Potential restrictions on dividends could adversely affect
our cash flow.

Dalian Beigang may not be able to obtain sufficient foreign
exchange to satisfy its foreign exchange requirements or pay dividends to us. A
substantial portion of our revenues and operating expenses are denominated in
Renminbi while a portion of our capital expenditures is denominated in US
dollars. Accordingly, failure by Dalian Beigang to generate sufficient foreign
exchange to pay dividends to us could adversely affect our cash flows and
adequately address our ongoing working capital needs.

Restrictions on the ability of our subsidiary to pay
dividends.

Failure of our Chinese subsidiary to generate profits will
restrict us from paying dividends to our US parent corporation. Restrictions on
dividends flow through to the parent company could adversely affect cash flows
and the US companys ability to honor its financial obligations including
providing dividends to our shareholders. Although we currently do not anticipate
such an issue, new China government policies could be implemented or be change
such that we are restricted from paying dividends from our China subsidiary to
our US parent corporation. This again would restrict our ability to meet our
corporate cash flow needs and restrict our abilities to pay dividends to our
shareholders.

Currency conversion could have a negative impact on our
business.

The PRC government imposes controls on the convertibility of
Renminbi into foreign currencies and, in certain cases, the remittance of
currency out of the PRC. We receive substantially all of our revenues in
Renminbi, which is currently not a freely convertible currency. Shortages in the
availability of foreign currency may restrict our ability to remit sufficient
foreign currency to pay dividends, or otherwise satisfy foreign currency
dominated obligations. Under existing PRC foreign exchange regulations, payments
of current account items, including profit distributions, interest payments and
expenditures from the transaction, can be made in foreign currencies without
prior approval from the PRC State Administration of Foreign Exchange by
complying with certain procedural requirements. However, approval from
appropriate governmental authorities is required where Renminbi is to be
converted into foreign currency and remitted out of China to pay capital
expenses such as the repayment of bank loans denominated in foreign currencies.

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The Companys major operation is in the PRC, which may give
rise to significant foreign currency risks from fluctuations and the degree of
volatility of foreign exchange rates between United States dollars and the
Chinese Renminbi. Historically, the PRC government has benchmarked the Renminbi
exchange ratio against the US dollar, thereby mitigating the associated foreign
currency exchange rate fluctuation risk. The Company does not believe that its
foreign currency exchange rate fluctuation risk is significant, especially if
the PRC government continues to benchmark the Renminbi against the US dollar.

The PRC government may also at its discretion restrict access
in the future to foreign currencies for current account transactions. If the
foreign exchange control system prevents us from obtaining sufficient foreign
currency to satisfy our currency demands, we may not be able to pay certain of
our expenses as they come due.

The PRC government regulates the air-ticketing, travel agency,
  advertising and Internet industries. If we fail to obtain or maintain all pertinent
  permits and approvals or if the PRC government imposes more restrictions on
  these industries, our business may be adversely affected.

The PRC government regulates the air-ticketing, travel agency,
advertising and Internet industries. We are required to obtain applicable
permits or approvals from different regulatory authorities to conduct our
business, including separate licenses for Internet content provision,
air-ticketing, advertising and travel agency activities. If we fail to obtain or
maintain any of the required permits or approvals, we may be subject to various
penalties, such as fines or suspension of operations in these regulated
businesses, which could severely disrupt our business operations. As a result,
our financial condition and results of operations may be adversely affected.

In particular, the Civil Aviation Administration of China, or
CAAC, regulates pricing of air tickets as well as commissions payable to air-
ticketing agencies. If restrictive policies are adopted by CAAC or any of its
regional branches, our air-ticketing revenues may be adversely affected.

Risk Factors Relating to the Companys Colorstar Industry

The requirement for additional financing will affect future
profitability.

Currently the Company uses its existing cash resources to
finance construction of Colorstar test units. We anticipate that our current
sales and marketing efforts will result in agreements being entered into under
which we will be required to provide Colorstar units for partner retail
locations, Since we intend to maintain ownership of all Colorstar units at all
times, we must fully finance all manufacturing, assembly and operating costs.
Our current banking arrangements will not cover such needs, however we are in
discussions with a number of other Chinese banking entities regarding a 100%
inventory financing program for orders in hand. We believe that such bank
financing will materialize. In the event that it does not, then we will be
forced to implement a program whereby we sell the Colorstar units for a fee and
then charge an ongoing monthly fee to operate such units on behalf of the
purchasers. Alternatively we would scale back proposed Colorstar operations
which would have a negative effect on planned operations and on the financial
health of the Company.

Our systems may experience operating difficulties as the
number of Colorstar kiosks increases.

To date we have had a limited number of kiosk units installed
in the Dalian, China area which have been subject to constant and ongoing
consumer usage for over eighteen months. The current model unit has achieved the
performance levels which we have set and we have concluded that the unit has
reached a commercial stage. However, once we start producing units in volume and
we start subjecting our server units to increasing unit and transaction volumes,
we could expect operational issues may develop that could seriously impact our
financial performance and ability to enter into further agreements or
franchise-type arrangements. Our historical expertise in developing the Tenet
system, with its online security and access systems, makes us confident that we
have the expertise to correct any issues that may arise from Colorstar unit
operations.

Security Issues related to cash controls and debit/credit
card handling procedures could negatively affect profitability.

Our planned Colorstar business will entail the installation of
many individual Colorstar kiosks, each installed remotely from our central
server, and each located in a separate retail location. Users will be paying for
transactions with cash, bank debit cards or credit cards. We must ensure that
our security systems adequately provide for payment transactions to be handled
correctly and that auditable cash handling procedures are

20

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implemented at each location. Our online server, to which each
Colorstar kiosk is connected at all times, has systems built in which will
indicate actual cash and debit-credit card payments and when such payments were
picked up-collected. We are confident that our expertise in development of Tenet
systems has provided us with the expertise to develop and implement any and all
security related issues required for the Colorstar network.

Component failures in kiosk manufacture could result in
field location financial problems.

Our manufacturing process for Colorstar kiosk assembly and
production includes a comprehensive and detailed quality control program which
has been designed to ensure that all units are fully operational when shipped.
Since each unit is connected to our central server at all times, we expect that
any field malfunctions will be immediately identified. The Company will
establish a field service team whose responsibility will be to address any
repair and maintenance issues as soon as they arise.

Introduction of Colorstar into North America and elsewhere
could be restricted due to local regulatory compliance issues.

Currently we have two Colorstar units located in Vancouver,
Canada where they are being analyzed to determine any and all issues that could
affect performance and regulatory compliance if the units were to be introduced
into the North American marketplace. We are currently awaiting the adaption of
these units to the new modular design prior to completing a full analysis. We
expect that such adaptations and analysis will be completed by the end of 2010,
after which the North American Colorstar business plan should be finalized.

Competition could have a materially adverse effect on our
business.

In China, we expect that stand alone digital photo kiosks
produced by other manufacturers will continue to be introduced into the
marketplace. Management`s assessment of potential market demand is such that
competition is inevitable and likely from significant players such as Kodak,
Sony and others. Our plan is to aggressively approach the geographical markets
that we have expertise in and to establish operating relationships with large
partners, who have retail locations located in areas where we currently do not
conduct business. Based on our market research to date, we believe that
Colorstar units are more cost efficient and provide higher quality photo
products that all other photo production units currently on the market. Hence,
we believe that we will have a significant competitive advantage in our planned
expansion in China. In North America, we are currently analyzing Colorstar units
to confirm regulatory compliance and user acceptance in the United States and in
Canada. Once that analysis is completed, we will then finalize our business plan
for that market.

Resistance by users towards our products could negatively
affect our revenues and profits.

Consumers may not find value in Colorstar units such that
average usage numbers are below break-even levels. Based on usage figures of
test units installed, we believe that our projected 35% usage figure is
reasonable and achievable. Because of the cost effectiveness of the design and
production process, we could lower user selling prices if required, although to
date, consumer response has indicated that our price point is acceptable to the
market.

Intellectual property protection may be inadequate to
protect us from competitive intervention.

Our ability to compete effectively will depend on our success
in protecting our proprietary technology, both in China, in the United States
and elsewhere. We have filed for patent protection in China and certain other
countries to cover proprietary design aspects of our Colorstar products.

These patent applications are under review by the Chinese
Patent Office and, to date, we have not been issued any patent approvals in
China or elsewhere. No assurance can be given that any patents relating to our
existing technology will be issued from any patent offices; that we will receive
any patent approvals in the future based on our continued development of our
technology; or that any patent protection, once approved, will be sufficient to
deter others, legally or otherwise, from developing or marketing competitive
products utilizing our technologies.

In addition to seeking patent protection, we rely on trade
secrets, know-how and continuing technological advancement to seek to achieve
and thereafter maintain a competitive advantage. Although we have entered into
or intend to enter into confidentiality and invention agreements with our
employees, consultants and advisors,

21

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no assurance can be given that such agreements will be honored
or that we will be able to effectively protect our rights to our unpatented
trade secrets and know-how. Moreover, no assurance can be given that others will
not independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets and know-how.

Risk factors relating to our Ling Xiao Travel Services
Business

Growth in the overall economy and demand for travel services
in China.

We expect that our financial results will continue to be
affected by the overall growth of the economy and demand for travel services in
China. According to the statistical report published on the website of the
National Bureau of Statistics of China on February 28, 2007, GDP per capita rose
from RMB 9,398 (US$1,135) to RMB15,973 (US$2,047), representing a 14% compound
annual growth rate. This growth led to a significant increase in the demand for
travel services. According to the statistical report published on the website of
National Bureau of Statistics of China on February 28, 2007, domestic tourism
spending grew from RMB387.8 billion (US$46.9 billion) in 2002 to RMB623.0
billion (US$79.8 billion) in 2006, representing a compound annual growth of 13%.
However, current economic conditions have changed and such continued growth
rates are not now expected. A slow-down of the Chinese economy, will have a
material and adverse effect on the travel industry in China, which in turn would
harm our business.

Our business may be harmed if our infrastructure and technology
  are damaged or otherwise fail or become obsolete.

Our customer service center and substantially all of our
computer and communications systems are located at single facilities in Dalian
and Shenyang and are therefore vulnerable to damage or interruption from human
error, computer viruses, fire, flood, power loss, telecommunications failure,
physical or electronic break-ins, sabotage, vandalism, natural disasters and
similar events. We currently do not have backup systems and do not carry
business interruption insurance to compensate us for losses that may occur.

We use an internally developed booking software system known as
8000e that supports the aspects of our booking transactions. Capacity
constraints could cause unanticipated system disruptions, slower response times,
poor customer service, impaired quality, and delays in reporting accurate
financial and operating information. These factors could cause us to lose
customers , which will have a material and adverse effect on our results of
operations and financial condition.

Declines or disruptions in the travel industry generally could
  reduce our revenue.

A large part of our Ling Xiao business is driven by the trends
that occur in the travel industry in China, including the airline and tour
sectors. As the travel industry is highly sensitive to business and personal
discretionary spending levels, it tends to decline during general economic
downturns. We could be severely affected by declines or disruptions in the
travel industry and in many cases, have little or no control over those changes.

Seasonality in the travel service industry.

The travel service industry is characterized by seasonal
fluctuations and accordingly our Ling Xiao revenues may vary from quarter to
quarter. Typically, the revenues generated during the summer season of each year
generally are higher than those generated during the winter season, mainly
because the summer season coincides with the peak business and leisure travel
season, while the winter season of each year includes the Chinese New Year
holiday, during which our customers reduce their business activities.

Risk Factors Relating to the Companys Capital Stock

There is no significant trading market for our common stock
as yet and if a market for our common stock does not develop, our investors will
be unable to sell their shares.

We currently have our common stock quoted on the National
Association of Securities Dealers Inc.'s OTC Bulletin Board under the trading
symbol NNWS. The trading market for our common stock has not yet developed to
any significant level. We cannot provide our investors with any assurance that a
significant public market will materialize for our common stock. Further, the
OTC Bulletin Board is not a listing service or exchange, but is instead a dealer
quotation service for subscribing members. The market price of our common

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stock may be significantly affected by factors such as actual
or anticipated fluctuations in our operation results, general market conditions
and other factors. In addition, the stock market has from time to time
experienced significant price and volume fluctuations that have particularly
affected the market prices for the shares of developmental stage companies,
which may materially adversely affect the market price of our common stock.

Risks of dilution in new stock issuance.

We intend to approach potential funders, investors and
brokerage firms to assist in raising a minimum of $500,000 over the next 12
month period. Such investment, if available at all, will result in dilution of
our existing shareholders holdings. Such dilution percentage could vary
dependent upon our acceptance in the investment community as against other
investment opportunities available. We anticipate that such financing would
result in new share issuances of at least 1,000,000 shares. We` are authorized
to issue up to 100,000,000 preferred shares of which none are currently issued
and also authorized to issue up to100,00,000 common shares of which 34,200,012
are currently issued.

Sales of a substantial number of shares of our common stock
into the public market by the sellingstockholders may
result in significant downward pressure on the price of our common stock and
could affectthe ability of our stockholders to realize any
current trading price of our common stock.

Sales of a substantial number of shares of our common stock in
the public market could cause a reduction in the market price of our common
stock, when and if such market develops. Based upon the registration of stock in
our registration statement, selling stockholders may be reselling a substantial
number of our shares of common stock which have been issued and are available
for resale when any significant market develops for our common stock, which
could have an adverse effect on the price of our common stock. As a result of
any such decreases in price of our common stock, purchasers who acquire shares
from the selling stockholders may lose some or all of their investment.

Selling shareholders may impact our stock value through the
execution of short sales which may decrease the value of our common stock.

Any significant downward pressure on the price of our common
stock as the selling stockholders sell their registered shares of our common
stock could encourage short sales by the selling stockholders or others. Any
such short sales could place further downward pressure on the price of our
common stock.

Short sales are transactions in which a selling shareholder
sells a security it does not own. To complete the transaction, a selling
shareholder must borrow the security to make delivery to the buyer. The selling
shareholder is then obligated to replace the security borrowed by purchasing the
security at the market price at the time of replacement. The price at such time
may be higher or lower than the price at which the security was sold by the
selling shareholder. If the underlying security goes down in price between the
time the selling shareholder sells our security and buys it back, the selling
shareholder will realize a gain on the transaction. Conversely, if the
underlying security goes up in price during the period, the selling shareholder
will realize a loss on the transaction. The risk of such price increases is the
principal risk of engaging in short sales. The selling shareholders could short
the stock by borrowing and then selling our securities in the market. Because
the selling shareholders control a large portion of our common stock, the
selling shareholders could have a large impact on the value of our stock if they
were to engage in short selling of our stock. Such short selling could impact
the value of our stock in an extreme and volatile manner to the detriment of
other shareholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our North American executive office consists of approximately
100 square feet of temporary space and is located at Suite #4200, 601 Union
Street, Seattle, Washington, 98101. The lease is a month-to month arrangement
with the option to increase space as needs require. The current monthly rent is
$225.

In China, the Company leases office spaces from certain third
parties under eight operating leases in Dalian and Shenyang which expire on
dates between February 28, 2010 and September 30, 2013 at monthly rentals of
between $293 and $2,925.

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ITEM 3. LEGAL PROCEEDINGS

We are not party to any legal proceedings, nor are we aware of
any contemplated or pending legal proceedings against us.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS

On July 20, 2009, the Company held its Annual Shareholder
meeting at the offices of the Companys attorney in Seattle, Washington. The
specific issues which were presented at the meeting were a proposal to re-elect
three (3) directors to serve until the next annual meeting of shareholders and a
proposal to ratify the appointment of Jimmy C.H. Cheung & Co as the
Companys independent registered public accountants for the fiscal year ending
December 31, 2009. Both proposals were approved by the shareholders.

PART II

|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
      STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES
|------- | -----------------------------------------------------------------------------------------------------------------------

Market For Common Stock

Our common stock has been traded on the NASD OTC Bulletin Board
under the symbol NPCA since January 2008 and changed to NNWS in November
2008. The following table sets forth the high and low bid price per share of our
common stock for the quarters during 2009. These over-the-counter market
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions:

Quarter
      Ended
    
    High
    
    LowDecember 31, 2009
    
    $0.30
    
    $0.29September 30, 2009
    
    $0.40
    
    $0.30June 30, 2009
    
    $1.20
    
    $0.20March 31, 2009
    
    $1.20
    
    $1.20


We had 253 registered shareholders of record as of December 31,
2009.

PennyStockRule

Our shares currently comply with the Penny Stock Reform Act of
1990 which may potentially decrease your ability to easily transfer our shares.
Broker-dealer practices in connection with transactions in penny stocks are
regulated. Penny stocks generally are equity securities with a price of less
than $5.00. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customers account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchasers written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that has to comply with the
penny stock rules. As our shares will likely have to comply with such penny
stock rules, our shareholders will in all likelihood find it more difficult to
sell their securities.

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Our common stock commenced trading on the NASD OTC Bulletin
Board on January 16, 2008 under the symbol NPCA. and changed to NNWS in
November, 2008. During 2007 there was no formal market for our shares.

Holders of Common Stock

As of December 31, 2009, we had 253 shareholders of record for
our common stock.

Dividend Policy

To date, we have not declared or paid cash dividends on our
shares of common stock. We intend to retain all future earnings, if any, for our
business and do not anticipate paying cash dividends in the foreseeable future.
Any future determination to pay cash dividends will be at the discretion of our
board of directors and will be dependent upon our financial condition, results
of operations, capital requirements, general business conditions and such other
factors as our board of directors may deem relevant.

Recent Issuances of Unregistered Securities

On August 11, 2009, the Company entered into an agreement with
a director, Yu Jianhua, to issue up to 3,000,000 treasury shares in exchange for
investment of $2,250,000. As of August 11, 2009, Yu Jianhua had advanced
$1,125,000 and accordingly the Company issued a total of 1,500,000 treasury
shares in exchange for the investment at that time.

Equity Compensation Plan Information

The Company currently has no equity compensation plan in place
for its employees, consultants or directors.

ITEM 6. SELECTED FINANCIAL DATA

Set forth below is our historical financial data with respect
to the fiscal years ended December 31, 2009, 2008, 2007, and 2006. The
information is only a summary. This information has been derived from, and
should be read in conjunction with, our historical Unaudited Condensed
Consolidated Financial Statements and Consolidated Financial Statements and
related notes beginning on page F-1 and the section entitled "Management's
Discussion and Analysis" beginning on page 26.

