UNITED STATES 
SECURITIES 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, 2010 [ ] 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) Washington76-0674579(State or other jurisdiction of incorporation of organization)(I.R.S. Employer Identification No.)601 Union Street, Suite #4200, Seattle, Washington98101(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:  None Securities registered pursuant to Section 12(g) of the Act.:  Common Stock, $0.001 par value 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]  1       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 registrant was 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]  Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [ ] No [X]   The aggregate market value of the voting and non-voting common equity held by non-affiliates is approximately $270,625. This calculation is based upon the average of the bid price of $0.01 and asked price of $0.04 of the common stock on June 30, 2010. The number of shares of our common stock outstanding as of March 31, 2011 was: 31,700,012.  2         TABLE OF CONTENTS PART 1ITEM 1DESCRIPTION OF BUSINESS5ITEM 1ARISK FACTORS13ITEM 1BUNRESOLVED STAFF COMMENTS23ITEM 2PROPERTIES23ITEM 3LEGAL PROCEEDINGS24ITEM 4REMOVED AND RESERVED24ITEM 5MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES24ITEM 6SELECTED FINANCIAL DATA25ITEM 7MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS26ITEM 7AQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK38ITEM 8FINANCIAL STATEMENTS38ITEM 9CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE38ITEM 9ACONTROLS AND PROCEDURES39ITEM 9BOTHER INFORMATION40ITEM 10DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE40ITEM 11EXECUTIVE COMPENSATION43ITEM 12SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS44ITEM 13CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE45ITEM 14PRINCIPAL ACCOUNTING FEES AND SERVICES46ITEM 15EXHIBITS AND REPORTS ON FORM 8-K47  NOTE REGARDING FORWARD LOOKING STATEMENTS 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  3    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.  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 Unless the context indicates otherwise, 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.   PART I ITEM 1. DESCRIPTION OF BUSINESS Our Business Northport Network Systems, Inc. conducts business in China through a Wholly Owned Foreign Enterprise (WOFE) subsidiary, Dalian Beigang Information Industry Development Company Limited (Dalian Beigang), which developed a digital photo processing kiosk technology, which operates under the trade name Colorstar. We entered into an agreement dated June 23, 2005, to  4    acquire 100% of Dalian Beigang and obtained Chinese government approval of the WOFE business license on May 17, 2006. We have installed a limited number of test units in commercial locations in Dalian, PRC during the past four years. 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.  In addition, during 2010 we commenced development of an e-commerce website known as UrMart.net which we intend to test launch as early as in the summer of 2012 and generate revenues from sales made through the site. The website UrMart.net was at its trial stage at the end of 2010. 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.  During 2010, we discontinued operations of our Tenet, tax filing software division as a result of changes to the China National Tax Bureau filing access procedures. In May 2010, we divested our 51% equity interest in Shenyang Ling Xiao Aviation Services Co., Ltd (Ling Xiao), which operates online and call center travel booking operations in the Chinese cities of Dalian and Shenyang.  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.  Corporate History We were originally incorporated in Colorado on July 25, 2000 as dotcom.netmgmt.com Inc. 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,  5    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.  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. We issued a total of 1,500,000 shares of our common stock as the purchase price for the acquisition. Subsequently on January 10, 2008, 1,000,000 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 SB-2 filing which was declared effective by the Securities and Exchange Commission (the SEC) on July 13, 2007.  On October 9, 2008, at our annual shareholders meeting, our shareholders, among other acts, approved: (i) a plan of merger for the reincorporation of the Company from the State of Colorado to the State of Washington, (ii) the change of the name of the Company to Northport Network Systems, Inc., and (iii) the authorization of 100,000,000 shares of preferred stock with a par value of $0.001.  Our authorized capital stock now consists of 100,000,000 shares of common stock, $0.001 par value per share, of which 31,700,012 shares have been issued and outstanding, fully paid and non-assessable as of December 31, 2010. 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 10-K report, we have used an exchange rate of $1.00 US = 6.56 Rmb (Chinese yuan) based on March 25, 2011 exchange rate obtained from http://www.xe.com for all conversions except those taken directly from our audited financial statements which may vary marginally from this rate. The value of RMB against US$ and other currencies may fluctuate and is  6    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 $182,926 (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 $182,926 (Rmb1.2 million) to $335,365 (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 $182,926.   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 our common stock at a fair value of $3,240,000. The amount was 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. In May 2010, we divested our 51% equity interest in Ling Xiao.  On August 11, 2009, the Company entered into a Subscription Agreement with a subscriber relating to the issuance of 3,000,000 shares of 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.   7    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 $1,065,383 to the Company. The remaining balance of $59,617 was recorded as related party receivable as of December 31, 2010.  On June 18, 2010, Dalian Beigang entered into an equity agreement with Jianhua Yu, a Chinese citizen and a director of the Company, to acquire a 35% equity interest in Riyueming Hotels Co., Ltd. ( Riyueming), an existing group of business budget hotels headquartered in Dalian, China. The 35% interest in Riyueming is being acquired in exchange for 1,777,160 shares of Northport Network Systems Inc. valued at USD $2,665,740. However, the parties terminated the agreement effective August 5, 2010 and cancel the transaction in its entirety.  