Selected Historical Financial Data

|                                                                                       |   | As
      of and for the Year Ended December 31, |  
|-------------------------------------------------------------------------------------- | - | ----------------------------------------------- | -
|                                                                                       |   | 2009                                            |  
|                                                                                       |   |                                                 |  
|Total revenues                                                                         | $ | 755,678                                         |  
|Income (loss) from operations                                                          | $ | (3,883,757                                      | )
|Net income (loss)                                                                      | $ | (3,816,911                                      | )
|                                                                                       |   |                                                 |  
|Net income (loss) per share: basic and diluted                                         | $ | (0.11                                           | )
|Wt. Avg. shares outstanding: basic and diluted                                         |   | 33,213,711                                      |  
|Total assets                                                                           | $ | 1,402,767                                       |  
|Long-term debt including capital lease,     
      obligations, net of current portion | $ | -                                               |  
|Shareholders' equity/deficit                                                           | $ | 51,249                                          |  

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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION ANDRESULTS OF OPERATIONS

Introduction

This Report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The words believe, expect, anticipate,
intend, estimate, may, should, could, will, plan, future,
continue, and other expressions that are predictions of or indicate future
events and trends and that do not relate to historical matters identify
forward-looking statements. These forward-looking statements are based largely
on our expectations or forecasts of future events, can be affected by inaccurate
assumptions, and are subject to various business risks and known and unknown
uncertainties, a number of which are beyond our control. Therefore, actual
results could differ materially from the forward-looking statements contained in
this document, and readers are cautioned not to place undue reliance on such
forward-looking statements. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise. A wide variety of factors could cause or contribute
to such differences and could adversely impact revenues, profitability, cash
flows and capital needs. There can be no assurance that the forward-looking
statements contained in this document will, in fact, transpire or prove to be
accurate.

Factors that could cause or contribute to our actual results
differing materially from those discussed herein or for our stock price to be
adversely affected include, but are not limited to: (i) our short operating
history; (ii) our ability to increase revenues and profits in 2010 as we
anticipate launch of our e-commerce website, expansion of Ling Xiao operations
and operating and other efficiencies and to otherwise manage our planned
business expansion; (iii) whether there will be a commercial market,
domestically and internationally, for our Colorstar products, (iv) the success
of Ling Xiao air-ticket operations in Dalian, Shenyang and other potential
northeastern China city locations where Ling Xiao may decide to commence
business operations therein; (v)characterization of our market by new products
and rapid technological change and an ability to adapt to the same; (vi) our
ability to compete against other companies that have greater economic and human
resources than we do; (vii) our dependence on key personnel; (viii) our ability
to attract and retain quality employees; (ix) ) our dependence on manufacturers
and suppliers; (x) our ability to protect technology through patents; (xi) our
ability to protect our proprietary technology and information as trade secrets
and through other similar means; (xii) our revenues and operating results may
fluctuate unexpectedly from quarter to quarter; (xiii) sale of substantial
amounts of our common stock that may have a depressive effect on the market
price of the outstanding shares of our common stock; (xiv) our ability to comply
with Sarbanes-Oxley Act of 2002 Section 404 in 2010; (xv) our non-payment of
dividends and lack of plans to pay dividends in the future; (xvi) future sale of
a substantial number of shares of our common stock that could depress the
trading price of our common stock, lower our value and make it more difficult
for us to raise capital; (xvii) our additional securities available for
issuance, which, if issued, could adversely affect the rights of the current
holders of our common stock; (xviii) our stock price which is likely to be
highly volatile because of several factors, including a relatively limited
public float; and (xix) indemnification of our officers and directors.

Since inception of our Chinese subsidiary, we had been
primarily engaged in the commercial tax filing software systems business, with
operations located in Dalian city in Liaoning province in northeast China. Since
2005, we have also undertaken a research and development program of a
proprietary digital photo processing technology, (`Colorstar`), which has now
been commercialized in a kiosk format. The technology has been developed as a
platform, thus allowing additional applications to be developed for the kiosk
technology besides the photo processing use. Very preliminary revenues were
generated beginning in 2007 and in 2008 and we anticipated a number of
agreements with retail store partners to develop in 2009. We entered into an
agreement on March 1, 2008 to supply and operate a total of 564 Colorstar kiosks
in conjunction with China Netcom, a significant Chinese telecom company. This
agreement has now lapsed and will not be renewed because of customer
re-structuring of their business which will preclude arrangements such as we had
originally entered into. In October 2008, we acquired a 51% equity interest in a
China based air ticket booking business known as Ling Xiao which is generating
business and expanding rapidly.

Results of Operations-Fiscal Year Ended December 31, 2009 Compared to Fiscal year Ended
  December 31, 2008

The Company currently operates its business exclusively through
its Chinese subsidiary. Dalian Beigang has two businesses; one being the supply
and operation of stand alone, digital photo processing kiosks in partnership
with retail locations, either by way of license or franchise-type arrangements;
and the second being an air ticket

26

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booking business known as Ling Xiao which has operations in the
north eastern China cities of Shenyang and Dalian, and in which the Company has
a 51% equity interest.

Up until June 2009, we continued operation of a non-revenue
generating division known as Tenet- being a business of providing platforms to
customers in Dalian China for electronic filing of federal tax returns and
payment of taxes (Tenet). As described above, in late 2008, the China State
Administration of Taxation installed a systematic black box on its website,
designed to guarantee network safety for the system. As a result, Dalian Beigang
was thereafter unable to upgrade its Tenet tax filing system. We negotiated with
representatives of the Federal Administration of Taxation in the Dalian Office
on how to deal with the problems that had risen as a result. Because we were
unable to update the Tenet system for our subscribers and were unable to bill
for services or access- we had no option but to discontinue Tenet operations as
of June 2009.

The assets employed in the provision of platform for electronic
filing of tax returns, comprised mainly of computer equipment with a net book
value of $851 at July 1, 2009 was transferred to other segments or written off
in the fourth quarter of 2009

Results of the discontinued operations for the year ended
December 31, 2009 and 2008 are as follows:

|                                      |   | 2009    |   |   | 2008     |  
|------------------------------------- | - | ------- | - | - | -------- | -
|                                      |   |         |   |   |          |  
|Revenues                              | $ | 2,316   |   | $ | 123,163  |  
|Cost of sales                         |   | (18,544 | ) |   | (85,081  | )
|Gross (loss) profit                   |   | (16,228 | ) |   | 38,082   |  
|Operating expenses                    |   | (1,483  | ) |   | (391,837 | )
|Net loss from discontinued operations | $ | (17,711 | ) | $ | (353,755 | )

The assets and liabilities of discontinued operations as of
December 31, 2009 and December 31, 2008 are summarized as follows:

|                                                           |   | 2009 |  |   | 2008   | 
|---------------------------------------------------------- | - | ---- |  | - | ------ | 
|Assets                                                     |   |      |  |   |        | 
|Property and equipment, net                                | $ | -    |  | $ | 42,151 | 
|Total assets related to discontinued
      operations      | $ | -    |  | $ | 42,151 | 
|                                                           |   |      |  |   |        | 
|Liabilities                                                |   |      |  |   |        | 
|Deferred revenue                                           | $ | -    |  | $ | 5,023  | 
|Total liabilities related to discontinued
      operations | $ | -    |  | $ | 5,023  | 

Net cash flow of the discontinued operations from the
categories of investing activities was not significant for the year ended
December 31, 2009 and 2008.

Revenues from Colorstar installations take the form of a
revenue charge to users of the kiosks, and such revenues are typically split
between the Company and the retail location on an 85/15 basis.

Revenues from Ling Xiao take the form of commissions earned
from air ticket bookings to a number of China airlines as conducted through Ling
Xiaos in-house call centers and also through a network of some 300 independent
travel agents that utilize Ling Xiaos proprietary booking systems.

The Company operates in three reportable segments, color photo
printing, online shopping and air-ticketing agency. The operation of platforms
for electronic filing of tax returns and payment of taxes was discontinued on 1
July 2009 and the losses and assets of this operation were accounted for under
discontinued operations. A new e-Commerce website division is at its trial stage
and expected to commence operations during 2010.

The following is a summary of the Companys segment information
for the year ended December 31, 2009 and 2008:

27

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| |                                                             |  | 2009       |   |   | 2008     |  
| | ----------------------------------------------------------- |  | ---------- | - | - | -------- | -
| |                                                             |  |            |   |   |          |  
| | Revenues                                                    |  |            |   |   |          |  
| | Color photo printing                                        |  | 3,639      |   | $ | 11,760   |  
| | Air-ticketing
      agency                                  |  | 751,565    |   |   | 473,992  |  
| | Online shopping                                             |  | 474        |   |   | -        |  
| | Total revenues                                              |  | 755,678    |   | $ | 485,752  |  
| |                                                             |  |            |   |   |          |  
| | Gross profit (loss)                                         |  |            |   |   |          |  
| | Color photo printing                                        |  | (25,681    | ) | $ | (61,132  | )
| | Air-ticketing
      agency                                  |  | 129,918    |   |   | 272,868  |  
| | Online shopping                                             |  | 474        |   |   | -        |  
| | Total gross profit (loss)                                   |  | 104,711    |   | $ | 211,736  |  
| |                                                             |  |            |   |   |          |  
| | Net income (loss) from operations                           |  |            |   |   |          |  
| | Color photo printing                                        |  | (379,154   | ) | $ | (289,326 | )
| | Air-ticketing
      agency                                  |  | (3,274,118 | ) |   | 189,044  |  
| | Online shopping                                             |  | (170,244   | ) |   |          |  
| | Total loss from operations                                  |  | (3,823,516 | ) |   | (100,282 | )
| |                                                             |  |            |   |   |          |  
| | Unallocated amounts relating to corporate
      operations: |  |            |   |   |          |  
| | Legal and professional fees                                 |  | (57,600    | ) |   | (217,771 | )
| | Others                                                      |  | (15,691    | ) |   | (15,082  | )
| | Net loss before income tax                                  |  | (3,896,807 | ) | $ | (333,135 | )

Revenues/Sales

Revenues for the year ended December 31, 2009, were $755,678 as
compared to $485,752 during the previous fiscal year ended December 31, 2008.
The primary reason for the increase was due to the acquisition of a 51% equity
interest in Ling Xiao on October 9, 2008 and the allocated revenues from Ling
Xiao since that date.

As described above, in late 2008, the China State
Administration of Taxation installed a systematic black box on its website,
designed to guarantee network safety for the system. As a result, Dalian Beigang
is now unable to upgrade its Tenet tax filing system. Because we were unable to
update the Tenet system for our subscribers, we were not billing for services or
access- thus not currently generating any Tenet revenues. We were unable to
resolve this issue, and had no option but to discontinue Tenet operations in
June 2009.

During 2007 and 2008 we installed a number of Colorstar photo
processing kiosks in the Dalian area under informal franchise arrangements.
Minor income amounts were generated from these units, although the purpose of
such installations was to generate consumer feedback and also to prove that
units were operating effectively and correctly. By December 31, 2007 we had
confirmed that this latest Colorstar model met all operating conditions
established by management and had reached a commercial stage. Due to failure by
the Company to generate working capital to pay for manufacturing of kiosks, only
12 units were produced in 2008 and four were in service as at December 31, 2009.
Until such time as the Company can raise sufficient capital to cover kiosk
manufacturing costs, expansion of this division will be limited.

During 2009, Ling Xiao generated net revenue of $751,565. The
majority of its revenues originated from air ticket bookings during the period.

Revenue Recognition

The Company recognizes revenues under the provisions of FASB
Codification Topic 605 (ASC Topic 605), Revenue Recognition when all of the
following have occurred: persuasive evidence of arrangement with the customer,
services have been performed, fees are fixed or determinable and collectability
of the fees is reasonably assured.

28

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These criteria as related to the Companys revenues are
considered to have been met as follows:

--Electronic tax filing services

The Company provides electronic tax filing services to its
customers based on fixed price contracts with contractual period of one year.
The customers are billed on approval of the contracts and based on the terms
included in the contracts. Revenue is recognized rateably over the term of the
contract and those billed and received in advanced by the Company for future
services not yet performed is deferred. On early termination of the contracts,
the fees received in advance will be refunded to the customers.

On April 12, 2009, the Directors resolved to discontinue the
operations of the provision of platform for electronic filing of tax returns
with effect from July 1, 2009. As the State Administration of Taxation in Dalian
(SAT in Dalian) has made available its electronic tax filing facilities to all
tax payers, subscribers to the Companys platform for electronic filing of tax
returns, and the revenue derived therefrom had continued to drop to a very low
level. In view of these recent developments, the Directors decided to
discontinue the operations of its platform for electronic filing of tax returns.

--Color photo printing services

Revenue from the sale of color photo printing services is
derived from its own and affiliate operations, which consist of franchise agency
and licensing programs. The Company follows the guidance of Emerging Issues Task
Force (EITF) 99-19, "Recording Revenue Gross as a Principal versus Net as an
Agent" for its presentation of revenue and direct costs. This guidance requires
the Company to assess whether it acts as a principal in the transaction or as an
agent acting on behalf of others. Where the Company is the principal in the
transaction and has the risks and rewards of ownership, the transactions are
recorded gross in the statements of income. Revenue and related costs of
services generated by the franchise agents are included as part of the Company's
consolidated revenue and costs of services, respectively, since the Company has
the direct contractual relationships with the customers, holds title to the
related customer receivables and is the legal employer of the employees.

The franchise agent acts as the Company's agent in a similar
manner as a branch manager in the Company-owned locations. In the franchise
arrangement, the Company has the direct contractual relationships with its
customers and contracts with customers are binding to the Company. The Company
is also responsible for the employees payroll, electricity and related overheads
regardless of customer acceptance of the services. These factors, among others,
designate the Company as the principal with respect to its franchise agent
operations. Franchise agents sales were $2,223 and $6,532 for 2009 and 2008
respectively.

The Company also has a licensing program whereby the licensee
has direct contractual relationships with the customers, held title to the
related customers receivables and is the legal employer of the employees.
Accordingly, net sales and costs of services generated by the licensee are not
included in the Company's consolidated financial statements. Fees are paid to
the Company based on a fixed price for each of the photo printed and such
license fees are recorded by the Company as revenue. Fees received from
licensees were $0 and $428 for 2009 and 2008 respectively.

For sale from its own operations, revenue is recognized after
the photos are printed and delivered to the customers and cash has been
collected.

--Air-ticketing agency services

The Company receives commissions from travel suppliers for air-ticketing
  services through the Companys transaction and service platform under various
  services agreements. Commissions from air-ticketing services rendered are recognized
  after air tickets are issued, net of estimated cancellations. The Company presents
  revenues from such transactions on a net basis in the statements of operations
  as the Company does not assume inventory risks and has no obligations for cancelled
  airline ticket reservations. Contracts with certain airlines contain discretionary
  escalating commissions that are paid to the Company subject to achieving specific
  performance targets. Such discretionary escalating commissions are recognized
  when the air tickets are issued and performance guarantees, if any, are achieved.

29

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Selling, General and Administrative Expenses.

General and administrative expenses were $756,570 in 2009, as
  compared to $396,494 in 2008; an increase of 91%. This increase was primarily
  a result of the costs incurred with attempted commercialization of Colorstar,
  increased travel to North America to investigate market opportunities and ongoing
  public entity related legal and audit costs. In addition, during the year we
  added administrative staffing for the Colorstar project, which also added to
  overall general expenses. Depreciation costs were $21,149 in 2009 as compared
  to $9,828 in 2008. Research and development expenses were $95,811 in 2009 as
  compared to $162,894 in 2008. Losses from operations were $3,883,757 in 2009
  as compared to losses of $357,480 in 2008 with the loss due primarily to impairment
  of goodwill, public professional services costs, reduced new Tenet subscribers,
  and increased support costs in anticipation of the Colorstar product launch.
  Net loss for the comparable year periods of 2009 and 2008 were $3,816,911 and
  $818,894 respectively.

Gross profit for fiscal year 2009 was $104,711 as compared to
$211,736 in 2008.

Research and Development

Research and development costs related to both present and
future products are expensed as incurred. Total expenditures on research and
development related to the color printing project and charged to general and
administrative expenses for the years ended December 31, 2009 and 2008 were $0
and $162,894 respectively. During 2009, 100% of the $95,811 incurred as
development costs related to the development of the planned e-commerce website
www.urmart.net.

Payroll and Employees Benefits Expense

The full time employees of the Company are entitled to employee
benefits including medical care, welfare subsidies, unemployment insurance and
pension benefits through a Chinese government mandated multi-employer defined
contribution plan. The Company is required to accrue for those benefits based on
certain percentages of the employees salaries and make contributions to the
plans out of the amounts accrued for medical and pension benefits. The total
provision and contributions made for such employee benefits was $9,117 and
$16,147 for the years ended December 31, 2009 and 2008, respectively. The
Chinese government is responsible for the medical benefits and the pension
liability to be paid to these employees.

The Companys PRC subsidiaries are required to make
appropriations to reserves funds, comprising the statutory surplus reserve,
statutory public welfare fund and discretionary surplus reserve, based on
after-tax net income determined in accordance with the laws and regulations of
the PRC. Prior to January 1, 2007 the appropriation to the statutory surplus
reserve should be at least 10% of the after tax net income determined in
accordance with the laws and regulations of the PRC until the reserve is equal
to 50% of the entities registered capital. Appropriations to the statutory
public welfare fund are at 5% to 10% of the after tax net income determined by
the Board of Directors. Effective January 1, 2007, the Company is only required
to contribute to one statutory reserve fund at 10 percent of net income after
tax per annum, such contributions not to exceed 50 percent of the respective
companies registered capital.

The statutory reserve funds are restricted for use to set off
against prior period losses, expansion of production and operation or for the
increase in the registered capital of the Company. The statutory public welfare
fund is restricted for use in capital expenditures for the collective welfare of
employees. These reserves are not transferable to the Company in the form of
cash dividends, loans or advances. These reserves are therefore not available
for distribution except in liquidation.

Dalian Beigang is not required to make further appropriations
to the statutory reserve funds after 2004 as the funds have exceeded 50% of its
registered capital after the 2003 appropriation.

Depreciation

Property and equipment assets are stated at cost, less
accumulated depreciation. Expenditures for additions, major renewals and
betterments are capitalized and expenditures for maintenance and repairs are
charged to expense as incurred.

Depreciation is provided on a straight-line basis, less
estimated residual value over the assets estimated useful lives. The estimated
useful lives are as follows:

| | Motor vehicles                    | 5 to 10 Years | 
| | --------------------------------- | ------------- | 
| | Color printing machine            | 4 Years       | 
| | Furniture, fixtures and equipment | 2 to 5 Years  | 

30

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The following is a summary of property and equipment at
December 31:

| |                                                         |   | 2009    |  |   | 2008    | 
| | ------------------------------------------------------- | - | ------- |  | - | ------- | 
| |                                                         |   |         |  |   |         | 
| | Motor vehicles                                          | $ | 272,392 |  | $ | 34,328  | 
| | Color photo printing machines                           |   | 310,159 |  |   | 309,389 | 
| | Furniture and office equipment                          |   | 102,471 |  |   | 135,007 | 
| | Construction in progress - color photo printing machine |   | -       |  |   | -       | 
| |                                                         |   | 685,022 |  |   | 478,724 | 
| | Less: accumulated depreciation                          |   | 228,631 |  |   | 101,035 | 
| | Property and equipment, net                             | $ | 456,391 |  | $ | 377,689 | 

Depreciation expense for the years ended December 31, 2009 and
2008 was $39,415 and $28,764 respectively.

Net Income (Loss) and earnings (Loss) per Share

Basic loss per share is computed by dividing income available
to common stockholders by the weighted average number of common shares
outstanding during the year. Diluted loss per share is computed on a similar
basis to basic loss per share except that the denominator is increased to
include the number of additional common shares that would have been outstanding
if the potential common shares had been issued and if the additional common
shares were dilutive. The increase in loss per share was primarily the result of
increased administrative costs and legal and audit requirements as components of
the public company disclosure process .

Liquidity and Capital Resources

As reflected in the accompanying financial statements, the
Company has an accumulated deficit of $5,532,209 at December 31, 2009 as
compared to an accumulated deficit of $1,715,298 at its year end of December 31,
2008. The Companys current liabilities exceed its current assets by $260,834
and the Company used cash in operations during the year period ended December
31, 2009 of $633,960.

Contractual cash commitments for the fiscal years subsequent to
December 31, 2009, are summarized as follows:

The Company leases office spaces from certain third parties
under eight operating leases which expire on dates between February 28, 2010 and
September 30, 2013 at monthly rentals of between $293 and $2,925.

As of December 31, 2009, the Company has outstanding
commitments of with respect to the above operating leases, which are due as
follows:

|2010 | $ | 57,792  | 
|---- | - | ------- | 
|2011 |   | 36,072  | 
|2012 |   | 35,102  | 
|2013 |   | 26,327  | 
|     | $ | 155,293 | 

For the year ended December 31, 2009, our cash and cash
equivalents decreased from $440,226 to $307,273.

As reflected in the accompanying financial statements, we had
an accumulated deficit of $5,532,209 at December 31, 2009. Our current
liabilities exceed our current assets by $260,834 and during the year period, we
used cash in operations of $633,960. Our auditor commented that these factors
raise substantial doubt about our ability to continue as a going concern. In
view of the matters described above, continued operation of the Company is
dependent upon the Companys ability to raise additional capital, reduce its
operating expenses, obtain financing and succeed in its future Colorstar
operations. Management is taking steps to revise our operating and financial
requirements, which we believe will be sufficient to provide us with the ability
to continue as a going concern.

31

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We are now pursuing additional funding and potential merger or
acquisition candidates, which would enhance stockholders investment. Management
believes that the above actions will allow us to continue operations through the
next fiscal year.

Cash Used in Operating Activities

Cash used in operating activities was $633,960 during the year
ended December 31, 2009, as compared to $714,776 during the year ended December
31, 2008.

Cash Used in Investing Activities

Cash used in investing activities was a negative amount of
$79,381 comprised primarily of issues related to the acquisition of computer
related software and hardware..

Cash from Financing Activities

We have funded our business to date primarily from sales of our
common stock and by way of shareholder loans. During 2009, specific financing
activities totaled $580,985 and which included sale of securities for $900,359
and additional stockholder loans of $77,407.

On August 28, 2009, the Company issued 1,500,000 shares of
common stock valued at $1,125,000 to the subscriber who has paid $900,359 in
cash to the Company. The remaining balance of $224,641 was recorded as stock
subscription receivables as of December 31, 2009. The subscriber was
subsequently appointed director of the Company on October 27, 2009.

As of December 31, 2009, a related company owed $99,209 to the
Company during the normal course of business and is under the same terms as
other customers.

As of December 31, 2009 and 2008, the Company owed $251,312 and
$173,432 respectively to a stockholder as unsecured loan and imputed interest is
computed at 5% per annum on the amount due. The balance is repayable on demand.

There are no assurances that we will be able to achieve further
sales of our common stock or any other form of additional financing. If we are
unable to achieve the financing necessary to continue our plan of operations,
then we will not be able to continue our exploration of the prospect lease and
our venture will fail.

Going Concern

As reflected in the accompanying financial statements, the
Company has an accumulated deficit of $5,532,209 at December 31, 2009 that
includes a net loss of $3,816,911 for the year ended December 31, 2009. The
Companys total current liabilities exceed its total current assets by $260,834
and the Company used cash amounted to $633,960 in its operations. These factors
raise substantial doubt about its ability to continue as a going concern. In
view of the matters described above, continued operation of the Company is
dependent upon the Companys ability to raise additional capital, obtain
financing and succeed in its future operations. The financial statements do not
include any adjustments relating to the classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.

Management has taken steps to revise its operating and
financial requirements, which it believes are sufficient to provide the Company
with the ability to continue as a going concern. The Company is also actively
pursuing additional funding and potential merger or acquisition candidates and
strategic partners, which would enhance stockholders investment. Management
believes that the above actions will allow the Company to continue operations
through the next fiscal year.

Our auditors stated in their report on our audited financial
statements for the year ended December 31, 2009 that they have substantial doubt
we will be able to continue as a going concern.

Future Financings

We anticipate continuing to rely on equity sales of our common
  shares in order to continue to fund our business operations. Issuances of additional
  shares will result in dilution to our existing shareholders. There is no assurance
  that we will achieve any additional sales of our equity securities or arrange
  for debt or other financing to fund our planned exploration activities.

32

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet debt nor did we have any
transactions, arrangements, obligations (including contingent obligations) or
other relationships with any unconsolidated entities or other persons that may
have material current or future effect on financial conditions, changes in the
financial conditions, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenue or expenses.

Critical Accounting Policies and Estimates

Management's discussion and analysis of financial conditions
and results of operations are based upon the Company's consolidated financial
statements that have been prepared in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP"). The
preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses. We base our estimates on historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates under different
assumptions or conditions.

We believe the following critical accounting policies affect
our more significant judgments and estimates used in the preparation of our
consolidated financial statements.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with
generally accepted accounting principles 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 period.
Actual results could differ from those estimates.

Revenue Recognition

Substantially all of the Companys revenue is generated from
the Ling Xiao travel booking business and color photo printing services.
Effective December 31, 2009, the Tenet, electronic tax filing business had
ceased all revenue generating activities, having effectively discontinued
operations as at June 2009. During 2008, the Company recognized revenue from the
sale of electronic tax filing service contracts and color photo printing
services under the provisions of ASC Topic 605, Revenue Recognition, where
persuasive evidence of an arrangement exists; the service is rendered; the fee
is fixed or determinable; the collection of the receivable is reasonably
assured; and no significant post-delivery obligations remain unfulfilled.

The Company provided electronic tax filing services to its
customers based on fixed price contracts with contractual period of one year.
The customers were billed on approval of the contracts and based on the terms
included in the contracts. Revenue was recognized rateably over the term of the
contract and those billed and received in advanced by the Company for future
services not yet performed was deferred. On early termination of the contracts,
the fees received in advanced are refunded to the customers.

Revenue from the sale of color photo printing services is
derived from affiliate operations, which consist of franchise agency and
licensing program. The Company follows the guidance of Emerging Issues Task
Force (EITF) 99-19, "Recording Revenue Gross as a Principal versus Net as an
Agent", for its presentation of revenue and direct costs. This guidance requires
the Company to assess whether it acts as a principal in the transaction or as an
agent acting on behalf of others. Where the Company is the principal in the
transaction and has the risks and rewards of ownership, the transactions are
recorded gross in the statements of income. Revenue and related costs of
services generated by the franchise agents are included as part of the Company's
consolidated revenue and costs of services, respectively, since the Company has
the direct contractual relations.

The franchise agent acts as the Company's agent in a similar
  manner as a branch manager in the Company-owned locations. In the franchise
  arrangement, the Company has the direct contractual relationships with its customers
  and contracts with customers are binding to the Company. The Company is also
  obligated for the employee payroll, electricity and related overheads regardless
  of customer acceptance of the services. These factors, among others, designate
  the Company as principal with respect to its franchise agent operations. Franchise
  agent sales were $2,223 and $6,532 for fiscal 2009 and 2008, respectively.

33

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The Company also has a licensing program whereby the licensee
had the direct contractual relationships with the customers, held title to the
related customer receivables and was the legal employer of the employees.
Accordingly, sales and costs of services generated by the license operation are
not included in the Company's consolidated financial statements. Fees are paid
to the Company based on a fixed price for each of the photo printed and such
license fees are recorded by the Company as revenue. Fees received from licensed
offices were $428 and $815 for fiscal 2009 and 2008, respectively.

Allowance for Doubtful Accounts

The Company extends unsecured credit to its customers in the
ordinary course of business but mitigates the associated risks by performing
credit checks and actively pursuing past due accounts. An allowance for doubtful
accounts is established and recorded based on managements assessment of the
credit history with the customer and current relationships with them.

Foreign currency translation

Northport Network maintains its accounting records in its
functional currencies of United States Dollars (US$) while Dalian Beigang and
Ling Xiao maintain their accounting records in their functional currencies of
Renminbi (RMB).

Foreign currency transactions during the year are translated to
the functional currency at the approximate rates of exchange on the dates of
transactions. Monetary assets and liabilities denominated in foreign currencies
at the balance sheet date are translated at the approximate rates of exchange at
that date. Non-monetary assets and liabilities are translated at the rates of
exchange prevailing at the time the asset or liability was acquired. Exchange
gains or losses are recorded in the statement of operations.

The financial statements of Dalian Beigang and Ling Xiao whose
functional currencies are RMB are translated into US$ using the closing rate
method. The balance sheet items are translated into US$ using the exchange rates
at the respective balance sheet dates. The capital and various reserves are
translated at historical exchange rates prevailing at the time of the
transactions while income and expenses items are translated at the average
exchange rate for the year. All exchange differences are recorded within
equity.

The exchange rates used to translate amounts in RMB into US$
for the purposes of preparing the financial statements were as follows:

|                                                                                                                           | December 31, 2008 | December 31, 2008
|-------------------------------------------------------------------------------------------------------------------------- | ----------------- | -----------------
|                                                                                                                           |                   |                  
|Balance sheet items, except
      for common stock, additional paid-in capital and retained
      earnings, as of year end | US$1=RMB6.8372    | US$1=RMB6.8542   
|                                                                                                                           |                   |                  
|Amounts included in the
      statements of operations and cash flows for the year                                         | US$1=RMB6.84088   | US$1=RMB6.96225  

The translation difference recorded for the years ended
December 31, 2009 and 2008 was loss of $2,823 and $46,737 respectively.

No presentation is made that RMB amounts have been, or would
be, converted into US$ at the above rates. Although the Chinese government
regulations now allow convertibility of RMB for current account transactions,
significant restrictions still remain. Hence, such translations should not be
construed as representation that the RMB could be converted into US$ at that
rate or any other rate.

The value of RMB against US$ and other currencies may fluctuate
and is affected by, among other things, changes in Chinas political and
economic conditions, any significant revaluation of RMB may materially affect

34

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Long-lived assets

In accordance with FASB Codification Topic 360 (ASC Topic
360), Accounting for the impairment or disposal of Long-Lived Assets",
long-lived assets and certain identifiable intangible assets held and used by
the Company are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. For purposes of evaluating the recoverability of long-lived assets,
the recoverability test is performed using undiscounted net cash flows related
to the long- lived assets. The Company reviews long-lived assets to determine
that carrying values are not impaired. There was no impairment recorded by the
Company on property and equipment during the year ended December 31, 2009.

Goodwill

Goodwill represents the excess purchase price of net tangible
and intangible assets acquired in business combinations over their estimated
fair value. The Company accounts for goodwill in accordance with FASB
Codification Topic 350 (ASC Topic 350), Accounting for Goodwill and Other
Intangible Assets and FASB Codification Topic 805 (ASC Topic 805), Business
Combinations. ASC Topic 350 requires goodwill to be tested for impairment on an
annual basis or more frequently, if impairment indicators arise, and written
down when impaired. In accordance with ASC Topic 350, the Company tests goodwill
for impairment at the reporting unit level at least annually and more frequently
upon the occurrence of certain events. The annual test of goodwill impairment is
performed in the fourth quarter using a two-step process in accordance with ASC
Topic 350. First, the Company determines if the carrying amount of its reporting
unit exceeds the fair value of the reporting unit, which would indicate that
goodwill may be impaired. If the Company determines that goodwill may be
impaired, the Company compares the implied fair value of the goodwill, as
defined by ASC Topic 350, to its carrying amount to determine if there is an
impairment loss. During the fourth quarter of 2009, the Company completed a
review of its goodwill and determined an impairment had occurred and provided
for a 100% impairment of goodwill amounting to $3,114,938.

Disclosure about Fair value of Financial Instruments

FASB Codification Topic 825 (ASC Topic
825), "Disclosure About Fair Value of Financial Instruments," requires certain
disclosures regarding the fair value of financial instruments. Fair value of
financial instrument is made at a specific point in time, based on relevant
information about financial markets and specific financial instruments. As these
estimates are subjective in nature, involving uncertainties and matters of
significant judgments, they cannot be determined with precision. Changes in
assumptions can significantly affect estimated fair values.

The carrying value of cash and cash
equivalents, accounts receivable (trade and others), accounts payable (trade and
related party) and accrued liabilities approximate their fair values because of
the short-term nature of these instruments. The management of the Company is of
the opinion that the Company is not exposed to significant interest or credit
risks arising from these financial instruments.

Income and Other Taxes and Obligatory Payments

The Company accounts for income taxes under the FASB
Codification Topic 740-10-25, Accounting for Income Taxes (ASC 740-10-25).
Under ASC 740-10-25, 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. 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. Under ASC
740-10-25, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that included the enactment date.

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On January 1, 2007, the Company adopted the provisions of FASB
Codification Topic 740, Accounting for Uncertainty in Income Taxes (ASC
740). ASC 740 prescribes a more-likely-than-not threshold for financial
statements recognition and measurement of a tax position taken (or expected to
be taken) in a tax return. This Interpretation also provides guidance on
derecognition of income tax assets and liabilities, classification of current
and deferred income tax assets and liabilities, accounting for interest and
penalties associated with tax positions, accounting for interest and penalties
associated with tax positions, accounting for income taxes in interim periods
and income tax disclosures. The adoption of ASC 740 has not resulted in any
material impact on the Companys financial position or results.

Recently Issued Accounting Standards

In February 2010, FASB issued ASU 2010-9 Subsequent Events
(Topic 855) Amendments to Certain Recognition and Disclosure Requirements ("ASU
2010-9"). ASU 2010-9 amends disclosure requirements within Subtopic 855-10. An
entity that is an SEC filer is not required to disclose the date through which
subsequent events have been evaluated. This change alleviates potential
conflicts between Subtopic 855-10 and the SEC's requirements. ASU 2010-9 is
effective for interim and annual periods ending after June 15, 2010. The Company
does not expect the standard to have any impact on the Companys financial
position.

In January 2010, FASB issued ASU 2010-2 Accounting and
Reporting for Decreases in Ownership of a Subsidiary- a Scope Clarification
("ASU 2010-2"). ASU 2010-2 addresses implementation issues related to the
changes in ownership provisions in the ConsolidationOverall Subtopic (Subtopic
810-10) of the FASB Accounting Standards Codification , originally issued as
FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. Subtopic 810-10 establishes the accounting and reporting guidance
for noncontrolling interests and changes in ownership interests of a subsidiary.
An entity is required to deconsolidate a subsidiary when the entity ceases to
have a controlling financial interest in the subsidiary. Upon deconsolidation of
a subsidiary, an entity recognizes a gain or loss on the transaction and
measures any retained investment in the subsidiary at fair value. The gain or
loss includes any gain or loss associated with the difference between the fair
value of the retained investment in the subsidiary and its carrying amount at
the date the subsidiary is deconsolidated. In contrast, an entity is required to
account for a decrease in ownership interest of a subsidiary that does not
result in a change of control of the subsidiary as an equity transaction. ASU
2010-2 is effective for the Company starting January 3, 2010. The Company does
not expect the standard to have any impact on the Companys financial position.

In January 2010, FASB issued ASU 2010-2 Accounting and
Reporting for Decreases in Ownership of a Subsidiary- a Scope Clarification
("ASU 2010-2"). ASU 2010-2 addresses implementation issues related to the
changes in ownership provisions in the ConsolidationOverall Subtopic (Subtopic
810-10) of the FASB Accounting Standards Codification , originally issued as
FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial
Statements. Subtopic 810-10 establishes the accounting and reporting guidance
for noncontrolling interests and changes in ownership interests of a subsidiary.
An entity is required to deconsolidate a subsidiary when the entity ceases to
have a controlling financial interest in the subsidiary. Upon deconsolidation of
a subsidiary, an entity recognizes a gain or loss on the transaction and
measures any retained investment in the subsidiary at fair value. The gain or
loss includes any gain or loss associated with the difference between the fair
value of the retained investment in the subsidiary and its carrying amount at
the date the subsidiary is deconsolidated. In contrast, an entity is required to
account for a decrease in ownership interest of a subsidiary that does not
result in a change of control of the subsidiary as an equity transaction. ASU
2010-2 is effective for the Company starting January 3, 2010. The Company does
not expect the standard to have any impact on the Companys financial position.

In December 2009, FASB issued ASU 2009-17 Consolidations (Topic
810) Improvements to Financial Reporting by Enterprises Involved with Variable
Interest Entities ("ASU 2009-17"). ASU 2009-17 amends the FASB ASC for the
issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R)
.. The amendments in ASU 2009-17 replace the quantitative-based risks and rewards
calculation for determining which enterprise, if any, has a controlling
financial interest in a variable interest entity with an approach focused on
identifying which enterprise has the power to direct the activities of a
variable interest entity that most significantly impact the entity's economic
performance and (1) the obligation to absorb losses of the entity or (2) the
right to receive benefits from the entity. ASU 2009-17 also requires additional
disclosures about an enterprise's involvement in variable interest entities. ASU
2009-17 is effective as of the beginning of each reporting entity's first annual
reporting period that begins after November 15, 2009. The Company does not
expect the standard to have any impact on the Companys financial position.

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In December 2009, FASB issued ASU 2009-16 Transfers and
Servicing (Topic 860) Accounting for Transfers of Financial Assets ("ASU
2009-16"). ASU 2009-16 amends the FASB Accounting Standards Codification for the
issuance of FASB Statement No. 166, Accounting for Transfers of Financial
Assetsan amendment of FASB Statement No. 140 . The amendments in ASU 2009-16
improve financial reporting by eliminating the exceptions for qualifying
special-purpose entities from the consolidation guidance and the exception that
permitted sale accounting for certain mortgage securitizations when a transferor
has not surrendered control over the transferred financial assets. In addition,
the amendments require enhanced disclosures about the risks that a transferor
continues to be exposed to because of its continuing involvement in transferred
financial assets. ASU 2009-16 is effective as of the beginning of each reporting
entity's first annual reporting period that begins after November 15, 2009. The
Company does not expect the standard to have any impact on the Companys
financial position.

In October, 2009, the FASB issued ASU 2009-15, Accounting for
Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or
Other Financing, now codified under FASB ASC Topic 470 Debt, (ASU 2009-15),
and provides guidance for accounting and reporting for own-share lending
arrangements issued in contemplation of a convertible debt issuance. At the date
of issuance, a share-lending arrangement entered into on an entitys own shares
should be measured at fair value in accordance with Topic 820 and recognized as
an issuance cost, with an offset to additional paid-in capital. Loaned shares
are excluded from basic and diluted earnings per share unless default of the
share-lending arrangement occurs. The amendments also require several
disclosures including a description and the terms of the arrangement and the
reason for entering into the arrangement. The effective dates of the amendments
are dependent upon the date the share-lending arrangement was entered into and
include retrospective application for arrangements outstanding as of the
beginning of fiscal years beginning on or after December 15, 2009. The Company
does not expect the standard to have any impact on the Companys financial
position.