On June 18, 2010, Dalian Beigang entered into a definitive agreement with the stockholders of Beijing Xin Lu Zheng Bao Cheng Education Technology Co. Ltd. (Lu Zheng) to acquire 65% equity interest of Lu Zheng for 3,000,000 shares of common stock of the Company at a fair value of $2,700,000. Lu Zheng, with its principal place of business in Beijing, PRC, is engaged in professional training services, which became our principal business. As of the date of this filing, the Company is conducting due diligence on Lu Zheng and expects to complete the acquisition before end of 2011.  Principal Products and Services 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 which allows 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, 2009 and 2010, and such expenditures amounted to $162,894, $0 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.  8       Over the past four 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. were in operation as at December 31, 2009. We have withdrew all test units as of December 31, 2010 due to high maintenance work related to low ink usage during the test period.  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. We are evaluating problems associated with the fourth design in order to finalize the fifth modular version.  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  9    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  10    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. 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.  We have two Colorstar test units located in Vancouver, Canada for analysis to determination of any and all issues that could affect performance and regulatory compliance if the units were to be introduced into the North American marketplace. Due to lack of funding, we presently have no plan to introduce Colorstar in North American marketplace.  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.  Current Status of Colorstar Operations. Currently, all operations of Colorstar are suspended. We are re-evaluating our digital photo processing technology business and considering ways to re-shape our technology and business model with view towards long term commercial success. However, we will require addition capital  11    to re-shape our technology, and we can not provide assurances that we will be successful in our endeavors.  Other Business Activities We took on two government oil contamination clean up projects in September 2010. These projects involve the use of biological cleaning methods to clean up oil spill in Jinzhou district in Dalian. One project involves the clean up of approximately 1.3 kilometers of seashore line or an area of 95,159.6 Square Meter and the other project involves the clean up of approximately 180 meters of seashore line or an area of 7,800 Square Meter. We expect to receive up to RMB7,340,000 or US$1,118,902 and RMB2,995,200 or US$456,585 for these two projects. On April 11, 2011, we received the first payments for both project for RMB RMB5,140,000 or US$783,537 and RMB1,790,000 or US$272,866. We anticipate receiving the remaining balance during second quarter of 2011. We do not plan to continue this business due to lack of capital resources. We plan to use the proceeds from these projects for repayment of loans from Yan Zhao and in our other planned business activities.  Our oil spill clean-up projects uses product manufactured by Oppenheimer Biotechnology Incorporated (OBI), which specializes in Bioremediation for over 20 years. The OBI Formula I and TerraZyme are OBI manufactured products with naturally occurring microorganisms that recycle simple, complex and chlorinated hydrocarbons into natural compounds. These naturally occurring hydrocarbon digesting microbes convert pollutants into environmentally beneficial products. The application of OBI products effectively cleaned up the oil spill along the seashore line with clear visual and actual results. The Oppenheimer Formula has been listed on U.S. EPA National Contingency Plan Product Schedule since 1991.  Dalian Beigang Biotech In June, 2010, Dalian Beigang acquired a series of Chinese patents focused on health diagnostic applications and products. The Company plans to establish a 90% owned subsidiary corporation, Dalian Beigang Biotech Inc., which will be located in Dalian, China. The company will develop, commercialize and popularize advanced In Vitro Diagnostic (IVD) kits/devices to improve health of human beings. Its primarily business is to design, develop, patent and market home-applicable diagnostic test papers and portable diagnostic devices related to human cardiovascular diseases. The company plans to initially develop up to 4 IVD products. The company needs to raise approximately $2,000,000 additional capital in order to begin the product development.  Online Education Services  (Acquisition to be completed upon completion of due diligence)  12    On June 18, 2010, a wholly owned subsidiary of Northport entered into an equity agreement in accordance with Company Law of the People's Republic of China with Jia Yi, Wu Peng and Yuan Huixiong in regards to Northport Dalian acquiring a 65% equity interest in Beijing XinLu Zheng Bao Cheng Education Technology Co. Ltd. (Beijing Bao Cheng), an existing education business headquartered in Beijing China. The consideration for the 65% equity interest is 3,000,000 shares in the Company being issued as follows: 1.2 million treasury shares to Jia Yi;  0.9 million treasury shares to Wu Peng; and 0.9 million treasury shares to Yuan Huixiong, the shareholders of Beijing Bao Cheng.  Beijing Bao Cheng was incorporated in the Peoples Republic of China (PRC) on December 21, 2009. Beijing Bao Cheng is engaged in professional training services. The Company provides professional training programs and services to students taking legal services, construction inspections and nursing examinations through the classroom and online training programs. Students can enroll at the Companys training facilities in Beijing and Guangzhou and franchisee network located throughout China or enroll for online courses. Tuition fees are generally paid in advance and are recognized when earned, ratably over the service period on a straight line basis, net of business taxes and related surcharges. The Company also sells reference materials to students and revenue is recognized upon delivery of the reference materials to the students over the subscription period the classroom or online course is available.  As of the date of this filing, the Company is conducting due diligence on Beijing Bao Cheng and expects to complete the acquisition before end of 2011.  Tenet tax filing software (Now discontinued) In June 2009, we discontinued operations of our Tenet tax reporting and payment system due to a number of competitive factors. The Tenet system was an intranet based online tax filing and payment transfer system, which had 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.  