In October 2009, the FASB issued ASU 2009-14, Certain
Arrangements That Include Software Elements, now codified under FASB ASC Topic
985, Software, (ASU 2009-14). ASU 2009-14 removes tangible products from the
scope of software revenue guidance and provides guidance on determining whether
software deliverables in an arrangement that includes a tangible product are
covered by the scope of the software revenue guidance. ASU 2009-14 should be
applied on a prospective basis for revenue arrangements entered into or
materially modified in fiscal years beginning on or after June 15, 2010, with
early adoption permitted. The Company does not expect the standard to have any
impact on the Companys financial position.

In October 2009, the FASB issued ASU 2009-13,
Multiple-Deliverable Revenue Arrangements, now codified under FASB ASC Topic
605, Revenue Recognition, (ASU 2009-13). ASU 2009-13 requires entities to
allocate revenue in an arrangement using estimated selling prices of the
delivered goods and services based on a selling price hierarchy. The amendments
eliminate the residual method of revenue allocation and require revenue to be
allocated using the relative selling price method. ASU 2009-13 should be applied
on a prospective basis for revenue arrangements entered into or materially
modified in fiscal years beginning on or after June 15, 2010, with early
adoption permitted. The Company does not expect the standard to have any impact
on the Companys financial position.

In June 2009, the FASB issued SFAS No. 167 Amendments to FASB
Interpretation No. 46(R) (SFAS 167) (not part of the codification yet). SFAS
167 amends FASB Interpretation No. 46 (Revised December 2003) Consolidation of
Variable Interest Entitiesan interpretation of ARB No. 51 (FIN 46(R)) to
require an enterprise to perform an analysis to determine whether the
enterprises variable interest or interests give it a controlling financial
interest in a variable interest entity; to require ongoing reassessments of
whether an enterprise is the primary beneficiary of a variable interest entity;
to eliminate the quantitative approach previously required for determining the
primary beneficiary of a variable interest entity; to add an additional
reconsideration event for determining whether an entity is a variable interest
entity when any changes in facts and circumstances occur such that holders of
the equity investment at risk, as a group, lose the power from voting rights or
similar rights of those investments to direct the activities of the entity that
most significantly impact the entitys economic performance; and to require
enhanced disclosures that will provide users of financial statements with more
transparent information about an enterprises involvement in a variable interest
entity. SFAS 167 will be effective as of the beginning of each reporting
entity's first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period, and for interim and
annual reporting periods thereafter. Early adoption is not permitted. This
guidance will be codified under FASB ASC Topic 810, Consolidation when it
becomes effective. The Company does not expect the standard to have any impact
on the Companys financial position.

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In June 2009, the FASB issued SFAS No. 166 Accounting for
Transfers of Financial Assetsan amendment of FASB Statement No. 140 (SFAS
166) (ASC Topic 810). SFAS 166 (not part of the codification yet) amends
various provisions of SFAS No. 140 Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilitiesa replacement of FASB
Statement No. 125 by removing the concept of a qualifying special-purpose
entity and removes the exception from applying FIN 46(R) to variable interest
entities that are qualifying special-purpose entities; limits the circumstances
in which a transferor derecognizes a portion or component of a financial asset;
defines a participating interest; requires a transferor to recognize and
initially measure at fair value all assets obtained and liabilities incurred as
a result of a transfer accounted for as a sale; and requires enhanced
disclosure;among others. SFAS 166 will be effective as of the beginning of each
reporting entity's first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period and for
interim and annual reporting periods thereafter. Early adoption is not
permitted. This guidance will be codified under FASB ASC Topic 860, Transfers
and Servicing when it becomes effective. The Company does not expect the
standard to have any impact on the Companys financial position.

In December 2008, the FASB issued Staff Position No. FAS
132(R)-1 Employers Disclosures about Postretirement Benefit Plan Assets (FSP
FAS 132(R)-1) (ASC Topic 715-20-65). FSP FAS 132(R)-1 (ASC Topic 715-20-65)
requires more detailed disclosures about employers plan assets in a defined
benefit pension or other postretirement plan, including employers investment
strategies, major categories of plan assets, concentrations of risk within plan
assets, and inputs and valuation techniques used to measure the fair value of
plan assets. FSP FAS 132(R)-1 (ASC Topic 715-20-65) also requires, for fair
value measurements using significant unobservable inputs (Level 3), disclosure
of the effect of the measurements on changes in plan assets for the period. The
disclosures about plan assets required by FSP FAS 132(R)-1 (ASC Topic 715-20-65)
must be provided for fiscal years ending after December 15, 2009. As this
pronouncement is only disclosure-related, it will not have an impact on the
financial position and results of operations.`

ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

The following discussion about the Companys market risk
disclosures involves forward-looking statements. Actual results could differ
materially from those projected in the forward-looking statements.

The Company is exposed to market risk related to changes in
interest rates. The Company does not use derivative financial instruments for
speculative or trading purposes.

Interest Rate Sensitivity. The Company maintains cash and cash
equivalents which consist of cash, money market funds and certificates of
deposit with financial institutions. Due to the conservative nature and
relatively short duration of our cash and cash equivalents, interest rate risk
is mitigated.

We currently maintain no short-term investments.

ITEM 8. FINANCIAL STATEMENTS

The financial statements of the Company are included following
  the signature page to this Form 10-K commencing on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE

On February 17, 2010, the Company was notified of the
resignation, effective immediately, of the US Audit Practice of Jimmy C.H.
Cheung & Co. (JCHC), as the Companys independent registered public
accounting firm in connection with JCHCs merger on January 29, 2010, with Baker
Tilly Hong Kong Limited (BTHK). On February 19, 2010, the Companys Board of
Directors approved the appointment of BTHK as the Companys independent
registered public accounting firm.

The audit reports of JCHC on the financial statements of the
Company as of and for the years ended December 31, 2008 and 2007 did not contain
an adverse opinion or a disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope or accounting principles , except that
the audit reports of JCHC for the

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financial statements of the Company as of December 31, 2008 and
December 31, 2007 indicated uncertainty as to the Companys ability to continue
as a going concern because the Company had working capital deficits.

In connection with the audits of the Companys financial
  statements for the fiscal years ended December 31, 2008 and 2007 and through
  the date of this Current Report, there were: (i) no disagreements between the
  Company and JCHC on any matters of accounting principles or practices, financial
  statement disclosure, or auditing scope or procedures, which disagreements,
  if not resolved to the satisfaction of JCHC, would have caused JCHC to make
  reference to the subject matter of the disagreement in their reports on the
  Companys financial statements for such years, and (ii) on reportable events
  within the meaning set forth in Item 304 (a)(1)(v) of Regulation S-K.

During the Companys most two recent fiscal years ended
December 31, 2008 and 2007 and through January 29, 2010, the Company did not
consult with BTHK on (i) the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that may
be rendered on the Companys financial statements, and BTHK did not provide
either a written report or oral advice to the Company that was an important
factor considered by the Company in reaching a decision as to any accounting,
auditing, or financial reporting issue; or (ii) the subject of any disagreement,
as defined in ITEM 304 (a)(1)(iv) of Regulation S-K and the related
instructions, or a reportable event within the meaning set forth in Item 304
(a)(1)(v) of Regulation S-K.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

The Company, under the supervision and with the participation
of its management, has evaluated the effectiveness of the design and operation
of the Company's disclosure controls and procedures, as such term is defined
in Rules 13a-15(e) under the Exchange Act, as of this annual report. Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by our Company is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the Securities and Exchange Commission. In making this
assessment, management used the framework set forth in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission.

Our President, Zhao Yan, our Northport Chief Financial Officer
James Wang and our Dalian Beigang Chief Financial Officer, Zi Feng Liu, are
responsible for establishing and maintaining disclosure controls and procedures
for our Company.

Our management has evaluated the effectiveness of our
disclosure controls and procedures as of December 31, 2009 (under the
supervision and with the participation of our Chief Executive Officer, our
Northport Chief Financial Officer and the Dalian Beigang Chief Financial
Officer), pursuant to Rule 13a-15(b) promulgated under the Securities Exchange
Act of 1934, as amended. The evaluation included analysis of systems and
procedures for all of Dalian Beigang operations including those of Ling Xiao.
Based on this evaluation, our Companys Chief Executive Officer, our Northport
Chief Financial Officer and our Dalian Beigang Chief Financial Officer
identified no material weakness in our Companys disclosure controls and
procedures as of December 31, 2009. We will state that the disclosure controls
and procedures as at December 31, 2009 were effective and we concluded that the
financial statements included in this Annual Report present fairly, in all
material respects, our financial position, results of operations and cash flows
for the periods presented in conformity with GAAP.

During 2007 we installed and implemented a custom software
program known as Northport Office Anywhere- 2007, which was custom designed
for us by Lenovo Corporation. The system provides us with a complete document
edit and control function and requires authorized approvals prior to any
financial transaction or entry being concluded. Our test procedures concluded
that the system is fully functional and provides us with an acceptable process
of accounting and financial control so as to ensure correct financial reporting.

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Changes in Internal Control over Financial Reporting

The term internal control over financial reporting is defined
as a process designed by, or under the supervision of, the Companys principal
executive and principal financial officers, or persons performing similar
functions, and effected by the Companys board of directors, management and
other personnel, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles and
includes those policies and procedures that:

- pertain to the maintenance of records that in reasonable detail,
  accurately and fairly reflect the transactions and dispositions of the assets
  of the Company;
- provide reasonable assurance that transactions are recorded as necessary
  to permit preparation of financial statements in accordance with generally
  accepted accounting principles, and that receipts and expenditures of the
  Company are being made only in accordance with authorizations of management
  and directors of the Company; and
- provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use or disposition of the Companys assets that
  could have a material effect on the financial statements.

Managements Report on Assessment of Internal Control Over
Financial Reporting

There have not been any changes in the Companys internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, during our fourth fiscal quarter that have
materially affected, or are reasonably likely to materially affect our internal
control over financial reporting in our financial statements prior to December
31, 2009.

A material weakness is defined in Public Company Accounting
Oversight Board Auditing Standard No. 2 as a significant deficiency, or a
combination of significant deficiencies, in internal control, over financial
reporting that results in there being more than a remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.

Our management's report was not subject to attestation by the
Company's registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only the
managements report in this annual report.

Inherent Limitation of the Effectiveness of Internal Control

Our internal control system is designed to provide reasonable
assurance to our management and board of directors regarding the preparation and
fair presentation of published financial statements. All internal control
systems, no matter how well designed, have inherent limitations. Therefore, even
those systems determined to be effective can provide only reasonable assurance
with respect to financial statement preparation and presentation. Further,
because of changes in conditions, the effectiveness of internal control may vary
over time.

ITEM 9B.OTHER INFORMATION

Not applicable.

PART III

|**ITEM 10.** | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
      CONTROL PERSONS, AND CORPORATE GOVERNANCE;
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
      ACT
|------------ | --------------------------------------------------------------------------------------------------------------------------------------------------------

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Directors and Executive Officers:

|Name            | Age | Position with
      Company           
|--------------- | --- | --------------------------------------
|                |     |                                       
|Yan Zhao        | 55  | Chairman of the
      Board, President
|                |     |                                       
|Zhong Bo Jia    | 55  | Vice President
      and Director     
|                |     |                                       
|James Wang      | 57  | Director and
      Secretary          
|                |     |                                       
|Jim Howell Qian | 48  | Chief Executive
      Officer         
|                |     |                                       
|Xiao Jun        | 40  | Director                              
|                |     |                                       
|Yu Jianhua      | 53  | Director                              

Yan Zhao  Chairperson and President

Yan Zhao is Chairperson and President of Dalian, China based,
Dalian Beigang Information Industry Development Co. Ltd., which she co-founded
in 1997. Prior to 1997, she spent five years as general manager of Dalian
Electronic and Telecommunication Co. Ltd. From 1969 to 1992, she was general
manager of the Dalian Post and Telecommunication Bureau. Yan Zhao is a 1976
Bachelor of Science graduate of Chang Chun Post and Telecommunications College.
She became President and director of Northport in April 2004.

Jim Howell Qian, Chief Executive Officer and Director

Jim Howell Qian, Ph.D. is currently the president and CEO of
American Centrality Group, Inc., Nevada and Abgenom, Inc. Hayward, CA. Prior to
this, Dr. Qian was a co-founder & president of Abgenome, Inc. Berkeley, CA,
which develops in vitro diagnostic kits for cardiovascular diseases. Prior to
that, Dr. Qian was the co-founder & president of ProMab Biotechnologies,
Inc. which develops and markets recombinant proteins, antibody-based reagents
and diagnostic kits, and tissue chips to academic and pharmaceutical
laboratories worldwide. Before launching ProMab, Dr. Qian was a scientist at
Incyte Genomics, Inc. He received his postdoctoral training in Biochemistry from
University of California at Berkeley and obtained his Ph.D. in Microbial Biology
from University of Nebraska-Lincoln.

Zhong Bo Jia  Vice President and Director

From 1992 until co-founding Dalian Beigang Information Industry
Development Co. Ltd. in 1997, Mr. Jia was President of Dalian Electronic and
Telecommunication Co. Ltd. From 1969 to 1973 and from 1977 to 1992, he was with
the Dalian Post and Telecommunication Bureau as Vice General Manager. Mr. Jia is
a 1977 Bachelor of Science graduate from Beijing Post and Telecommunication
University. He became a director of Northport in April 2004.

James Wang  Director and Secretary

James Wang, a Canadian citizen, has experience in business in
both Canada and the US in areas of distribution and technology. Since 2001 and
over the past five years, he has devoted his time and efforts with Dalian

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Beigang as a marketing consultant. He has been extensively
involved in assisting the management of the Dalian business in aspects of their
core business and also assisting the Company in planning a US share listing. He
became a director of Northport in April 2004. In February 2006, he changed his
legal name from Richard Wang to James Wang.

Xiao Jun- Director

Xiao Jun has been an employee of Northports China subsidiary
since April 2004. He obtained a Masters degree in Multimedia and Virtual Reality
in 2002 from Leuven Engineering College in Belgium and also holds a 1992 degree
in Computer Science and Engineering from Huazhong University of Science and
Technology. From 1996 to 1998 he was Vice Chief Engineer of the spaceflight
group at Guangyu Group in Shenzhen, China. From 1998 until 2000 he was Vice
General Manager of Beijing Yuanchao Information Technology Ltd. where he
assisted in the development of Chinas first business image processing software.
In 2000 he joined Beijing Yimei Network Technology Ltd as Vice CEO where he led
the employee team in development of China`s first digital imaging network
platform. While at Yimei, he assisted in the establishment of the Beijing
Digital Image Industry Union along with Lenovo, BOE and Thunis; all major
players in the field. Since joining Northport China, he has headed up the
Company`s research and development division and was appointed Chief Technology
Officer in October 2009.

Yu Jianhua- Director

Yu Jianhua is a resident of Dalian, China and has significant
expertise in real estate and property development. Since 2001 he has been
Chairman of Dalian Jintudi Real Estate Development Co. Ltd. Prior to that he was
Deputy General Manager of Dalian Xintian Real Estate Development Co. Ltd. and
Dalian Dongfang Real Estate Development Co. Ltd. Previously he spent almost
twenty years as a Factory Manager with a number of food and safety equipment
manufacturing factories in Dalian.

Directors

Directors serve for a term of one year or until their
successors are elected and qualified. Directors do not receive cash compensation
for serving as such.

Executive officers are appointed by and serve at the will of
the Board of Directors. There are no family relationships between or among any
of the directors or executive officers of the Company except Yan Zhao and Zhong
Bo Jia who are husband and wife.

Section 16(a) beneficial ownership reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as
amended (the Exchange Act), requires the Companys officers, directors and
persons who own more than ten percent of either the Common Stock or the Series A
Preferred Shares to file reports of ownership on Form 3 and changes in ownership
on Form 4 or 5 with the SEC. Such officers, directors and ten percent
shareholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms that they file. Based solely on its review of copies
of such reports received or representations from certain reporting persons, the
Company believes that, during the year ended December 31, 2009, all of its
officers, directors and ten percent shareholders complied with all Section 16(a)
filing requirements applicable to them with respect to transactions during
fiscal 2009.

Audit Committee

We do not have an independent Audit Committee and our Board of
Directors is comprised of members of management. As a result, there may be a
lack of independent oversight of the management team, lack of independent review
of our operating and financial results, and lack of independent review of
disclosures made by the Company.

Promoters

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By virtue of their activities in founding and organizing the
Company, as well as their beneficial ownership of its voting securities, Yan
Zhao, Zhong Bo Jia and James Wang may be deemed to be "promoters" of the
Company.

Related Party Transactions

As of December 31, 2009 and 2008, the Company owed $251,312 and
$173,432 respectively to a stockholder as unsecured loan and imputed interest is
computed at 5% per annum on the amount due. The balance is repayable on demand.

Total imputed interest expenses recorded as additional paid-in
capital amounted to $11,125 and $3,659 for the years ended December 31, 2009 and
2008 respectively.

As of December 31, 2009, a related company owed $99,209 to the
Company during the normal course of business and is under the same terms and
conditions as other customers.

On August 28, 2009, the Company issued 1,500,000 shares of
common stock valued at $1,125,000 to the subscriber who has paid $900,359 in
cash to the Company. The remaining balance of $224,641 was recorded as stock
subscription receivable as of December 31, 2009. The subscriber was subsequently
appointed director of the Company on October 27, 2009.

ITEM 11-EXECUTIVE COMPENSATION

Summary Executive Compensation Table

The following table sets forth a summary of all compensation
for the last fiscal ending year on December 31, 2009, awarded to, earned by, or
paid to the persons serving as the Companys principal executive officer and the
two most highly compensated executive officers other than our principal
executive officer.

Name, Principal
      Position
    Year
    Base Salary $ (1)
    Bonus $ (2)
    Option Awards $
    Non-Equity Incentive Plan
      Compensation
    Change in Pension
      Value and Nonqualified
    All Compensation $
    OtherTotal Compensation$Yan Zhao, 
        Chairperson, President
      2008 
        2009
      $21,551.72 
        $35,087.71
      -0-
      -0-
      -0-
      -0-
      -0-
      $21,551.72 
        $35,087.71Jim Howell Qian, 
        CEO
      2008 
        2009
      $0 
        $31,578.94
      -0-
      -0-
      -0-
      -0-
      -0-
      $0 
        $31,578.94Zhong Bo Jia, 
        Vice President
      2008 
        2009
      $17,241.37 
        $31,578.94
      -0-
      -0-
      -0-
      -0-
      -0-
      $17,241.37 
        $31,578.94James Wang, Secretary
      2008
        2009
      -0-(5)-0-
      -0-
      -0-
      -0-
      -0-
      -0-
      -0-(5)-0-


43

---

(1) Executives residing in China, receive compensation in
Chinese Yuan. The U.S. Dollar amounts expressed above have been derived using an
exchange rate of $1.00 = 6.84 Yuan.

(2) There are no employment agreements or any other
arrangements currently in place whereby the Companys executive officers receive
compensation in the form of bonuses, options or other compensation under
non-equity incentive plans.