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.   13    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.  Ling Xiao Airline Booking Operations (Now discontinued) On October 9, 2009, the Company and Dalian Beigang entered into a definitive agreement with the stockholders of Shenyang Ling Xiao Aviation Services Co., Ltd (Ling Xiao), in which the Company issued 2,700,000 shares of common stock at a fair market value of $3,240,000 to acquire 51% equity interest of Ling Xiaos net assets of $125,062. Ling Xiao was principally engaged in the air-ticketing agency business. Ling Xiao was a leading retailer of air tickets in northeast China.  On April 1, 2010, we terminated our Ling Xiao travel related service business when we sold our ownership interest back to its former shareholders in exchange for the return of 2,500,000 shares of our common stock.   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.  14       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 46 full-time employees as of December 31, 2010. 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.   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 = 6.56 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 $6,273,030 at December 31, 2010.  The Companys current liabilities also exceed its current assets by $371,646 and the Company used net cash in operations during the year ended December 31, 2010 of $553,202. 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  15    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, 2010 and 2009, the Company owed $933,098 and $251,312 respectively to a stockholder as unsecured loan. The Company recorded an imputed interest at 5% per annum on the amount due as of December 31, 2009. The balance is repayable on demand. Total imputed interest expenses recorded as additional paid-in capital amounted to $0 and $11,125 for the years ended December 31, 2010 and 2009.  As of December 31, 2010, a related company owed $59,617 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, 2010, decreased dramatically to $214 from $755,678 during the previous fiscal year ended December 31, 2009.  The Company has an immediate need for capital. The Company is actively pursuing additional equity funding, bank financing for its planned Colorstar operations, 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. If the Company is unable to raise funds in the near terms, its operations may be curtailed, or the company may be required to seek bankruptcy protection.  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  16    misconduct or a knowing violation of law; (b) unlawful distributions; 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 fiscal year 2010. 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.  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 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.   17    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 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 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 and cause significant dilution. 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 through the new issuance of stock. 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, 2010 the corporate cash resources were such that we had a negative working capital position of $371,646. We estimate that cash flows from ongoing shareholder loans will be sufficient to allow continuing operations for the next twelve months. Any equity based investment in the Company will likely create substantial dilution to existing shareholders.  The Company may pay consultants and employees in stock as consideration for their services which may result in stockholder dilution. Due to the Companys limited cash availability, the Company has in the past and may in the future pay consultants and employees in stock, warrants or options to purchase shares of our common  18    stock rather than cash. Payments for services or other amounts due in equity may materially and adversely affect the Companys stockholders by diluting the value of outstanding shares of our common stock.  Directors and officers are non-residents of the United States and could be beyond reach in the event of litigation. Because four 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, four of our directors and officers are nationals of countries other than the United States. Zhao Yan, Zhong Bo Jia and Xiaoliang Jia are citizens and residents of the PRC. Dr. Jim Howell Qian is a resident of California. Jianhua Yu is a resident of Canada. 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 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.  Only two of our Chinese directors, officers and employees including Mr. Zhong Bo Jia and Xiaoliang Jia have entered into employment agreements with the Companys wholly owned Chinese subsidiary. 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  19    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 Dalian Beigang, a wholly-owned subsidiary that operates in China. We entered into an agreement dated June 23, 2005, to acquire 100% of Dalian Beigang. 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.  20    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.   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. Neither the Company nor Dalian Beigang has ever been found to be in violation of any PRC law or regulation.  21       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.    22    Uncertainties with respect to the PRC legal system could adversely affect us. We conduct our business primarily through our wholly-owned subsidiary 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 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  23    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.    24    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.  Risk Factors Relating to the Companys Colorstar Industry  The requirement for additional financing will affect future profitability. We anticipate that our Colorstar 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. In the event we do not raising additional capital, 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 test installed in the Dalian, China area. During the test period these units have been subject to constant and ongoing consumer usage for over eighteen months. The current model unit has not yet achieved the performance levels which we have set and we have concluded that the unit has not yet 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.  25       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 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.  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%  26    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, 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.  