(3) There is no formal pension plan currently in place for the
Companys executives or employees other than pension plans required by law for
Chinese staff.

(4) The Company has not paid any other compensation to its
executives.

(5) During the 2008 and 2009 fiscal years, Mr. Wang did not
receive any compensation for his duties as secretary of the Company.

Employment Agreements with Our Executives and Employees

Currently, employment agreements are in place with all of the
Companys China based executives and employees. No other arrangements exist
whereby our executive officers would receive compensation in the form of
bonuses, options or other compensation under non-equity incentive plans.
Furthermore, no pension plan is currently in place for the Companys executives
or employees other than as required by law for China based executives.

The Company did not offer a pension plan during fiscal year
2009 other than as required by law for China based staff. The full time Chinese
employees of the Company are entitled to employee benefits including medical
care, welfare subsidies, unemployment insurance and pension benefits through a
Chinese government mandated multi-employer defined contribution plan. The
Company is required to accrue for those benefits based on certain percentages of
the employees salaries and make contributions to the plans out of the amounts
accrued for medical and pension benefits. The total provision and contributions
made for such employee benefits was $9,117 and $16,147 for the years ended
December 31, 2009 and 2008, respectively. The Chinese government is responsible
for the medical benefits and the pension liability to be paid to these
employees.

Employment Bonus Compensation

The Company did not offer any employment bonuses during fiscal
year 2009.

Outstanding Equity Awards at Fiscal Year End

The Company did not offer any equity options during fiscal year
2009.

Director Compensation

The Company did not enter into any director compensation
arrangements during the fiscal year 2009.

|**ITEM 12.** | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT **AND RELATED STOCKHOLDER MATTERS**
|------------ | --------------------------------------------------------------------------------------------------------

The following table sets forth, as of December 31, 2009, the
Companys outstanding Common Stock owned of record or beneficially by each
Executive Officer and Director and by each person who owned of record, or was
known by the Company to own beneficially, more than 5% of the Companys Common
Stock, and the shareholdings of all Executive Officers and Directors as a group.
Each person has sole voting and investment power with respect to the shares
shown.

44

---

NAME
    SHARES OWNED
    PERCENTAGE OF SHARES OWNED AS
      AT DECEMBER 31, 2009Zhao Yan
    5,750,000
    16.81%Zhong Bo Jia
    3,375,000
    9.86%James Wang
    2,239,120
    6.54%Jim Howell Qian
    0
    0Xiao Jun
    1,100,000
    3.21%Yu Jianhua
    1,500,000
    4.38%All Executive Officers and Directors
    13,964,120
    40.83%


As a Group

The Company is not aware of any arrangement which might result
in a change in control in the future. The addresses of the principal
shareholders are:

Zhao Yan: 7th Floor, 21 Huabin StreetXigang
District
  Dalian, Liaoning Province, China

Zhong Bo Jia:Room 504, 32 Kang Zhuang StreetBai Yun Xin
Chun
  Xigang District, Dalian, Liaoning Province, China

James Wang: #4200, 601 Union Street,
  Seattle, Washington, 98101

Xiao Jun Suite #512, A. No. 1 Huoju RoadQixianlinq
Industrial Base  High-Tech Zone, 
  Dalian, China.

Yu Jianhua Suite #512, A. No. 1 Huoju RoadQixianlinq
Industrial Base  High-Tech Zone, 
  Dalian, China.

Jim Howell Qian Suite #512, A. No. 1 Huoju
RoadQixianlinq Industrial Base  High-Tech Zone, 
  Dalian, China.

45

---

ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

Transactions with Management, Promoters and Others.

We have not entered into any transactions with our directors,
executive officers, any promoter or founder, or beneficial owners of our common
stock. All of our Chinese directors, officers and employees have entered into
employment agreements with the Companys wholly owned Chinese subsidiary, as is
required by Chinese labor laws.

Director Independence

None of the members of our Board of Directors are considered
independent.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The aggregate fees billed for each of the last two fiscal years
for professional services rendered by the principal accountant for our audit of
annual financial statements and review of financial statements included in our
Form 10-K or 10-KSBs and 10-Q or 10-QSBs for services that are normally provided
by the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years were:

|2009:  $12,000 - Jimmy C.H. Cheung & Co.     
|---------------------------------------------
|$35,000 - Baker
      Tilly Hong Kong Limited
|                                             
|2008:  $52,000 - Jimmy C.H. Cheung & Co.     

Financial Information Systems Design and Implementation
Fees

We did not engage Baker Tilly Hong Kong Limited, Certified
Public Accountants to provide advice regarding financial information systems
design and implementation during the last fiscal year.

Tax Fees

There have been no other fees billed or expected to be billed
to us by Baker Tilly Hong Kong Limited, Certified Public Accountants for any
other non-audit services, including tax-related services, provided during the
last two fiscal years.

All Other Fees

For fiscal years 2009 and 2008, Baker Tilly Hong Kong Limited,
Certified Public Accountants did not bill any fees for any other non-audit
services rendered to us.

Audit Committee

We do not have an independent Audit Committee. Our Board of
Directors is comprised of members of management. As a result, there may be a
lack of independent oversight of the management team, lack of independent review
of our operating and financial results, and lack of independent review of
disclosures made by the Company.

46

---

PART IV

ITEM 15. EXHIBITS AND REPORTS on FORM 8-K

|2.1  | Equity Transfer Agreement, dated June 23, 2005, among
        the Company and the four shareholders of Dalian Beigang Information Industry
        Development Company Limited (1)              
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                 
|2.2  | Amendment to Equity Transfer Agreement dated January
        16, 2006 among the Company and the four shareholders of Dalian Beigang
        Information Industry Development Company Limited (1)
|     |                                                                                                                                                                                                 
|2.3  | Equity Transfer Agreement dated October 9, 2008 among
        Dalian Beigang Information Industry Development Company Limited and Chen
        Mei Zhou as shareholder of Shenyang Ling Xiao (2)
|     |                                                                                                                                                                                                 
|3.1  | Articles of Incorporation (3)                                                                                                                                                                   
|     |                                                                                                                                                                                                 
|3.3  | Bylaws (3)                                                                                                                                                                                      
|     |                                                                                                                                                                                                 
|10.1 | Agreement between Dalian Beigang and Yingkou City Beigang
        Network Information Industry Services Co., Ltd. (1)                                                                           
|     |                                                                                                                                                                                                 
|10.2 | Agreement and Plan of Merger by and Between Northport
        Capital, Inc. and Northport Network Systems, Inc. (3)                                                                             
|     |                                                                                                                                                                                                 
|31.1 | Rule 13a-14(a)/15(d)-14(a)
        Certification of CEO*                                                                                                                                        
|     |                                                                                                                                                                                                 
|31.2 | Rule 13a-14(a)/15(d)-14(a)
        Certification of CFO*                                                                                                                                        
|     |                                                                                                                                                                                                 
|32.1 | Section 1350 Certification
        of CEO*                                                                                                                                                      
|     |                                                                                                                                                                                                 
|32.2 | Section 1350 Certification
        of CFO*                                                                                                                                                      

|(1) | Previously filed as an exhibit to our amended
      registration statement on Form SB-2/A filed on December 14,
2006.
|--- | ---------------------------------------------------------------------------------------------------------------------
|(2) | Previously filed as an exhibit to Form 8-K filed on
      October 16, 2008                                           
|(3) | Previously filed as an exhibit to Form 8-K filed on
      November 17, 2008.                                         

* Filed herewith

Form 8-K filings during the quarter ended December 31,
  2009

October 28, 2009 Form 8-K filing-

On October 27, 2009, the Board of Directors unanimously
approved a resolution to appoint three additional directors; Xiao Jun, Yu
Jianhua and Dr Jim Howell Qian to sit as directors of the Company effective
immediately and to act as directors until the next shareholder meeting or until
they resign or are replaced. All three have agreed to act as directors. There
are no family relationships between the new directors.

In addition, the Board accepted the resignation of Zhao Yan as
Chief Executive Officer of the Company effective immediately. Dr. Jim Howell
Qian has been appointed as the new CEO of the Company. Xiao Jun is appointed
Chief Technology Officer of the Company effective immediately. Yu Jianhua is
appointed Chief Operations Officer of China Operations effective immediately.

47

---

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| | NORTHPORT NETWORK SYSTEMS, INC.,
| | --------------------------------
| | a Washington corporation        
| |                                 
| | By:                             
| |                                 
| |                                 

Each person whose signature appears below authorizes Jim Howell
Qian to execute in the name of each such person who is then an officer or
director of the registrant, and to file, any amendments to this Annual Report on
Form 10-K necessary or advisable to enable the registrant to comply with the
Securities Exchange Act of 1934 and any rules, regulations and requirements of
the Securities and Exchange Commission in respect thereof, which amendments may
make such changes in such Report as such attorney-in-fact may deem appropriate.

In accordance with the Exchange Act this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.



|Signature and
      Title                 |  | Date          
|----------------------------------------- |  | --------------
|                                          |  |               
|/s/ Jim Howell
      Qian, CEO            |  | April 14, 2010
|Jim Howell Qian, Chief Executive Officer  |  |               
|and Director                              |  |               
|                                          |  |               
|/s/ Zhao Yan,
      President             |  | April 14, 2010
|Zhao Yan, President and Director          |  |               
|                                          |  |               
|/s/ Zhong Bo Jia,
      Vice-President    |  | April 14, 2010
|Zhong Bo Jia, Vice-President and Director |  |               
|                                          |  |               
|                                          |  |               
|                                          |  |               
|/s/ James Wang,
      CFO                 |  | April 14, 2010
|James Wang, Chief Financial Officer and   |  |               
|Director                                  |  |               
|                                          |  |               
|/s/ Xiao Jun                              |  | April 14, 2010
|Xiao Jun, Director                        |  |               
|                                          |  |               
|                                          |  |               
|/s/ Yu Jianhua                            |  | April 14, 2010
|Yu Jianhua, Director                      |  |               

48

---



NORTHPORT NETWORK SYSTEMS, INC.AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTSAS OF DECEMBER 31, 2009 AND 2008

F-i

---

NORTHPORT NETWORK SYSTEMS, INC. 
  AND SUBSIDIARIES

CONTENTS

|                                                                                                                  | Pages   
|----------------------------------------------------------------------------------------------------------------- | --------
|                                                                                                                  |         
|Reports of Independent Registered Public Accounting Firms                                                         | F1-F2   
|                                                                                                                  |         
|Consolidated Balance Sheets as of December 31, 2009 and
      2008                                                | F3      
|                                                                                                                  |         
|Consolidated Statements of Operations and Comprehensive
      Loss for the years ended December 31, 2009 and 2008 | F4      
|                                                                                                                  |         
|Consolidated Statements of Stockholders Equity for
      the years ended December 31, 2009 and 2008              | F5      
|                                                                                                                  |         
|Consolidated Statements of Cash Flows for the years ended
      December 31, 2009 and 2008                        | F6      
|                                                                                                                  |         
|Notes to the Consolidated Financial Statements                                                                    | F7  F20

F-ii

---

| | BAKER TILLY HONG             |                                   
| | ---------------------------- | ----------------------------------
| | KONG LIMITED                 | Registered with the Public Company
| | Certified Public Accountants | Accounting Oversight Board        

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
  Northport Network Systems, Inc.

We have audited the accompanying consolidated balance sheet of
  Northport Network Systems, Inc. and its subsidiaries as of December 31, 2009
  and the related consolidated statement of operations and comprehensive loss,
  stockholders equity and cash flows for the year ended December 31, 2009.
  These consolidated financial statements are the responsibility of the Companys
  management. Our responsibility is to express an opinion on these financial statements
  based on our audit.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. The Company is not
  required to have, nor were we engaged to perform, an audit of its internal control
  over financial reporting. Our audit included consideration of internal control
  over financial reporting as a basis for designing audit procedures that are
  appropriate in the circumstances, but not for the purpose of expressing an opinion
  on the effectiveness of the Companys internal control over financial reporting.
  Accordingly, we express no such opinion. An audit includes examining, on a test
  basis, evidence supporting the amounts and disclosures in the financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation. We believe that our audit of the financial statements provides
  a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Northport Network Systems, Inc. and subsidiaries, as of December 31, 2009, and
  the results of its operations and its cash flows for the year ended December
  31, 2009 in conformity with accounting principles generally accepted in the
  United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in Note 15 to the consolidated financial statements, the Company had a net loss
  of $3,816,911, an accumulated deficit of $5,532,209 and a working capital deficiency
  of $260,834 and used cash in operations of $633,960. These factors raise substantial
  doubt about its ability to continue as a going concern. Managements plans
  concerning this matter are also described in Note 15. The accompanying consolidated
  financial statements do not include any adjustments that might result from the
  outcome of this uncertainty.



/s/ Baker Tilly Hong Kong Limited BAKER TILLY HONG KONG LIMITED
  Certified Public Accountants

Hong Kong
  Date: April 9, 2010

F1

---

| | Jimmy C.H. Cheung & CoCertified Public Accountants
| | --------------------------------------------------

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
  Northport Network Systems, Inc.

We have audited the accompanying consolidated balance sheet of
  Northport Network Systems, Inc. and its subsidiaries as of December 31, 2008
  and the related consolidated statement of operations and comprehensive loss,
  stockholders equity and cash flows for the year ended December 31, 2008.
  These consolidated financial statements are the responsibility of the Companys
  management. Our responsibility is to express an opinion on these financial statements
  based on our audit.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. The Company is not
  required to have, nor were we engaged to perform, an audit of its internal control
  over financial reporting. Our audit included consideration of internal control
  over financial reporting as a basis for designing audit procedures that are
  appropriate in the circumstances, but not for the purpose of expressing an opinion
  on the effectiveness of the Companys internal control over financial reporting.
  Accordingly, we express no such opinion. An audit includes examining, on a test
  basis, evidence supporting the amounts and disclosures in the financial statements.
  An audit also includes assessing the accounting principles used and significant
  estimates made by management, as well as evaluating the overall financial statement
  presentation. We believe that our audit of the financial statements provide
  a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Northport Network Systems, Inc. and subsidiaries, as of December 31, 2008, and
  the results of its operations and its cash flows for the year ended December
  31, 2008 in conformity with accounting principles generally accepted in the
  United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in Note 15 to the consolidated financial statements, the Company had a net loss
  of $818,894, an accumulated deficit of $1,715,298 and a working capital deficiency
  of $332,127 and used cash in operations of $714,776. These factors raise substantial
  doubt about its ability to continue as a going concern. Managements plans
  concerning this matter are also described in Note 15. The accompanying consolidated
  financial statements do not include any adjustments that might result from the
  outcome of this uncertainty.



/s/ Jimmy C.H. Cheung & Co JIMMY C.H. CHEUNG & CO
  Certified Public Accountants

Hong Kong
  Date: March 6, 2009



1607 Dominion Centre, 43 Queens Road East, Wanchai, Hong
  Kong 
  Tel: (852) 25295500 Fax: (852) 21277660
  Email: Jimmy.cheung@jchcheungco.hk 
  Website: http://www.jchcheungco.hk

F2

---

NORTHPORT NETWORK SYSTEMS, INC. AND SUBSIDIARIES ("NNWS")CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                                       |   | December 31, |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | -
|                                                                                                                                                                                                                       |   | 2009         |  
|                                                                                                                                                                                                                       |   |              |  
|ASSETS                                                                                                                                                                                                                 |  
|                                                                                                                                                                                                                       |   |              |  
|CURRENT ASSETS                                                                                                                                                                                                         |   |              |  
|Cash and cash equivalents                                                                                                                                                                                              | $ | 307,273      |  
|Accounts receivable, net                                                                                                                                                                                               |   | 242,904      |  
|Prepaid expenses and other current assets                                                                                                                                                                              |   | 296,990      |  
|Due from a related company                                                                                                                                                                                             |   | 99,209       |  
|Assets held in discontinued operations                                                                                                                                                                                 |   | -            |  
|Total Current Assets                                                                                                                                                                                                   |   | 946,376      |  
|                                                                                                                                                                                                                       |   |              |  
|PROPERTY AND EQUIPMENT, NET                                                                                                                                                                                            |   | 456,391      |  
|GOODWILL                                                                                                                                                                                                               |   | -            |  
|                                                                                                                                                                                                                       |   |              |  
|TOTAL ASSETS                                                                                                                                                                                                           | $ | 1,402,767    |  
|                                                                                                                                                                                                                       |   |              |  
|                                                                                                                                                                                                                       |   |              |  
|LIABILITIES AND STOCKHOLDERS'
      EQUITY                                                                                                                                                                             |  
|                                                                                                                                                                                                                       |   |              |  
|                                                                                                                                                                                                                       |   |              |  
|CURRENT LIABILITIES                                                                                                                                                                                                    |   |              |  
|Accounts payable                                                                                                                                                                                                       | $ | 186,280      |  
|Other payables and accrued expenses                                                                                                                                                                                    |   | 723,253      |  
|Due to a stockholder                                                                                                                                                                                                   |   | 251,312      |  
|Income and other taxes payable                                                                                                                                                                                         |   | 46,365       |  
|Liabilities of discontinued
      operations                                                                                                                                                                           |   | -            |  
|TOTAL LIABILITIES                                                                                                                                                                                                      |   | 1,207,210    |  
|                                                                                                                                                                                                                       |   |              |  
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                          |   | -            |  
|                                                                                                                                                                                                                       |   |              |  
|EQUITY                                                                                                                                                                                                                 |   |              |  
|NNWS Stockholders' Equity                                                                                                                                                                                              |   |              |  
|Preferred stock, $0.001 par value,
      100,000,000 shares authorized,                
      None share issued and outstanding                                                                                        |   | -            |  
|Common stock, $0.001
      par value, 100,000,000 shares authorized,                
      34,200,012 and 30,000,012 shares issued and outstanding as of                
      December 31, 2009 and 2008 respectively |   | 34,200       |  
|Common stock, 2,700,000 shares to be issued                                                                                                                                                                            |   | -            |  
|Stock subscription receivable                                                                                                                                                                                          |   | (224,641     | )
|Additional paid-in capital                                                                                                                                                                                             |   | 5,862,090    |  
|Retained earnings (Accumulated
      deficits)                                                                                                                                                                         |   |              |  
|Unappropriated                                                                                                                                                                                                         |   | (5,678,857   | )
|Appropriated                                                                                                                                                                                                           |   | 146,648      |  
|Accumulated other comprehensive loss                                                                                                                                                                                   |   | (88,191      | )
|Total NNWS Stockholders' Equity                                                                                                                                                                                        |   | 51,249       |  
|                                                                                                                                                                                                                       |   |              |  
|Noncontrolling interests                                                                                                                                                                                               |   | 144,308      |  
|                                                                                                                                                                                                                       |   |              |  
|TOTAL EQUITY                                                                                                                                                                                                           |   | 195,557      |  
|                                                                                                                                                                                                                       |   |              |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                             | $ | 1,402,767    |  

The accompanying notes are an integral part of these consolidated
  financial statements

F3

---

NORTHPORT NETWORK SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

|                                                                                      |   | Year ended December 31, |  
|------------------------------------------------------------------------------------- | - | ----------------------- | -
|                                                                                      |   | 2009                    |  
|                                                                                      |   |                         |  
|NET SALES                                                                             |   |                         |  
|Color photo printing                                                                  | $ | 3,639                   |  
|Air-ticketing
      agency                                                            |   | 751,565                 |  
|Online shopping                                                                       |   | 474                     |  
|Total net sales                                                                       |   | 755,678                 |  
|                                                                                      |   |                         |  
|COST OF SALES                                                                         |   |                         |  
|Color photo printing                                                                  |   | (29,320                 | )
|Air-ticketing
      agency                                                            |   | (621,647                | )
|Online shopping                                                                       |   | -                       |  
|Total cost of sales                                                                   |   | (650,967                | )
|                                                                                      |   |                         |  
|GROSS PROFIT                                                                          |   | 104,711                 |  
|                                                                                      |   |                         |  
|OPERATING EXPENSES                                                                    |   |                         |  
|Selling, general and administrative                                                   |   | 756,570                 |  
|Impairment
      of goodwill                                                          |   | 3,114,938               |  
|Research and development
      expenses                                               |   | 95,811                  |  
|Depreciation                                                                          |   | 21,149                  |  
|Total Operating Expenses                                                              |   | 3,988,468               |  
|                                                                                      |   |                         |  
|LOSS FROM OPERATIONS                                                                  |   | (3,883,757              | )
|                                                                                      |   |                         |  
|OTHER INCOME (EXPENSES)                                                               |   |                         |  
|Other income                                                                          |   | 574                     |  
|Interest income                                                                       |   | 1,208                   |  
|Imputed interest
      expense on due to stockholders                                 |   | (11,125                 | )
|Other expenses                                                                        |   | (3,707                  |  
|Total Other (Expenses) Income, net                                                    |   | (13,050                 | )
|                                                                                      |   |                         |  
|LOSS FROM CONTINUING OPERATIONS BEFORE INCOME
      TAXES                             |   | (3,896,807              | )
|Income tax benefit (expense)                                                          |   | 39,517                  |  
|NET LOSS FROM CONTINUING OPERATIONS                                                   |   | (3,857,290              | )
|NET LOSS FROM DISCONTINUED OPERATIONS                                                 |   | (17,711                 | )
|NET LOSS                                                                              |   | (3,875,001              | )
|Less: net loss (income) attributable
      to noncontrolling interests                |   | 58,090                  |  
|NET LOSS ATTRIBUTABLE TO NNWS COMMON STOCKHOLDERS                                     |   | (3,816,911              | )
|                                                                                      |   |                         |  
|NET LOSS FROM CONTINUING OPERATIONS                                                   |   | (3,799,200              | )
|NET LOSS FROM DISCONTINUED OPERATIONS                                                 |   | (17,711                 | )
|                                                                                      |   | (3,816,911              | )
|                                                                                      |   |                         |  
|OTHER COMPREHENSIVE LOSS                                                              |   |                         |  
|Total other comprehensive
      loss                                                  |   | (1,426                  | )
|Less: foreign
      currency gain attributable to noncontrolling interests            |   | (1,397                  | )
|Foreign currency translation
      loss attributable to                               |   |                         |  
|NNWS common stockholders                                                              |   | (2,823                  | )
|COMPREHENSIVE LOSS ATTRIBUTABLE TO                                                    |   |                         |  
|NNWS COMMON STOCKHOLDERS                                                              | $ | (3,819,734              | )
|                                                                                      |   |                         |  
|Net loss per share-basic and diluted                                                  |   |                         |  
|From continuing operations                                                            | $ | (0.11                   | )
|From discontinued
      operations                                                    |   | 0.00                    |  
|Total net loss per share                                                              | $ | (0.11                   | )
|                                                                                      |   |                         |  
|Weighted average number of shares outstanding during the yaar-basic
      and diluted |   | 33,213,711              |  

The accompanying notes are an integral part of these consolidated
  financial statements

F4

---

NORTHPORT NETWORK SYSTEMS, INC. AND SUBSIDIARIES
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

Common Stock
      
      
      Shares to be issued
      
      
      Stock
      
      
      Additional
      
      
      Unappropriated
      
      
      Appropriated
      
      
      Accumulated other
      
      
      NNWSNumber of
      
      
      
      
      
      Number of
      
      
      
      
      
      subscriptions
      
      
      paid-in
      
      
      accumulated
      
      
      retained
      
      
      comprehensive
      
      
      stockholders'
      
      
      Noncontrolling
      
      
      TotalShares
      
      
      Amount
      
      
      Shares
      
      
      Amount
      
      
      receivable
      
      
      capital
      
      
      deficits
      
      
      earnings
      
      
      loss
      
      
      equity
      
      
      interests
      
      
      equityBalance at December 31, 2007
      
      26,500,000
      
      $
      26,500
      
      
      -
      
      $
      -
      
      $
      -
      
      $
      160,634
      
      $
      (1,026,301
      )
      $
      129,897
      
      $
      (38,631
      )
      $
      (747,901
      )
      $
      -
      
      $
      (747,901
      )Components of comprehensive
        lossNet loss for the year
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (818,894
      )
      
      -
      
      
      -
      
      
      (818,894
      )
      
      80,844
      
      
      (738,050
      )Foreign currency translation
        loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (46,737
      )
      
      (46,737
      )
      
      -
      
      
      (46,737
      )Comprehensive loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (865,631
      )
      
      -
      
      
      (784,787
      )Noncontrolling interest on acquisition of a
        subsidiary
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      120,157
      
      
      120,157Shares to be issued for acquisition of a subsidiary
      
      -
      
      
      -
      
      
      2,700,000
      
      
      2,700
      
      
      -
      
      
      3,237,300
      
      
      -
      
      
      -
      
      
      -
      
      
      3,240,000
      
      
      -
      
      
      3,240,000Issue of shares to an emplyee for services
      
      1,000,000
      
      
      1,000
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      1,000
      
      
      -
      
      
      1,000Issue of shares to two stockholders for 
             settlement of loans
      
      2,400,012
      
      
      2,400
      
      
      -
      
      
      -
      
      
      -
      
      
      1,197,606
      
      
      -
      
      
      -
      
      
      -
      
      
      1,200,006
      
      
      -
      
      
      1,200,006Issue of shares to two third parties for cash
      
      100,000
      
      
      100
      
      
      -
      
      
      -
      
      
      -
      
      
      99,900
      
      
      -
      
      
      -
      
      
      -
      
      
      100,000
      
      
      -
      
      
      100,000Imputed interest on advances from stockholders
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      32,025
      
      
      -
      
      
      -
      
      
      -
      
      
      32,025
      
      
      -
      
      
      32,025Transfer from retained earnings to statutory
        reserve
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (16,751
      )
      
      16,751
      
      
      -
      
      
      -
      
      
      -
      
      
      -Balance at December 31, 2008
      
      30,000,012
      
      
      30,000
      
      
      2,700,000
      
      
      2,700
      
      
      -
      
      
      4,727,465
      
      
      (1,861,946
      )
      
      146,648
      
      
      (85,368
      )
      
      2,959,499
      
      
      201,001
      
      
      3,160,500Components of comprehensive lossNet loss for the year
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (3,816,911
      )
      
      -
      
      
      -
      
      
      (3,816,911
      )
      
      (58,090
      )
      
      (3,875,001
      )Foreign currency translation loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (2,823
      )
      
      (2,823
      )
      
      1,397
      
      
      (1,426
      )Comprehensive loss
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      (3,819,734
      )
      
      -
      
      
      (3,876,427
      )Shares issued for acquisition
        of a subsidiary
      
      2,700,000
      
      
      2,700
      
      
      (2,700,000
      )
      
      (2,700
      )
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -Issue of shares to a third
        party for cash
      
      1,500,000
      
      
      1,500
      
      
      -
      
      
      -
      
      
      (224,641
      )
      
      1,123,500
      
      
      -
      
      
      -
      
      
      -
      
      
      900,359
      
      
      -
      
      
      900,359Imputed interest on advances
        from stockholders
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      -
      
      
      11,125
      
      
      -
      
      
      -
      
      
      -
      
      
      11,125
      
      
      -
      
      
      11,125Balance at December 31, 2009
      
      34,200,012
      
      $
      34,200
      
      
      -
      
      $
      -
      
      $
      (224,641
      )
      $
      5,862,090
      
      $
      (5,678,857
      )
      $
      146,648
      
      $
      (88,191
      )
      $
      51,249
      
      $
      144,308
      
      $
      195,557


The accompanying notes are an integral part of these consolidated
  financial statements

F5

---

NORTHPORT NETWORK SYSTEMS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                           |   | Year ended December 31, |  
|-------------------------------------------------------------------------- | - | ----------------------- | -
|                                                                           |   | 2009                    |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                       |   |                         |  
|Net loss from continuing operations                                        | $ | (3,799,200              | )
|Adjusted to reconcile net loss to cash used
      in operating activities: |   |                         |  
|Impairment of goodwill                                                     |   | 3,114,938               |  
|Depreciation - cost of
      sales                                         |   | 18,266                  |  
|Depreciation                                                               |   | 21,149                  |  
|Loss on disposals of property
      and equipment                          |   | -                       |  
|Imputed interest expense on due to stockholders                            |   | 11,125                  |  
|Stock issued for services                                                  |   | -                       |  
|Noncontrolling interests                                                   |   | (58,090                 | )
|Changes in operating assets and liabilities                                |   |                         |  
|(Increase) Decrease in:                                                    |   |                         |  
|Accounts receivable                                                        |   | 206,647                 |  
|Prepaid expenses and other current assets                                  |   | 143,302                 |  
|Due from a related company                                                 |   | (99,156                 | )
|Increase (Decrease):                                                       |   |                         |  
|Accounts payable                                                           |   | 47,455                  |  
|Other payables and accrued expenses                                        |   | (173,989                | )
|Deferred revenue                                                           |   | (5,033                  | )
|Income tax and other taxes payable                                         |   | (48,141                 | )
|Net cash used in operating
      activities of continuing operations       |   | (620,727                | )
|Net cash used in operating activities of
      discontinued operations     |   |                         |  
|Net
      loss from discontinued operations                                |   | (17,711                 | )
|Depreciation - cost
      of sales                                         |   | 1,891                   |  
|Depreciation                                                               |   | -                       |  
|Loss on disposal of
      property and equipment                           |   | 2,587                   |  
|Imputed
      interest expense on due to stockholders                      |   | -                       |  
|                                                                           |   | (13,233                 | )
|Net cash used in operating
      activities                                |   | (633,960                | )
|                                                                           |   |                         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                       |   |                         |  
|Cash inflow from acquisition of a subsidiary
      (See note 2)            |   | -                       |  
|Purchase of property and
      equipment                                   |   | (79,381                 | )
|Proceeds from disposals of property and
      equipment                    |   | -                       |  
|Net cash used in investing activities                                      |   | (79,381                 | )
|                                                                           |   |                         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                       |   |                         |  
|Proceeds from issue of common stock                                        |   | 900,359                 |  
|Repayment of note payable                                                  |   | -                       |  
|Due to a stockholder                                                       |   | 77,407                  |  
|Due to a noncontrolling
      stockholder of a subsidiary                  |   | (396,781                | )
|Due to related companies                                                   |   | -                       |  
|Net cash provided by financing activities                                  |   | 580,985                 |  
|                                                                           |   |                         |  
|EFFECT OF EXCHANGE RATES ON CASH                                           |   | (597                    | )
|                                                                           |   |                         |  
|NET (DECREASE) INCREASE IN CASH AND CASH
      EQUIVALENTS                 |   | (132,953                | )
|                                                                           |   |                         |  
|CASH AND CASH EQUIVALENTS AT BEGINNING OF
      YEAR                       |   | 440,226                 |  
|                                                                           |   |                         |  
|CASH AND CASH EQUIVALENTS AT END OF YEAR                                   | $ | 307,273                 |  
|                                                                           |   |                         |  
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW
      INFORMATION                     |   |                         |  
|Cash paid for income tax expense                                           | $ | 3,320                   |  

The accompanying notes are an integral part of these consolidated
  financial statements

F6

---

NORTHPORT NETWORK SYSTEMS, INC. AND SUBSIDAIRIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

|1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
        AND ORGANIZATION
|-- | -------------------------------------------------------------------
|   |                                                                    
|   | (A)                                                                
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   | (B)                                                                
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   | (C)                                                                
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    
|   |                                                                    

F7

---

| |     | Trust has adopted the Codification in this quarterly
        report by using plain English to describe FASB broad topic references.                                                                                                                                                                                                                                                                                                                                                                              
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (D) | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The preparation of the consolidated financial statements
        in conformity with generally accepted accounting principles requires management
        to make estimates and assumptions that affect the reported amount 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 period. Actual results could differ
        from those estimates.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (E) | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | For purpose of the statements of cash flows, cash and
        cash equivalents include cash on hand and demand deposits with bankers
        with a maturity of less than 3 months.                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (F) | Accounts receivable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | The Company extends unsecured credit to its customers
        in the ordinary course of business but mitigates the associated risks
        by performing credit checks and actively pursuing past due accounts. An
        allowance for doubtful accounts is established and recorded based on managements
        assessment of the credit history with the customer and current relationships
        with them.                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | (G) | Property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Property and equipment are stated at cost, less accumulated
        depreciation. Expenditures for additions, major renewals and betterments
        are capitalized and expenditures for maintenance and repairs are charged
        to expense as incurred.                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     | Depreciation is provided on a straight-line basis, less
        estimated residual value over the assets estimated useful lives.
        The estimated useful lives are as follows:                                                                                                                                                                                                                                                                                                                             

| | Motor vehicles                    | 5 to 10 Years | 
| | --------------------------------- | ------------- | 
| | Color printing machine            | 4 Years       | 
| | Furniture, fixtures and equipment | 2 to 5 Years  | 

| | (H) | Long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | In accordance with FASB Codification Topic 360 (ASC
        Topic 360), Accounting for the impairment or disposal of Long-Lived
        Assets", long-lived assets and certain identifiable intangible assets
        held and used by the Company are reviewed for impairment whenever events
        or changes in circumstances indicate that the carrying amount of an asset
        may not be recoverable. For purposes of evaluating the recoverability
        of long-lived assets, the recoverability test is performed using undiscounted
        net cash flows related to the long- lived assets. The Company reviews
        long-lived assets to determine that carrying values are not impaired.
        There was no impairment recorded by the Company on property and equipment
        during the year ended December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (I) | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Goodwill represents the excess purchase price of net
        tangible and intangible assets acquired in business combinations over
        their estimated fair value. The Company accounts for goodwill in accordance
        with FASB Codification Topic 350 (ASC Topic 350), Accounting
        for Goodwill and Other Intangible Assets and FASB Codification Topic
        805 (ASC Topic 805),  Business Combinations .
        ASC Topic 350 requires goodwill to be tested for impairment on an annual
        basis or more frequently, if impairment indicators arise, and written
        down when impaired. In accordance with ASC Topic 350, the Company tests
        goodwill for impairment at the reporting unit level at least annually
        and more frequently upon the occurrence of certain events. The annual
        test of goodwill impairment is performed in the fourth quarter using a
        two-step process in accordance with ASC Topic 350. First, the Company
        determines if the carrying amount of its reporting unit exceeds the fair
        value of the reporting unit, which would indicate that goodwill may be
        impaired. If the Company determines that goodwill may be impaired, the
        Company compares the implied fair value of the goodwill, as defined by
        ASC Topic 350, to its carrying amount to determine if there is an impairment
        loss. During the fourth quarter of 2009, the Company completed a review
        of its goodwill and determined an impairment had occurred and provided
        for a 100% impairment of goodwill amounting to $3,114,938.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (J) | Fair value of financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | FASB Codification Topic 825 (ASC Topic 825),
        "Disclosure About Fair Value of Financial Instruments," requires certain
        disclosures regarding the fair value of financial instruments. Fair value
        of financial instrument is made at a specific point in time, based on
        relevant information about financial                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F8

---

| |     | markets and specific financial
        instruments. As these estimates are subjective in nature, involving uncertainties
        and matters of significant judgments, they cannot be determined with precision.
        Changes in assumptions can significantly affect estimated fair values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The carrying value of cash and
        cash equivalents, accounts receivable (trade and others), accounts payable
        (trade and related party) and accrued liabilities approximate their fair
        values because of the short-term nature of these instruments. The management
        of the Company is of the opinion that the Company is not exposed to significant
        interest or credit risks arising from these financial instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (K) | Noncontrolling interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The noncontrolling stockholders
        interests in the equity and net income of Ling Xiao for the year ended
        December 31, 2009 and 2008 are included in noncontrolling interests in
        the accompanying consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | In late 2007, the Financial
        Accounting Standard Board (FASB) issued FASB Codification
        Topic 810 (ASC Topic 810), Noncontrolling Interests
        in Consolidated Financial Statements- an amendment of ARB No. 51
        , which establishes accounting and reporting standards for the noncontrolling
        interest in a subsidiary (minority interest) and for the deconsolidation
        of a subsidiary. We have adopted the provisions of ASC Topic 810 with
        effect from January 1, 2009. The adoption of ASC Topic 810 did not have
        any significant impact on the financial position and results of operations
        of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | (L) | Revenue recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company recognizes revenues
        under the provisions of FASB Codification Topic 605 (ASC Topic 605),
        Revenue Recognition when all of the following have occurred: persuasive
        evidence of arrangement with the customer, services have been performed,
        fees are fixed or determinable and collectibility of the fees is reasonably
        assured. These criteria as related to the Companys revenues are
        considered to have been met as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Electronic tax filing services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company provides electronic
        tax filing services to its customers based on fixed price contracts
        with contractual period of one year. The customers are billed on approval
        of the contracts and based on the terms included in the contracts. Revenue
        is recognized ratably over the term of the contract and those billed and
        received in advanced by the Company for future services not yet performed
        is deferred. On early termination of the contracts, the fees received
        in advanced will be refunded to the customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | On April 12, 2009, the Directors
        resolved to discontinue the operations of the provision of platform for
        electronic filing of tax returns with effect from July 1, 2009. As the
        State Administration of Taxation in Dalian (SAT in Dalian)
        has made available its electronic tax filing facilities to all tax payers,
        subscribers to the Companys platform for electronic filing of tax
        returns, and the revenue derived therefrom had continued to drop to a
        very low level. In view of these recent developments, the Directors decided
        to discontinue the operations of its platform for electronic filing of
        tax returns.                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Color photo printing services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | Revenue from the sale of color
        photo printing services is derived from its own and affiliate operations,
        which consist of franchise agency and licensing programs. The Company
        follows the guidance of ASC Topic 605, "Recording Revenue Gross as a Principal
        versus Net as an Agent" for its presentation of revenue and direct costs.
        This guidance requires the Company to assess whether it acts as a principal
        in the transaction or as an agent acting on behalf of others. Where the
        Company is the principal in the transaction and has the risks and rewards
        of ownership, the transactions are recorded gross in the statements of
        income. Revenue and related costs of services generated by the franchise
        agents are included as part of the Company's consolidated revenue and
        costs of services, respectively, since the Company has the direct contractual
        relationships with the customers, holds title to the related customer
        receivables and is the legal employer of the employees.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The franchise agent acts as
        the Company's agent in a similar manner as a branch manager in the Company-owned
        locations. In the franchise arrangement, the Company has the direct contractual
        relationships with its customers and contracts with customers are binding
        to the Company. The Company is also responsible for the employees payroll,
        electricity and related overheads regardless of customer acceptance of
        the services. These factors, among others, designate the Company as the
        principal with respect to its franchise agent operations. Franchise agents
        sales were $2,223 and $6,532 for 2009 and 2008 respectively.                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     | The Company also has a licensing
        program whereby the licensee has direct contractual relationships with
        the customers, held title to the related customers receivables and
        is the legal employer of the employees. Accordingly, net sales and costs
        of services generated by the licensee are not included in                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F9