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 Pink Sheets 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 Pink Sheets is not a listing service or exchange, but is instead a dealer quotation service for subscribing members. The market price of our common 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.  27       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. Given the share price of our common stock, dilution could be significant.   We are authorized to issue up to 100,000,000 preferred shares of which none are currently issued and also authorized to issue up to 100,000,000 common shares of which 31,700,012 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  28    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 Not applicable  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, USA 98101. The lease is a month-to month arrangement with the option to increase space as needs require. The annual rent is $2,700.  Our Dalian executive office consists of approximately 160 square meter of space and is located at Room 1804, Bainian Hui D7 Building, Huizhan Road, Shahekou District, Dalian, PRC 116023. The lease is for a period of two years expiring on July 19, 2012. The annual rent is approximately $22,866.  We also lease approximately 1,255 square meter of space and is located at 4th floor, DD-Hitech Building, No. 12 Liaohe Road East, Jinzhou New District, Dalian PRC 116600. The lease is for a period of three years expiring on July 19, 2013. The annual rent is approximately $54,527. We also lease approximately 100 square meter of space and is located at Suite #512, A. No. 1 Huoju Road, Qixianling Industry Base - High Tech Zone, Dalian, PRC 116001. The lease is for one year expiring on April 9, 2011. The annual rent is approximately $5,589.   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. (REMOVED AND RESERVED).  PART II ITEM 5.MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  29        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. Since April 5, 2010, our common stock has traded on the Pink Sheet under the symbol NNWS. The following table sets forth the high and low bid price per share of our common stock for the quarters during 2010 and the recent quarter ended March 31, 2011. These over-the-counter and pink sheet market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions: Quarter EndedHighLowDecember 31, 2009$0.30$0.29September 30, 2009$0.40$0.30June 30, 2009$1.20$0.20March 31, 2009$1.20$1.20December 31, 2010$0.02$0.02September 30, 2010$1.00$0.02June 30, 2010$1.00$0.20March 31, 2010$0.55$0.55March 31, 2011$0.02$0.02  Penny Stock Rule 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.   30       Holders of Common Stock As of December 31, 2010, 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 None.  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 Not Applicable   ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 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  31    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 achieve revenues and profits in 2011 as we anticipate re-launch of our Colorstar products, and (iii) our ability to raise funds for the re-launch of our Colorstar business, (iv) our ability to compete against other companies that have greater economic and human resources than we do; (v) our dependence on key personnel; (vi) our ability to attract and retain quality employees; (viii) our dependence on manufacturers and suppliers; and (ix) our ability to protect technology through patents; and (x) our ability to comply with Sarbanes-Oxley Act of 2002 Section 404 in 2010.  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. As of December 31, 2010, we have suspended operations of our Colorstar business.  In October 2008, we acquired a 51% equity interest in a China based air line ticket booking business known as Ling Xiao. In April 2010, we terminated our air line ticket booking business.  Results of Operations-Fiscal Year Ended December 31, 2010 Compared to Fiscal year Ended December 31, 2009 During 2010, the Company operated 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 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.  32       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  On October 9, 2009, the Company and Dalian Beigang entered into a definitive agreement with the stockholders of Shenyang Ling Xiao Aviation Services Co., Ltd (Ling Xiao), in which the Company issued 2,700,000 shares of common stock at a fair market value of $3,240,000 to acquire 51% equity interest of Ling Xiaos net assets of $125,062. Goodwill valued $3,114,938 was fully impaired for the year ended December 31, 2009. Ling Xiao was primarily engaged in air-ticketing agency services.  On April 1, 2010, the Company and Dalian Beigang entered into an agreement with the 49% stockholder of Ling Xiao to divest its 51% equity interest in Ling Xiao. For exchange, the 49% stockholder returned 2,500,000 shares of the Companys common stock to the Company. The agreement was finalized on May 11, 2010. Pursuant to the agreement, the divestiture was effective on April 1, 2010. The value of the 200,000 shares common stock and the operation loss of Ling Xiao for the three months ended March 31, 2010 were classified as discontinued operation loss.  The following table is a summary of Ling Xiaos financial position and result of operations as of and for the twelve months ended December 31, 2010: Shenyang Ling Xiao Aviation Services Co., LtdCondensed Balance SheetCondensed Statement of IncomeAssetsSales revenue$                     -Current assets$                       -Cost of sales-Non-current assets-Gross Profit-Total assets-Operating Income-Liabilities  33       Current liabilities-Income tax-Non-current liabilitiesLoss from discontinuedTotal liabilities-operation, net of tax(125,062)Net Assets$                       -Net Income$     (125,062)   The following is a summary of the Companys statement of operations for the year ended December 31, 2010 and 2009: 20102009Revenue$                      214$                755,678Cost of revenue11650,967Gross profit203104,711Selling expenses53,631-General and administrative expenses502,611873,530Goodwill impairment loss-3,114,938Total operating expenses556,2423,988,468Operating income(556,039)(3,883,757)Other income1,902574Interest income2331,208Other expense(2,869)(3,707)Interest expense-(11,125)Total other income/(expenses)(734)(13,050)Income (loss) from continued operation before income tax(556,773)(3,896,807)Provisions for income tax/(tax benefit)-39,517Net income (loss) from continued operation(556,773)(3,857,290)Gain (loss) from discontinued operation, net of tax(125,062)(17,711)Net income (loss)$           (681,835)$          (3,875,001)  Revenues/Sales Revenues for the year ended December 31, 2010, were $214 compared with $755,678 for the comparable period in 2009. For the 2009 period, of the total amount of revenue, Ling Xiao  34    generated $751,565 or 99% of total revenue. The majority of its revenues originated from air ticket bookings during the period. In April 2010, we divested our interest in the Ling Xiao business. Cost of revenue for the year ended December 31, 2010, were $11 compared with $650,967 for the comparable period in 2009. The significant decrease in cost of revenue is due to divesture of Ling Xiao business. We also had a goodwill impairment loss of $3,114,938 during the 2009 attributable to the divestiture of our interest in the Ling Xiao business.  Operating Expenses. We had selling expenses of $53,631 for the 2010 period. These expenses relate mainly to operating and travelling expenses related to the Colorstar business.  General and administrative expenses were $502,611 in 2010, as compared to $873,530 in 2009; a decrease of 42%. General and administrative expenses represent payroll and related costs, professional fees, depreciation, travel and offices rental expenses. The decrease during the 2010 is due principally to reduced headcount and related costs coincident with our business divestiture and scaled down operation of our Colorstar operations. The decrease also was attributable to increase in depreciation during the current period offset by decrease in office rental expenses of Ling Xiao business and travel to North America. Depreciation costs were $115,299 in 2010 as compared to $39,415 in 2009.  Losses from Operations. Net losses from operations for 2010 were $681,835 compared with $3,875,001 for the 2009 period for the reasons discussed above.  Research and Development/Payroll We had no research and development costs for the 2010 and 2009 fiscal years. 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 $26,942 and $9,117 for the years ended December 31, 2010 and 2009, 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  35    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 t 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.  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 has been performed, fees are fixed or determinable and collectability 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 In the past, the Company provided 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.  36       --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 $0 and $2,223 for 2010 and 2009 respectively.  --Air-ticketing agency services During 2009, for its airline ticketing agency business the Company received commissions from travel suppliers for air-ticketing services through the Companys transaction and service platform under various services agreements. Commissions from air-ticketing services rendered are recognized after air tickets are issued, net of estimated cancellations. The Company presents revenues from such transactions on a net basis in the statements of operations as the Company does not assume inventory risks and has no obligations for cancelled airline ticket reservations. Contracts with certain airlines contain discretionary escalating commissions that are paid to the Company subject to achieving specific performance targets. Such discretionary escalating commissions are recognized when the air tickets are issued and performance guarantees, if any, are achieved.   Depreciation Property and equipment assets are stated at cost, less accumulated depreciation. Expenditures for additions, major renewals and betterments are capitalized and expenditures for maintenance and repairs are charged to expense as incurred. Depreciation is provided on a straight-line basis, less estimated residual value over the assets estimated useful lives. The estimated useful lives are as follows: Motor vehicles5 to 10 Years  37       Color printing machine4 YearsFurniture, fixtures and equipment2 to 5 Years  The following is a summary of property and equipment at December 31: AtAccumulatedDecember 31, 2010:CostDepreciationNetMotor Vehicles$ 145,673$ 131,742$ 13,931Color Photo Printing Machines417,248190,115227,133Furniture and Equipment40,86122,07318,788$ 603,782$ 343,930$ 259,852AtAccumulatedDecember 31, 2009:CostDepreciationNetMotor Vehicles$ 272,392$ 155,401$ 116,991Color Photo Printing Machines310,15932,772277,387Furniture and Equipment102,47140,45862,013$ 685,022$ 228,631$ 456,391  Depreciation expenses were $115,299 and $39,415 for the years ended December 31, 2010 and 2009 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 $6,272,030 at December 31, 2010. The Companys current liabilities also exceed its  38    current assets by $371,646 and the Company used net cash in operations during the year ended December 31, 2010 of $553,202.  Contractual cash commitments for the fiscal years subsequent to December 31, 2010, are summarized as follows:  The Company leases office spaces from external parties under 5 operating agreements, which will expire on August 1, 2011, August 12, 2012, August 12, 2012, July 19, 2013, and November 26, 2013 at monthly rentals of $451, $177, $1,936, $4,397 and $255. The impact to the Companys results of operations, in the form of rent expense, for the twelve months ended December 31, 2010 was $56,826.  The Companys lease contracts with the third parties calls for non-cancellable operating lease commitment as follow:  For the twelve months ending December 31:- Fiscal YearsCommitments2011$ 84,368201272,671201356,760$ 213,799  For the year ended December 31, 2011, our cash and cash equivalents decreased from $307,273 to $4,400.  Going Concern As reflected in the accompanying financial statements, we had an accumulated deficit of $6,273,030 at December 31, 2010. Our auditors stated in their report on our audited financial statements for the year ended December 31, 2010 that they have substantial doubt we will be able 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.   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. However, there are no assurances that we will be  39    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.  Cash Used in Operating Activities Cash used in operating activities was $553,202 during the year ended December 31, 2010, as compared to $633,960 during the year ended December 31, 2009.  Cash Used in Investing Activities Cash provided by investing activities was $12,821 for the 2010 period due to decrease of plant and equipment of $81,240 offset by advanced payment for office constructions of $68,420. For the 2009 period, it was $79,381 comprised primarily of issues related to the acquisition of computer related software and hardware for the building of Colorstar machines.  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 2010, we had no cash from financing activities. 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 $1,065,383 to the Company. The remaining balance of $59,617 was recorded as related party receivable as of December 31, 2010.  As of December 31, 2010, a related company owed $59,617 to the Company during the normal course of business and is under the same terms as other customers.  As of December 31, 2010 and 2009, the Company owed $933,098 and $251,312 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.  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.   Off-Balance Sheet Arrangements  40    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  41    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.  We have no revenue from the sale of color photo printing services. 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. 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.  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).   42    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, 2010December 31, 2009Balance sheet items, except for common 