---

| |     | the Company's consolidated financial statements. Fees
        are paid to the Company based on a fixed price for each of the photo printed
        and such license fees are recorded by the Company as revenue. Fees received
        from licensees were $0 and $428 for 2009 and 2008 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | For sale from its own operations, revenue is recognized
        after the photos are printed and delivered to the customers and cash has
        been collected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Online shopping                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The website UrMart.net is at its trial stage, the revenue
        derived therefrom is insignificant and recorded on receipt of subscription
        fees from members. The management will review this policy on official
        launch of this website.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Air-ticketing agency services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company receives commissions from travel suppliers
        for air-ticketing services through the Companys transaction and
        service platform under various services agreements. Commissions from air-ticketing
        services rendered are recognized after air tickets are issued, net of
        estimated cancellations. The Company presents revenues from such transactions
        on a net basis in the statements of operations as the Company does not
        assume inventory risks and has no obligations for cancelled airline ticket
        reservations. Contracts with certain airlines contain discretionary escalating
        commissions that are paid to the Company subject to achieving specific
        performance targets. Such discretionary escalating commissions are recognized
        when the air tickets are issued and performance guarantees, if any, are
        achieved.       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (M) | Research and development                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Research and development costs related to both present
        and future products are expensed as incurred. Total expenditures on research
        and development related to the color printing project and charged to general
        and administrative expenses for the years ended December 31, 2009 and
        2008 were $95,811 and $162,894 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (N) | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The Company accounts for income taxes under the FASB
        Codification Topic 740-10-25, Accounting for Income Taxes
        ( ASC 740-10-25 ). Under ASC 740-10-25, 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. 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. Under ASC 740-10-25, the effect on
        deferred tax assets and liabilities of a change in tax rates is recognized
        in income in the period that included the enactment date.                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | On January 1, 2007, the Company adopted the provisions
        of FASB Codification Topic 740, Accounting for Uncertainty in Income
        Taxes (ASC 740). ASC 740 prescribes a more-likely-than-not
        threshold for financial statements recognition and measurement of a tax
        position taken (or expected to be taken) in a tax return. This Interpretation
        also provides guidance on derecognition of income tax assets and liabilities,
        classification of current and deferred income tax assets and liabilities,
        accounting for interest and penalties associated with tax positions, accounting
        for interest and penalties associated with tax positions, accounting for
        income taxes in interim periods and income tax disclosures. The adoption
        of ASC 740 has not resulted in any material impact on the Companys
        financial position or results.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (O) | Foreign currency translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Northport Network maintains its accounting records in
        its functional currencies of United States Dollars (US$) while
        Dalian Beigang and Ling Xiao maintain their accounting records in their
        functional currencies of Renminbi (RMB).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | Foreign currency transactions during the year are translated
        to the functional currency at the approximate rates of exchange on the
        dates of transactions. Monetary assets and liabilities denominated in
        foreign currencies at the balance sheet date are translated at the approximate
        rates of exchange at that date. Non-monetary assets and liabilities are
        translated at the rates of exchange prevailing at the time the asset or
        liability was acquired. Exchange gains or losses are recorded in the statement
        of operations.                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | The financial statements of Dalian Beigang and Ling
        Xiao whose functional currencies are RMB are translated into US$ using
        the closing rate method. The balance sheet items are translated into US$
        using the exchange rates at the respective balance sheet dates. The capital
        and various reserves are translated at historical exchange rates prevailing
        at the time of the transactions while income and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

F10

---

expenses items are translated at the
  average exchange rate for the year. All exchange differences are recorded within
  equity.

The exchange rates used to translate
  amounts in RMB into US$ for the purposes of preparing the financial statements
  were as follows:

| |                                                                                                                              | December 31, 2009 | December 31, 2008
| | ---------------------------------------------------------------------------------------------------------------------------- | ----------------- | -----------------
| | Balance sheet items, except for common 
      stock, additional paid-in capital and 
      retained earnings, as of year end | US$1=RMB6.8372    | US$1=RMB6.8542   
| |                                                                                                                              |                   |                  
| | Amounts included in the statements of 
      operations and cash flows for the year                                          | US$1=RMB6.84088   | US$1=RMB6.96225  

| |     | The translation difference recorded for the years ended
        December 31, 2009 and 2008 was loss of $2,823 and $46,737 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | No presentation is made that RMB amounts have been,
        or would be, converted into US$ at the above rates. Although the Chinese
        government regulations now allow convertibility of RMB for current account
        transactions, significant restrictions still remain. Hence, such translations
        should not be construed as representation that the RMB could be converted
        into US$ at that rate or any other rate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The value of RMB against US$ and other currencies may
        fluctuate and is affected by, among other things, changes in Chinas
        political and economic conditions, any significant revaluation of RMB
        may materially affect the Companys financial condition in terms
        of US$ reporting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (P) | Other comprehensive loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The foreign currency translation gain or loss resulting
        from translation of the financial statements expressed in RMB to US$ is
        reported as other comprehensive loss in the statements of operations and
        stockholders equity. The foreign currency translation loss for the
        years ended December 31, 2009 and 2008 was $2,823 and $46,737 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (Q) | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Basic loss per share is computed by dividing income
        available to common stockholders by the weighted average number of common
        shares outstanding during the year. Diluted loss per share is computed
        similar to basic loss per share except that the denominator is increased
        to include the number of additional common shares that would have been
        outstanding if the potential common shares had been issued and if the
        additional common shares were dilutive. There are no potentially dilutive
        securities for 2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (R) | Segments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company operates in three reportable segments, color
        photo printing, air-ticketing agency and online shopping. The operation
        of platforms for electronic filing of tax returns and payment of taxes
        was discontinued on 1 July 2009 and the losses and assets of this operation
        were accounted for under discontinued operation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (S) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | In February 2010, FASB issued ASU 2010-9 Subsequent
        Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements
        ("ASU 2010-9"). ASU 2010-9 amends disclosure requirements within Subtopic
        855-10. An entity that is an SEC filer is not required to disclose the
        date through which subsequent events have been evaluated. This change
        alleviates potential conflicts between Subtopic 855-10 and the SEC's requirements.
        ASU 2010-9 is effective for interim and annual periods ending after June
        15, 2010. The Company does not expect the standard to have any impact
        on the Company s financial position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | In January 2010, FASB issued ASU 2010-2 Accounting and
        Reporting for Decreases in Ownership of a Subsidiary- a Scope Clarification
        ("ASU 2010-2"). ASU 2010-2 addresses implementation issues related to
        the changes in ownership provisions in the ConsolidationOverall
        Subtopic (Subtopic 810- 10) of the FASB Accounting Standards Codification
        , originally issued as FASB Statement No. 160, Noncontrolling Interests
        in Consolidated Financial Statements. Subtopic 810-10 establishes the
        accounting and reporting guidance for noncontrolling interests and changes
        in ownership interests of a subsidiary. An entity is required to deconsolidate
        a subsidiary when the entity ceases to have a controlling financial interest
        in the subsidiary. Upon deconsolidation of a subsidiary, an entity recognizes
        a gain or loss on the transaction and measures any retained investment
        in the subsidiary at fair value. The gain or loss includes any gain or
        loss associated with the difference between the fair value of the retained
        investment in the subsidiary and its carrying amount at the date the subsidiary
        is

F11

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deconsolidated. In contrast, an entity
  is required to account for a decrease in ownership interest of a subsidiary
  that does not result in a change of control of the subsidiary as an equity transaction.
  ASU 2010-2 is effective for the Company starting January 3, 2010. The Company
  does not expect the standard to have any impact on the Company s financial
  position.

In December 2009, FASB issued ASU 2009-17
  Consolidations (Topic 810) Improvements to Financial Reporting by Enterprises
  Involved with Variable Interest Entities ("ASU 2009-17"). ASU 2009-17 amends
  the FASB ASC for the issuance of FASB Statement No. 167, Amendments to FASB
  Interpretation No. 46(R) . The amendments in ASU 2009-17 replace the quantitative-based
  risks and rewards calculation for determining which enterprise, if any, has
  a controlling financial interest in a variable interest entity with an approach
  focused on identifying which enterprise has the power to direct the activities
  of a variable interest entity that most significantly impact the entity's economic
  performance and (1) the obligation to absorb losses of the entity or (2) the
  right to receive benefits from the entity. ASU 2009-17 also requires additional
  disclosures about an enterprise's involvement in variable interest entities.
  ASU 2009-17 is effective as of the beginning of each reporting entity's first
  annual reporting period that begins after November 15, 2009. The Company does
  not expect the standard to have any impact on the Company s financial
  position.

In December 2009, FASB issued ASU 2009-16
  Transfers and Servicing (Topic 860) Accounting for Transfers of Financial Assets
  ("ASU 2009-16"). ASU 2009-16 amends the FASB Accounting Standards Codification
  for the issuance of FASB Statement No. 166, Accounting for Transfers of Financial
  Assetsan amendment of FASB Statement No. 140 . The amendments in ASU 2009-16
  improve financial reporting by eliminating the exceptions for qualifying special-purpose
  entities from the consolidation guidance and the exception that permitted sale
  accounting for certain mortgage securitizations when a transferor has not surrendered
  control over the transferred financial assets. In addition, the amendments require
  enhanced disclosures about the risks that a transferor continues to be exposed
  to because of its continuing involvement in transferred financial assets. ASU
  2009-16 is effective as of the beginning of each reporting entity's first annual
  reporting period that begins after November 15, 2009. The Company does not expect
  the standard to have any impact on the Company s financial position.

In October, 2009, the FASB issued ASU
  2009-15, Accounting for Own-Share Lending Arrangements in Contemplation
  of Convertible Debt Issuance or Other Financing, now codified under FASB
  ASC Topic 470 Debt, (ASU 2009-15), and provides guidance
  for accounting and reporting for own-share lending arrangements issued in contemplation
  of a convertible debt issuance. At the date of issuance, a share-lending arrangement
  entered into on an entitys own shares should be measured at fair value
  in accordance with Topic 820 and recognized as an issuance cost, with an offset
  to additional paid-in capital. Loaned shares are excluded from basic and diluted
  earnings per share unless default of the share-lending arrangement occurs. The
  amendments also require several disclosures including a description and the
  terms of the arrangement and the reason for entering into the arrangement. The
  effective dates of the amendments are dependent upon the date the share-lending
  arrangement was entered into and include retrospective application for arrangements
  outstanding as of the beginning of fiscal years beginning on or after December
  15, 2009. The Company does not expect the standard to have any impact on the
  Company s financial position.

In October 2009, the FASB issued ASU
  2009-14, Certain Arrangements That Include Software Elements, now codified
  under FASB ASC Topic 985, Software, (ASU 2009-14). ASU
  2009-14 removes tangible products from the scope of software revenue guidance
  and provides guidance on determining whether software deliverables in an arrangement
  that includes a tangible product are covered by the scope of the software revenue
  guidance. ASU 2009-14 should be applied on a prospective basis for revenue arrangements
  entered into or materially modified in fiscal years beginning on or after June
  15, 2010, with early adoption permitted. The Company does not expect the standard
  to have any impact on the Company s financial position.

In October 2009, the FASB issued ASU
  2009-13, Multiple-Deliverable Revenue Arrangements, now codified
  under FASB ASC Topic 605, Revenue Recognition, (ASU 2009-13).
  ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated
  selling prices of the delivered goods and services based on a selling price
  hierarchy. The amendments eliminate the residual method of revenue allocation
  and require revenue to be allocated using the relative selling price method.
  ASU 2009-13 should be applied on a prospective basis for revenue arrangements
  entered into or materially modified in fiscal years beginning on or after June
  15, 2010, with early adoption permitted. The Company does not expect the standard
  to have any impact on the Company s financial position.

In June 2009, the FASB issued SFAS No.
  167  Amendments to FASB Interpretation No. 46(R) ( SFAS 167
  ) (not part of the codification yet). SFAS 167 amends FASB Interpretation No.
  46

F12

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(Revised December 2003)  Consolidation
  of Variable Interest Entitiesan interpretation of ARB No. 51 (FIN
  46(R)) to require an enterprise to perform an analysis to determine whether
  the enterprise s variable interest or interests give it a controlling
  financial interest in a variable interest entity; to require ongoing reassessments
  of whether an enterprise is the primary beneficiary of a variable interest entity;
  to eliminate the quantitative approach previously required for determining the
  primary beneficiary of a variable interest entity; to add an additional reconsideration
  event for determining whether an entity is a variable interest entity when any
  changes in facts and circumstances occur such that holders of the equity investment
  at risk, as a group, lose the power from voting rights or similar rights of
  those investments to direct the activities of the entity that most significantly
  impact the entity s economic performance; and to require enhanced disclosures
  that will provide users of financial statements with more transparent information
  about an enterprise s involvement in a variable interest entity. SFAS
  167 will be effective as of the beginning of each reporting entity's first annual
  reporting period that begins after November 15, 2009, for interim periods within
  that first annual reporting period, and for interim and annual reporting periods
  thereafter. Early adoption is not permitted. This guidance will be codified
  under FASB ASC Topic 810,  Consolidation when it becomes effective.
  The Company does not expect the standard to have any impact on the Company
  s financial position.

In June 2009, the FASB issued SFAS No.
  166  Accounting for Transfers of Financial Assetsan amendment of
  FASB Statement No. 140 ( SFAS 166 ) (ASC Topic 810). SFAS
  166 (not part of the codification yet) amends various provisions of SFAS No.
  140  Accounting for Transfers and Servicing of Financial Assets and Extinguishments
  of Liabilitiesa replacement of FASB Statement No. 125 by removing
  the concept of a qualifying special-purpose entity and removes the exception
  from applying FIN 46(R) to variable interest entities that are qualifying special-purpose
  entities; limits the circumstances in which a transferor derecognizes a portion
  or component of a financial asset; defines a participating interest; requires
  a transferor to recognize and initially measure at fair value all assets obtained
  and liabilities incurred as a result of a transfer accounted for as a sale;
  and requires enhanced disclosure; among others. SFAS 166 will be effective as
  of the beginning of each reporting entity's first annual reporting period that
  begins after November 15, 2009, for interim periods within that first annual
  reporting period and for interim and annual reporting periods thereafter. Early
  adoption is not permitted. This guidance will be codified under FASB ASC Topic
  860,  Transfers and Servicing when it becomes effective. The Company
  does not expect the standard to have any impact on the Company s financial
  position.

In December 2008, the FASB issued Staff
  Position No. FAS 132(R)-1  Employers Disclosures about Postretirement
  Benefit Plan Assets ( FSP FAS 132(R)-1 ) (ASC Topic 715-20-65).
  FSP FAS 132(R)-1 (ASC Topic 715-20-65) requires more detailed disclosures about
  employers plan assets in a defined benefit pension or other postretirement
  plan, including employers investment strategies, major categories of plan
  assets, concentrations of risk within plan assets, and inputs and valuation
  techniques used to measure the fair value of plan assets. FSP FAS 132(R)-1 (ASC
  Topic 715-20-65) also requires, for fair value measurements using significant
  unobservable inputs (Level 3), disclosure of the effect of the measurements
  on changes in plan assets for the period. The disclosures about plan assets
  required by FSP FAS 132(R)-1 (ASC Topic 715-20-65) must be provided for fiscal
  years ending after December 15, 2009. As this pronouncement is only disclosure-related,
  it will not have an impact on the financial position and results of operations.

|2. | BUSINESS COMBINATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | On October 9, 2008, Dalian Beigang entered into a definitive
        agreement with the stockholders of Ling Xiao to acquire 51% equity interest
        of Ling Xiao for 2,700,000 shares of treasury stock of the Company at
        a fair value of $3,240,000 based on the closing price of the Companys
        common stock as quoted on the Over-the- Counter Bulletin Board as of the
        date of the closing of the transaction. The stockholders of Ling Xiao
        do not have any prior affiliation with the Company. According to the terms
        of the definitive agreement, the consideration amount is determined on
        the basis of a formula of 51% of 5 times of the planned Ling Xiaos
        net earnings for the year ended March 31, 2009.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Ling Xiao was registered with the Shenyang Industrial
        and Commercial Administration on September 26, 2008 and its business term
        is approved until September 2017. Ling Xiao is principally engaged in
        air- ticketing agency business. In addition to its operation in the city
        of Shenyang, Liaoning Province in the PRC, Ling Xiao assumed all of the
        business operations of Dalian Ling Xiao Aviation Service Co., Ltd (Dalian
        Ling                                                                                                                                                                                                                                                                                            

F13

---

Xiao) on October 10, 2008. Dalian
  Ling Xiao is owned by the stockholders of Ling Xiao and principally engaged
  in air-ticketing agency business in the City of Dalian, Liaoning Province in
  the PRC.

The preliminary allocation of the net
  assets acquired was as follows:

| | Cash and cash equivalents      | $ | 26,583    |  
| | ------------------------------ | - | --------- | -
| | Other receivables and deposits |   | 42,337    |  
| | Due by stockholders            |   | 190,851   |  
| | Due from related companies     |   | 3,400     |  
| | Total current assets           |   | 263,171   |  
| | Property and equipment, net    |   | 2,536     |  
| | Goodwill                       |   | 3,114,938 |  
| | Total assets                   |   | 3,380,645 |  
| | Less: Accrued liabilities      |   | (2,205    | )
| | Other taxes payable            |   | (18,283   | )
| | Minority interest              |   | (120,157  | )
| | Total purchase price           | $ | 3,240,000 |  

Analysis of the net inflow of cash and
  cash equivalents in respect of the business combination is as follows:

| | Consideration paid                       | $ | -      | 
| | ---------------------------------------- | - | ------ | 
| |                                          |   |        | 
| | Less: cash and cash equivalents acquired |   | 26,583 | 
| |                                          |   |        | 
| | Net cash inflow                          | $ | 26,583 | 

The acquisition of Ling Xiao was accounted
  for as a purchase under ASC Topic 805, Business Combinations. Accordingly, the
  operating results of Ling Xiao have been included in the consolidated statements
  of operation and comprehensive loss after the effective date of the acquisition
  of October 9, 2008.