stock, additional paid-in capital and 
retained earnings, as of year endUS$1=RMB6.6118US$1=RMB6.8372Amounts included in the statements of 
operations and cash flows for the yearUS$1=RMB6.7788US$1=RMB6.84088  The translation difference recorded for the years ended December 31, 2010 and 2009 was a gain of $415,016 and a loss of $2,823, respectively.  No presentation is made that RMB amounts have been, or would be, converted into US$ 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.   Long-lived assets  43    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. At December 31, 2010, the Company assessed its color printing machine, motor vehicle and equipment for production and has concluded that its long-lived assets have not experienced any impairment losses.  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  44    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.   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 June 2009, FASB issued FASB Statement No. 166, Accounting for Transfers for Financial Assets (FASB ASC 860 Transfers and Servicing) and FASB Statement No. 167 (FASB ASC 810 Consolidation), a revision to FASB Interpretation No. 46 (Revised December 2003), Consolidation of Variable Interest Entities (FASB ASC 810 Consolidation). The Company has adopted the new accounting policies and has determined that there is no material impact to the financial statements presented herein.  On June 30, 2009, FASB issued FASB Statement No. 168, Accounting Standards CodificationTM (FASB ASC 105 Generally Accepted Accounting Principles) a replacement of FASB Statement No. 162 the Hierarchy of Generally Accepted Accounting Principles. On the effective date of this standard, FASB Accounting Standards CodificationTM (ASC) became the source of authoritative U.S. accounting and reporting standards for nongovernmental entities, in addition to guidance issued by the Securities and Exchange Commission (SEC). This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  If an accounting change results from the application of this guidance, an entity should disclose the nature and reason for the change in accounting principle in their financial statements.  This new standard flattens the GAAP hierarchy to two levels: one that is authoritative (in FASB ASC) and one that is non-authoritative (not in FASB ASC). Exceptions include all rules and interpretive releases of the SEC under the authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants, and certain grandfathered guidance having an effective  45    date before March 15, 1992. Statement No. 168 is the final standard that will be issued by FASB in that form.  There will no longer be, for example, accounting standards in the form of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position. The Company has adopted and implemented the new accounting policy.  In October 2009, the FASB issued ASU No. 2009-13 Revenue Recognition (Topic 605): Multiple Deliverable Revenue Arrangements - A Consensus of the FASB Emerging Issues Task Force. This update provides application guidance on whether multiple deliverables exist, how the deliverables should be separated and how the consideration should be allocated to one or more units of accounting. This update establishes a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence, if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific or third-party evidence is available. The Company will be required to apply this guidance prospectively for revenue arrangements entered into or materially modified after January 1, 2011; however, earlier application is permitted. The management is in the process of evaluating the impact of adopting this ASU on the Companys financial statements.  The FASB issued ASU-2010-09 (Topic 855) to amend guidance on subsequent events to remove the requirement for SEC filers (as defined in ASU 2010-09) to disclose the date through which an entity has evaluated subsequent events. This change alleviates potential conflicts with current SEC guidance. An SEC filer is still required to evaluate subsequent events through the date financial statements are issued, but disclosure of that date is no longer required. The amendments in ASU 2010-09 became effective upon issuance of the guidance. Management adopted this pronouncement as of July 1, 2010.  ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.  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  Not applicable.  ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we undertook an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934, Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. The evaluation of our disclosure controls and procedures included a review of our processes and implementation and the effect on the information generated for use in this Annual Report on Form 10-K. As a result of such evaluation, Chief Executive Officer and the Chief Financial Officer have  46    concluded that, as of the evaluation date, our disclosure controls and procedures are effective.  The Company believes that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.  Management's Annual Report on Internal Control Over Financial Reporting. The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  Our internal control system was designed to, in general, provide reasonable assurance to the Companys management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  Our management assessed the effectiveness of the Companys internal control over financial reporting as of December 31, 2010.  The framework used by management in making that assessment was the criteria set forth in the document entitled  Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our management has determined that as of December 31, 2010, the Companys internal control over financial reporting was effective.  This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. 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 management's report in this annual report.  Changes in Internal Control over Financial Reporting No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.   ITEM 9B. OTHER INFORMATION Not applicable.    47      PART III   ITEM 10.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS, AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Directors and Executive Officers: NameAgePosition with CompanyYan Zhao57Chairman of the Board, President and Chief Executive OfficerZhong Bo Jia57Vice President and DirectorJim Howell Qian49Chief Financial Officer, Corporate Secretary, Corporate Treasurer, and DirectorJianhua Yu55Director and Chief Operations Officer of China OperationsXiaoliang Jia30Director and Dalian Beigang  Chief Executive Officer Yan Zhao  Chairperson, President and Chief Executive Officer Yan Zhao has been our Chairman of the Board, President and Chief Executive Officer since 2004.  She was replaced by Jim H. Qian, Ph.D. asour Chief Executive Officer in October 2009 and resumed that position in September 2010. She is Chairperson, President and Chief Executive Officer of our subsidiary, 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 Financial Officer, Corporate Secretary, Corporate Treasurer, and Director Jim H. Qian, Ph.D. has been our Director since October 2009 and served as our Chief Executive Officer from October 2009 to August 2010. Dr. Qian was the President and CEO of American Centrality Group, Inc., a biotech holding company from 2006 to 2009. Dr. Qian also was a Co-founder and served as President of Abgenome, Inc. Berkeley, CA, which develops in vitro diagnostic kits for cardiovascular diseases from 2006 to 2009. Dr. Qian was the Co-founder and served as 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 from 2001 to 2005. Before launching ProMab, Dr. Qian was a scientist at Incyte Genomics, Inc. He received his postdoctoral training in Biochemistry from  48    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 Zhong Bo Jia has been our Vice President and Director since 2004. 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.  Jianhua Yu -- Director and Chief Operations Officer of China Operations Jianhua Yu has been Director and Chief Operations Officer of China Operations of the Company since October 2009. Mr. Yu has significant expertise in real estate and property development. From 2001 to the present, he has been Chairman of Dalian Jintudi Real Estate Development Co. Ltd., a real estate development company located in Dalian. 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.  Xiaoliang Jia Dalian Beigang Chief Executive Officer and Director Mr. Jia has been Chief Executive Officer of Dalian Beigang since June 2010 and Director since September 2010. He has worked as a Manager in the finance department of Dalian Beigang from 2005 to 2008. Mr. Jia has been Chairman and President at Beijing Zurui International Trade Co. Ltd. since 2009. Mr. Jia is Chairman and President of Dalian High Power environment-Protection Technology Management Co. Ltd, an energy saving management company since 2009.  Mr. Jia obtained a Bachelor degree in Computer Information Management and Engineering from Central Queensland University in Australia in 2002 and a Bachelor degree in Business Management from Dalian Entrepreneur Management College in 2005.  Term of Office, Arrangements and Related Matters Our executive officers serve at the discretion of our Board of Directors. The officers of the Company are not full time employees and certain conflicts may exist in allocating their time between our operations and other businesses. There are no arrangements or understandings between any of our directors or executive officers pursuant to which such person was or is to be selected as a director (or nominee) or an officer, as applicable. To the best of our knowledge, during the past five years, none of our existing directors, executive officers, or control persons were involved in any of the following: (1) any bankruptcy petition filed by or against any property or business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two  49    years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending, or otherwise limiting his involvement in any type of business, securities or banking activities; or (4) being found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. 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, and Xiaoliang Jia who is their son.  Directors Directors serve for a term of one year or until their successors are elected and qualified. Directors do not receive cash compensations, other then for the reimbursement of board meeting related travel expenses, for serving as such.  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, 2010, all of its officers, directors and ten percent shareholders have not complied with all Section 16(a) filing requirements applicable to them with respect to transactions during fiscal 2010 and all required filings are delinquent.  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.     50  Promoters   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 Jianhua Yu may be deemed to be "promoters" of the Company.  Related Party Transactions As of December 31, 2010 and 2009, the Company owed $933,098 and $251,312, respectively to Yan Zhao as unsecured loan and imputed interest is computed at 5% per annum on the amount due. The balance is repayable on demand.  On August 28, 2009, the Company issued 1,500,000 shares of common stock valued at $1,125,000 to Mr. Jianhua Yu who has paid $1,065,383 to the Company. The remaining balance of $59,617 was recorded as related party receivable as of December 31, 2010. Mr. Jianhua Yu 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, 2010, 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 
PositionYearBase Salary
$ 
(1)Bonus 
$Option 
Awards 
$Non-Equity 
Incentive Plan 
CompensationChange in 
Pension 
Value and 
NonqualifiedAll 
Compensation 
$Other Total 
Compensation
$Yan Zhao, 
Chairperson, CEO and President2008
2009
2010$21,552
$35,088
$11,890-0--0--0--0--0-$21,552
$35,088
$11,890Jim Howell Qian, 
Chief Financial Officer, and Director2008
2009
2010$0
$31,579
$0-0--0--0--0--0-$0
$31,579