The following table reflects the unaudited
  pro forma combined results of operations for the year ended December 31, 2008,
  assuming the acquisition of Ling Xiao had occurred and was completed at the
  beginning of 2008.

| | Revenues           | $ | 1,950,234 |  
| | ------------------ | - | --------- | -
| |                    |   |           |  
| | Net loss           | $ | (175,869  | )
| |                    |   |           |  
| | Net loss per share |   |           |  
| | - basic            | $ | (0.01     | )
| | - diluted          | $ | (0.01     | )

|3. | ACCOUNTS RECEIVABLE, NET                                                             
|-- | -------------------------------------------------------------------------------------
|   |                                                                                      
|   | Accounts receivable at December 31, 2009 and 2008 consisted
        of the following:

| |                                       |   | 2009    |  |   | 2008    | 
| | ------------------------------------- | - | ------- |  | - | ------- | 
| |                                       |   |         |  |   |         | 
| | Accounts receivable                   | $ | 242,904 |  | $ | 448,547 | 
| | Less: allowance for doubtful accounts |   | -       |  |   | -       | 
| | Accounts receivable, net of allowance | $ | 242,904 |  | $ | 448,547 | 

|   | As of December 31, 2009 and
        2008, the Company considered all accounts receivable collectable and has
        not recorded a provision for doubtful accounts.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                     
|4. | PREPAID EXPENSES AND OTHER CURRENT ASSETS,
      NET                                                                                                                
|   |                                                                                                                                                                     
|   | Prepaid expenses and other current assets at December
      31, 2009 and 2008 consisted of the following:                                                           

F14

---

| |                                                 |   | 2009    |  |   | 2008    | 
| | ----------------------------------------------- | - | ------- |  | - | ------- | 
| |                                                 |   |         |  |   |         | 
| | Cash at online paying agents                    | $ | 69,129  |  | $ | 223,954 | 
| | Deposits for purchase of color printing machine |   | 88,436  |  |   | 88,264  | 
| | Other deposits                                  |   | 43,546  |  |   | 38,502  | 
| | Other receivable                                |   | 29,793  |  |   | 67,759  | 
| | Prepaid expenses                                |   | 8,654   |  |   | 6,004   | 
| | Due from staff                                  |   | 57,432  |  |   | 14,794  | 
| |                                                 | $ | 296,990 |  | $ | 439,277 | 

|5. | PROPERTY AND EQUIPMENT, NET                                                 
|-- | ----------------------------------------------------------------------------
|   |                                                                             
|   | The following is a summary of property and equipment
        at December 31:

| |                                |   | 2009    |  |   | 2008    | 
| | ------------------------------ | - | ------- |  | - | ------- | 
| |                                |   |         |  |   |         | 
| | Motor vehicles                 | $ | 272,392 |  | $ | 34,328  | 
| | Color photo printing machines  |   | 310,159 |  |   | 309,389 | 
| | Furniture and office equipment |   | 102,471 |  |   | 135,007 | 
| |                                |   | 685,022 |  |   | 478,724 | 
| | Less: accumulated depreciation |   | 228,631 |  |   | 101,035 | 
| |                                |   |         |  |   |         | 
| | Property and equipment, net    | $ | 456,391 |  | $ | 377,689 | 

|   | Depreciation expense for the years ended December 31,
        2009 and 2008 was $39,415 and $28,764 respectively.
|-- | -----------------------------------------------------------------------------------------------------------------
|   |                                                                                                                  
|6. | OTHER PAYABLES AND ACCRUED EXPENSES                                                                              
|   |                                                                                                                  
|   | Other payables and accrued expenses at December 31,
        2009 and 2008 consisted of the following:            

| |                                                     |   | 2009    |  |   | 2008      | 
| | --------------------------------------------------- | - | ------- |  | - | --------- | 
| |                                                     |   |         |  |   |           | 
| | Due to a noncontrolling stockholder of a subsidiary | $ | 18,896  |  | $ | 414,859   | 
| | Deposit for purchase of common stock of the Company |   | -       |  |   | 426,708   | 
| | Due to online paying agents                         |   | 302,412 |  |   | -         | 
| | Other payables                                      |   | 87,920  |  |   | 79,163    | 
| | Deposits received                                   |   | 15,904  |  |   | 16,048    | 
| | Advanced payment from other air-ticketing agents    |   | 36,603  |  |   | 126,226   | 
| | Accrued expenses                                    |   | 261,518 |  |   | 228,116   | 
| |                                                     | $ | 723,253 |  | $ | 1,291,120 | 

|7. | NET LOSS PER SHARE                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                      
|   | The following is a reconciliation of the numerators
        and denominators used in computing basic and diluted net loss per share
        (in thousands, except per share amounts):

F15

---

| |                                                                          |   | 2009   |   |   | 2008   |  
| | ------------------------------------------------------------------------ | - | ------ | - | - | ------ | -
| | Numerator:                                                               |   |        |   |   |        |  
| | Net loss used in computing basic and diluted
      net loss per share    |   |        |   |   |        |  
| | -Continuing
      operations                                             | $ | (3,799 | ) | $ | (465   | )
| | -Discontinued
      operations                                           |   | (18    | ) |   | (354   | )
| |                                                                          | $ | (3817  | ) | $ | (819   | )
| |                                                                          |   |        |   |   |        |  
| | Denominator:                                                             |   |        |   |   |        |  
| | Shares used in computation of basic and
      diluted net loss per share |   |        |   |   |        |  
| | Weighted
      average issued common stock outstanding                   |   | 33,214 |   |   | 28,279 |  
| | Weighted average
      common stock to be issued                         |   | -      |   |   | 621    |  
| |                                                                          |   | 33,214 |   |   | 28,900 |  
| | Basic and diluted net loss per share                                     |   |        |   |   |        |  
| | -Continuing operations                                                   | $ | (0.11  | ) | $ | (0.02  | )
| | -Discontinued operations                                                 | $ | (0.00  | ) | $ | (0.01  | )
| | Total net loss-basic and
      diluted                                   |   | (0.11  | ) |   | (0.03  | )

|8. | COMMITMENTS AND CONTINGENCIES
|-- | -----------------------------
|   |                              
|   | (A)                          
|   |                              
|   |                              
|   |                              
|   | (B)                          
|   |                              
|   |                              
|   |                              
|   |                              

| | 2010 | $ | 57,792  | 
| | ---- | - | ------- | 
| | 2011 |   | 36,072  | 
| | 2012 |   | 35,102  | 
| | 2013 |   | 26,327  | 
| |      | $ | 155,293 | 

|9. | STOCKHOLDERS EQUITY
|-- | --------------------
|   |                     
|   | (A)                 
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     
|   |                     

F16

---

| |     | On August 18, 2008, the Company issued 2,400,012 shares
        of common stock to two stockholders or their nominees for settlement of
        the loans owed by the Company in the aggregate amount of $1,200,006 at
        the conversion price of $0.5 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Stock issued for acquisition of a subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | On October 9, 2008, Dalian Beigang entered into a definitive
        agreement with the stockholders of Ling Xiao to acquire 51% equity interest
        of Ling Xiao for 2,700,000 treasury shares of common stock of the Company.
        On August 28, 2009, the 2,700,000 consideration shares were issued to
        the previous stockholders of Ling Xiao pursuant to the said definitive
        agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Stock issued for private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | On August 11, 2009, the Company entered into a Subscription
        Agreement with a subscriber relating to the issuance of 3,000,000 shares
        of restricted common stock of the Company to the subscriber in two tranches
        at a price of $0.75 per share for a total purchase price of $2,250,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | On August 28, 2009, the Company issued 1,500,000 shares
        of common stock valued at $1,125,000 to the subscriber who has paid $900,359
        in cash to the Company. The remaining balance of $224,641 was recorded
        as stock subscription receivables as of December 31, 2009. The subscriber
        was subsequently appointed director of the Company on October 27, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (B) | Appropriated retained earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Companys PRC subsidiaries are required to
        make appropriations to reserves funds, comprising the statutory surplus
        reserve, statutory public welfare fund and discretionary surplus reserve,
        based on after-tax net income determined in accordance with the laws and
        regulations of the PRC. Prior to January 1, 2007 the appropriation to
        the statutory surplus reserve should be at least 10% of the after tax
        net income determined in accordance with the laws and regulations of the
        PRC until the reserve is equal to 50% of the entities registered
        capital. Appropriations to the statutory public welfare fund are at 5%
        to 10% of the after tax net income determined by the Board of Directors.
        Effective January 1, 2007, the Company is only required to contribute
        to one statutory reserve fund at 10 percent of net income after tax per
        annum, such contributions not to exceed 50 percent of the respective companies
        registered capital.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The statutory reserve funds are restricted for use to
        set off against prior period losses, expansion of production and operation
        or for the increase in the registered capital of the Company. The statutory
        public welfare fund is restricted for use in capital expenditures for
        the collective welfare of employees. These reserves are not transferable
        to the Company in the form of cash dividends, loans or advances. These
        reserves are therefore not available for distribution except in liquidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Dalian Beigang is not required to make further appropriations
        to the statutory reserve funds after 2004 as the funds have exceeded 50%
        of its registered capital after the 2003 appropriation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | In 2008, Ling Xiao appropriated $16,751 to the reserves
        funds based on its net income in accordance with the laws and regulations
        of the PRC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|10. | INCOME TAX                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The Company is subject to income taxes on an entity
        basis on income arising in or derived from the tax jurisdiction in which
        each entity is domiciled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Northport Network was incorporated in the United States
        and has incurred net operating loss for income tax purposes for 2009 and
        2008. Northport Network has net operating loss carry forwards for income
        taxes amounting to approximately $570,719 and $506,844 as at December
        31, 2009 and 2008 which may be available to reduce future years
        taxable income. These carry forwards, will expire, if not utilized, commencing
        in 2027. Management believes that the realization of the benefits from
        these losses appears uncertain due to the Companys limited operating
        history and continuing losses. Accordingly, no deferred tax asset benefit
        has been recorded. The tax benefit not recorded at December 31, 2009 and
        2008 was $194,045 and $172,327 respectively. The net change in the tax
        benefit for 2009 was an increase of $21,718.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Dalian Beigang and Ling Xiao were incorporated in the
        PRC and are subject to PRC income tax which is computed according to the
        relevant laws and regulations in the PRC. Beginning January 1, 2008, the
        new Enterprise Income Tax (EIT) law has replaced the old income
        tax laws for Domestic Enterprises (DES) and Foreign Invested
        Enterprises (FIEs). The new standard EIT rate of 25% replaces
        the 33% rate applicable to both DES and FIEs. Both Dalian Beigang and
        Ling Xiao have incurred net operating loss for income tax purposes for
        2009. Accordingly, no provision for income tax has been made. The net
        operating losses for income taxes can be carried forward to reduce future
        5 years taxable income. No deferred tax                                                                                                             

F17

---

asset benefits have been recorded due
  to the uncertainty on realization of the benefits from the tax losses incurred
  by Dalian Beigang and the insignificant effect of the tax losses incurred by
  Ling Xiao. The tax benefits not recorded by Dalian Beigang and Ling Xiao for
  the year ended December 31, 2009 and 2008 were $144,410, $39,517, $160,770 and
  $0 respectively.

The income tax benefit net of income
  tax expense was $39,517 for 2009 and the income tax expense was $51,160 for
  2008.

The reconciliation of income taxes computed
  at the statutory income tax rates to total income taxes for the years ended
  December 31, 2009 and 2008 is as follows:

| |                                                                                  |   | 2009       |   |   | 2008     |  
| | -------------------------------------------------------------------------------- | - | ---------- | - | - | -------- | -
| |                                                                                  |   |            |   |   |          |  
| | Federal tax rate on net loss                                                     | $ | (1,330,936 | ) | $ | (233,543 | )
| | Valuation allowance                                                              |   |            |   |   |          |  
| | Northport Network                                                                |   | 21,718     |   |   | 89,243   |  
| | Dalian Beigang                                                                   |   | 144,410    |   |   | 160,770  |  
| | Ling Xiao                                                                        |   | 39,517     |   |   | -        |  
| | Tax effect of impairment on goodwill not deductible for income
      tax purpose |   | 1,059,079  |   |   | -        |  
| | Foreign tax differential                                                         |   | 26,695     |   |   | 34,690   |  
| | Actual tax (benefit) expense                                                     | $ | (39,517    | ) | $ | 51,160   |  

|11. | CONCENTRATIONS AND RISKS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | During 2009 and 2008, 100% of the Companys assets
        were located in the PRC and 100% of the Companys revenues were derived
        from companies located in the city of Dalian and Shenyang which are both
        located in the PRC.                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company has a diversified base of customers. No
        individual customer contributed to more than 10% of total revenues for
        the years ended December 31, 2009 and 2008. No individual customer accounted
        for more than 10% of accounts receivable as of December 31, 2009 and 2008.                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The business of the Companys newly acquired subsidiary,
        Ling Xiao acquired in 2008 is subject to certain risks and concentrations
        including dependence on relationships with travel suppliers, primarily
        airlines and exposure to risks associated with online commerce security.
        Agency commission from an airline accounted for 56% and 84 % of the Companys
        total revenues for the years ended December 31, 2009 and 2008 respectively.
        As of December 31, 2009 and 2008, accounts receivable from this airline
        were $41,059 and $272,678 respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|12. | SEGMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company operates in three reportable segments: color
        photo printing, air-ticketing agency services and online shopping. The
        Company evaluates segment performance based on income from operations.
        All inter-company transactions between segments have been eliminated.
        As a result, the components of operating income for one segment may not
        be comparable to another segment. The following is a summary of the Companys
        segment information for the years ended December 31, 2009 and 2008:                                                              

F18

---

| |                                                       |   | 2009       |   |   | 2008     |  
| | ----------------------------------------------------- | - | ---------- | - | - | -------- | -
| |                                                       |   |            |   |   |          |  
| | Revenues                                              |   |            |   |   |          |  
| | Color photo printing                                  | $ | 3,639      |   | $ | 11,760   |  
| | Air-ticketing agency                                  |   | 751,565    |   |   | 473,992  |  
| | Online shopping                                       |   | 474        |   |   | -        |  
| | Total revenues                                        |   | 755,678    |   |   | 485,752  |  
| |                                                       |   |            |   |   |          |  
| | Gross profit (loss)                                   |   |            |   |   |          |  
| | Color photo printing                                  |   | (25,681    | ) |   | (61,132  | )
| | Air-ticketing agency                                  |   | 129,918    |   |   | 272,868  |  
| | Online shopping                                       |   | 474        |   |   | -        |  
| | Total gross profit                                    |   | 104,711    |   |   | 211,736  |  
| |                                                       |   |            |   |   |          |  
| | Net income (loss) from operations                     |   |            |   |   |          |  
| | Color photo printing                                  |   | (379,154   | ) |   | (289,326 | )
| | Air-ticketing agency                                  |   | (3,274,118 | ) |   | 189,044  |  
| | Online shopping                                       |   | (170,244   | ) |   |          |  
| | Total loss from operations                            |   | (3,823,516 | ) |   | (100,282 | )
| |                                                       |   |            |   |   |          |  
| | Unallocated amounts relating to corporate operations: |   |            |   |   |          |  
| | Legal and professional
      fees                     |   | (57,600    | ) |   | (217,771 | )
| | Others                                                |   | (15,691    | ) |   | (15,082  | )
| | Net loss before income tax                            | $ | (3,896,807 | ) | $ | (333,135 | )

|13. | DISCONTINUED OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | On April 12, 2009, the Directors resolved to discontinue
        the operations of the provision of platform for electronic filing of tax
        returns with effect from July 1, 2009. As the State Administration of
        Taxation in Dalian (SAT in Dalian) has made available its
        electronic tax filing facilities to all tax payers, subscribers to the
        Companys platform for electronic filing of tax returns, and the
        revenue derived therefrom had continued to drop to a very low level. In
        view of these recent developments, the Directors decided to discontinue
        the operations of its platform for electronic filing of tax returns.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The assets employed in the provision of platform for
        electronic filing of tax returns, comprised mainly computer equipment
        with a net book value of $851 at July 1, 2009 was written off in 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Results of the discontinued operations for the years
        ended December 31, 2009 and 2008 are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

| |                                       |   | 2009    |   |   | 2008     |  
| | ------------------------------------- | - | ------- | - | - | -------- | -
| |                                       |   |         |   |   |          |  
| | Revenues                              | $ | 2,316   |   | $ | 123,163  |  
| | Cost of sales                         |   | (18,544 | ) |   | (85,081  | )
| | Gross (loss) profit                   |   | (16,228 | ) |   | 38,082   |  
| | Operating expenses                    |   | (1,483  | ) |   | (391,837 | )
| | Net loss from discontinued operations | $ | (17,711 | ) | $ | (353,755 | )

The assets and liabilities of discontinued
  operations as of December 31, 2009 and 2008 are summarized as follows:

F19

---

| |                                                      |   | 2009 |  |   | 2008   | 
| | ---------------------------------------------------- | - | ---- |  | - | ------ | 
| | Assets                                               |   |      |  |   |        | 
| | Property and equipment, net                          | $ | -    |  | $ | 42,151 | 
| | Total assets related to discontinued operations      | $ | -    |  | $ | 42,151 | 
| |                                                      |   |      |  |   |        | 
| | Liabilities                                          |   |      |  |   |        | 
| | Deferred revenue                                     | $ | -    |  | $ | 5,023  | 
| | Total liabilities related to discontinued operations | $ | -    |  | $ | 5,023  | 

|    | Net cash flow of the discontinued operations from the
        categories of investing activities was not significant for the years ended
        December 31, 2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|14. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | As of December 31, 2009 and 2008, the Company owed $251,312
        and $173,432 respectively to a stockholder as unsecured loan and imputed
        interest is computed at 5% per annum on the amount due. The balance is
        repayable on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Total imputed interest expenses recorded as additional
        paid-in capital amounted to $11,125 and $3,659 for the years ended December
        31, 2009 and 2008 respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | As of December 31, 2009, a related company owed $99,209
        to the Company during the normal course of business and is under the same
        terms and conditions as other customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | On August 28, 2009, the Company issued 1,500,000 shares
        of common stock valued at $1,125,000 to the subscriber who has paid $900,359
        in cash to the Company. The remaining balance of $224,641 was recorded
        as stock subscription receivable as of December 31, 2009. The subscriber
        was subsequently appointed director of the Company on October 27, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|15. | GOING CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | As reflected in the accompanying financial statements,
        the Company has an accumulated deficit of $5,532,209 at December 31, 2009
        that includes a net loss of $3,816,911 for the year ended December 31,
        2009. The Companys total current liabilities exceed its total current
        assets by $260,834 and the Company used cash amounted to $633,960 in its
        operations. These factors raise substantial doubt about its ability to
        continue as a going concern. In view of the matters described above, continued
        operation of the Company is dependent upon the Companys ability
        to raise additional capital, obtain financing and succeed in its future
        operations. The financial statements do not include any adjustments relating
        to the classification of liabilities that might be necessary should the
        Company be unable to continue as a going concern.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Management has taken steps to revise its operating and
        financial requirements, which it believes are sufficient to provide the
        Company with the ability to continue as a going concern. The Company is
        also actively pursuing additional funding and potential merger or acquisition
        candidates and strategic partners, which would enhance stockholders
        investment. Management believes that the above actions will allow the
        Company to continue operations through the next fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|16. | RECLASSIFICATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Prior year amounts have been reclassified to conform
        to the current year presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|17. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Management evaluated all activities of the Company through
        April 9, 2010 and concluded that no subsequent events have occurred that
        would require recognition in the consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F20

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