$0 (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 = 6.56 Yuan. (2) 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. (3) The Company has not paid any other compensation to its executives.  Employment Agreements with Our Executives and Employees The Company has employment agreements with two of its Executive Officers. The agreement with Mr. Zhong Bo Jia is from January 1, 2002 to December 31, 2005 and has been renewed annually through December 31, 2011. The agreement with Mr. Xiaoliang Jia is from January 1, 2002 to December 31, 2004 and has been renewed annually through December 31, 2011. Both agreements only set minimum monthly salary of RMB800 or US$122.  Other than as stated herein, 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 2010 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 $26,942 and $9,117 for the years ended December 31, 2010 and 2009, 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 2010.  Outstanding Equity Awards at Fiscal Year End The Company did not offer any equity options during fiscal year 2010.  Director Compensation The Company did not enter into any director compensation arrangements during the fiscal year 2010.  51       Code of Ethics  We plan to adopt a code of ethics during 2011 that applies to all of our executive officers and employees, including our Chief Executive Officer and our Chief Financial Officer.  Nominees to the Board of Directors  There have been no material changes to the procedures by which security holders may recommend nominees to the small business issuers board of directors  Board of Director Governance  Our Board of Directors consists of Yan Zhao, Zhong Bo Jia, Jim Howell Qian, Jianhua Yu and Xiaoliang Jia and none of the members have been determined by us to be independent directors within the meaning of the independent director guidelines of the New York Stock Exchange Rules. We do not have a nominating, compensation or audit committee or committees performing similar functions nor a written nominating, compensation or audit committee charter due to the limited size of our Board of Directors. As a result, the entire Board of Directors reviews executive compensation, audit, and nominating decisions. Due to our limited capital resources, we did not maintain an audit committee financial expert.  ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth, as of December 31, 2010, 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 individually and as a group. Each person has sole voting and investment power with respect to the shares shown. The below percentages are based upon 31,700,012 shares of common stock issued and outstanding as of March 31, 2011. Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed below has ownership of and voting power and investment power with respect to our common stock, any options exercisable within 60 days have been included in the denominator.  52        NAME AND TITLE OF BENEFICIAL OWNERNUMBER OF COMMON SHARES OWNEDPERCENT OF CLASSZhao Yan
Chairperson, CEO and President5,750,00018.14%Zhong Bo Jia, Vice President and Director3,375,00010.65%James Wang2,239,1207.06%Jim Howell Qian
Chief Financial Officer00%Jianhua Yu
Director1,500,0004.73%Xiaoliang Jia
Director and Dalian Beigang 
Chief Executive Officer200,000Less then 1%All Executive Officers and Directors
As a Group (5 persons)10,825,00034.15% 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: 
Unit 1-102, Building 8, No. 46 Binhai Xi Road
Xigang District
Dalian, Liaoning Province, China  Zhong Bo Jia:
Unit 1-102, Building 8, No. 46 Binhai Xi Road369
Xigang District
Xigang District, Dalian, Liaoning Province, China  James Wang: 
#4200, 601 Union Street,
Seattle, Washington, 98101 Jianhua Yu 
Room 1804, Bainian Hui D7 Building, Huizhan Road, Shahekou District  53    Dalian, China   Jim Howell Qian 
Room 1804, Bainian Hui D7 Building, Huizhan Road, Shahekou District Dalian, China Xiaoliang Jia Unit 1-102, Building 8, No. 46 Binhai Xi Road
Xigang District
Dalian, Liaoning Province, China  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. Except as stated herein, since the beginning of our last fiscal year, there have been no transactions or proposed transactions, involving us and any of our officers, directors, promoters, or control persons, or any related persons thereof, the amount of which exceeds $120,000.  Transactions with Management, Promoters and Others. Only two of our Chinese directors, officers and employees including Mr. Zhong Bo Jia and Xiaoliang Jia 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 and 10-Q for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were: 2010: $30,000  Samuel H. Wong & Co., LLP$14,012  Baker Tilly Hong Kong Limited2009: $12,000  Jimmy C.H. Cheung & Co.$35,000  Baker Tilly Hong Kong Limited Audit Related Fees. 2010: $0  Samuel H. Wong & Co., LLP$0  Baker Tilly Hong Kong Limited  54       2009: $0  Jimmy C.H. Cheung & Co.$0  Baker Tilly Hong Kong Limited Tax Fees 2010: $0  Samuel H. Wong & Co., LLP$0  Baker Tilly Hong Kong Limited2009: $0  Jimmy C.H. Cheung & Co.$0  Baker Tilly Hong Kong Limited All Other Fees 2010: $0  Samuel H. Wong & Co., LLP$0  Baker Tilly Hong Kong Limited2009: $0  Jimmy C.H. Cheung & Co.$0  Baker Tilly Hong Kong Limited  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.   55       PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 2.1Equity Transfer Agreement, dated June 23, 2005, among the Company and the four shareholders of Dalian Beigang Information Industry Development Company Limited (1)2.2Amendment to Equity Transfer Agreement dated January 16, 2006 among the Company and the four shareholders of Dalian Beigang Information Industry Development Company Limited (1)2.3Equity 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)3.1Articles of Incorporation (3)3.3Bylaws (3)10.1Agreement between Dalian Beigang and Yingkou City Beigang Network Information Industry Services Co., Ltd. (1)10.2Agreement and Plan of Merger by and Between Northport Capital, Inc. and Northport Network Systems, Inc. (3)31.1Rule 13a-14(a)/15(d)-14(a) Certification of CEO*31.2Rule 13a-14(a)/15(d)-14(a) Certification of CFO*32.1Section 1350 Certification of CEO*32.2Section 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. 1 Filed herewith  56        BAKER TILLY HONGKONG LIMITEDRegistered with the Public CompanyCertified Public AccountantsAccounting 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 LIMITEDCertified Public Accountants Hong Kong
Date: April 9, 2010   [f10kfinal1002.gif]  [f10kfinal1004.gif]  [f10kfinal1006.gif]  [f10kfinal1008.gif]  [f10kfinal1010.gif]  [f10kfinal1012.gif]  [f10kfinal1014.gif]  [f10kfinal1016.gif]  [f10kfinal1018.gif]  [f10kfinal1020.gif]  [f10kfinal1022.gif]  [f10kfinal1024.gif]  [f10kfinal1026.gif]  [f10kfinal1028.gif]  [f10kfinal1030.gif]  [f10kfinal1032.gif]  [f10kfinal1034.gif]  [f10kfinal1036.gif]  [f10kfinal1038.gif]  [f10kfinal1040.gif]  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 corporationBy:/s/ Zhao YanZhao YanChief Executive Officer Each person whose signature appears below authorizes Zhao Yanb 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 TitleDate/s/ Yan Zhao, CEOApril 15, 2011Yan Zhao, Chief Executive Officer, Presidentand Director/s/ Zhong Bo Jia, Vice-PresidentApril 15, 2010Zhong Bo Jia, Vice-President and Director/s/ Jim Howell Qian, CFOApril 15, 2010Jim Howell Qian, Chief Financial Officer andDirector/s/ Xiaoliang JiaApril 15, 2010Xiaoliang Jia, Director/s/ Jianhua YuApril 15, 2010Jianhua Yu, Director