UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2011

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

Commission File Number: 000-52728

NORTHPORT NETWORK SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Washington		76-0674579
(State or other jurisdiction		(I.R.S. Employer
of incorporation or organization)		Identification No.)

601 Union Street, Suite #4200, Seattle, Washington 98101

(Address of principal executive offices) (Zip Code)

(206) 652-3451

(Registrant’s telephone number, including area code)

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. [X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted

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and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during

the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ ]Yes  [X] No

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  [X] No

As of May 13, 2011, the registrant had 33,700,012 shares of its common stock issued and outstanding.

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TABLE OF CONTENTS

		PAGE
	PART I
Item 1.	Consolidated Financial Statements - Unaudited	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4/4T.	Controls and Procedures
	PART II
Item 6.	Exhibits	35
	Signature	36

NOTE REGARDING FORWARD LOOKING STATEMENTS

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This Quarterly Report contains forward-looking statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “intend,” and other variations of these words or comparable words. In addition, any statements that refer to expectations, projections or other characterizations of events, circumstances or trends and that do not relate to historical matters are forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and you are cautioned not to place undue reliance on such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors 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 Quarterly Report on Form 10-Q 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 Quarterly Report: (i) the terms “we”, “us”, “our”, “ Northport Network”, “Northport” and the “Company” mean

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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.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Overview

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 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.

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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 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 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, our President, and for our other working capital needs.

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. Subject to available funds, the company plans to develop, commercialize and popularize advanced In Vitro Diagnostic (IVD) kits/devices to improve the overall health of humans. Its primarily focus will be 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

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additional capital in order to begin the product development. As of the date of this filing, the Company does not have any formal arrangement for any debt or equity financing and can not predict whether it will be successful in obtaining such capital or developing the proposed IV products.

Online Education Services (Acquisition to be completed upon completion of due diligence)

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 three unaffiliated individuals, Jia Yi, Wu Peng and Yuan Huixiong pursuant to which Northport Dalian would acquire a 65% equity interest in Beijing XinLu Zheng Bao Cheng Education Technology Co. Ltd. (“Beijing Bao Cheng”), an existing educational 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 shares to Jia Yi;  0.9 million shares to Wu Peng; and 0.9 million shares to Yuan Huixiong, the shareholders of Beijing Bao Cheng. Jia Yi, Wu Peng and Yuan Huixiong collectively own the remaining 35% 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 fiscal 2011.

Results of Operations

For the Three Months Ended March 31, 2011 Compared to the Three Months Ended March 31, 2010

 

The following is a summary of the Company’s statement of operations for the quarter ended

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March 31, 2011 and 2010:

	3/31/2011	3/31/2010
Revenue	$93	$1
Cost of revenue	5	1,241
Gross profit (loss)	88	(1,240)
Selling expenses	26,467	-
General and administrative expenses	190,673	96,595
Impairment loss	2,203	-
Total operating expenses	219,343	96,595
Operating income (loss)	(219,255)	(97,835)
Income (loss) from continued operation before income tax	(219,248)	(98,432)
Provisions for income tax (tax benefit)	-	-
Net income (loss) from continued operation	(219,248)	(98,432)
Gain (loss) from discontinued operation, net of tax	-	24,025
Net income (loss)	$(219,248)	$(74,407)

Revenues

Revenues for the three months ended March 31, 2011 were $93 compared with $1 for the comparable period in 2010. Colorstar operation generated no revenue for the quarter ended March 31, 2011 and $1 for the comparable period in 2010. As mentioned herein, the Colorstar operation is presently suspended.

Cost of revenue for the three months ended March 31, 2011 were $5 compared with $1,241 for the comparable period in 2010. The decrease in cost of revenue is due to suspension of the Colorstar operation.

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Operating Expenses.

Selling, general and administrative expenses were $217,140 for the three months ended March 31, 2011 as compared to $96,595 for the comparable 2010 period; an increase of $120,545 or 124.8%. Selling, general and administrative expenses represent payroll and related costs, professional fees, depreciation, travel and offices rental expenses. The increase for the current period is mainly due to increase in depreciation cost of $21,407, $18,670 in professional fees paid to former auditor Baker Tilley Hong Kong Limited for services rendered for 2009 and 2010, but was not recorded in prior accounting period, as well as an increase in stock-based compensation expense to a consultant for $40,000 for the issuance of 2,000,000 shares of common stock.

Losses from Operations.

Net losses from operations for three months ended March 31, 2011 were $219,248 compared with $74,407 for the comparable 2010 period for the reasons discussed above.

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 period. 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 increases in expenses discussed above.

Liquidity and Capital Resources

As reflected in the accompanying financial statements, the Company has an accumulated deficit of $6,492,278 at March 31, 2011. The Company’s current liabilities also exceed its current assets by $535,405.

Contractual cash commitments for the fiscal years subsequent to March 31, 2011, are summarized as follows:

The Company leases office spaces from external parties under 4 operating agreements, which will expire on August 1, 2011, August 12, 2012, July 19, 2013, and November 26, 2013 at monthly rentals of $451, $1,936, $4,397 and $255, respectively. The impact to the Company’s results of operations, in the form of rent expense, for the three months ended March 31, 2011 was $8,497. The Company’s lease contracts with each of the third parties calls for

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non-cancellable operating lease commitment as follow:

For the twelve months ending December 31:-

Fiscal Years		Commitments
2011		$76,087
2012		71,255
2013		56,760
		$204,102

For the three months ended March 31, 2011, our cash and cash equivalents decreased from $7,476 to $3,870 for the comparable period in 2010.

Going Concern

As reflected in the accompanying financial statements, we had an accumulated deficit of $6,492,278 at March 31, 2011. 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, including the raising of additional capital.

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 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, our business may fail.

Cash Used in Operating Activities

Cash used in operating activities was $31,615 during the three months ended March 31, 2011, as compared to $20,965 during the three months ended March 31, 2010.

Cash Used in Investing Activities

Cash provided by investing activities was $812 for the three months ended March 31, 2011 compared to $2,633 during comparable period in 2010.   

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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 the three months ended March 31, 2011, we had no cash from financing activities.

As of March 31, 2011, a director owes $59,617 to the Company in connection with a stock subscription in 2009.

As of March 31, 2011 and March 31, 2010, the Company owed $1,274,131 and $247,714 respectively to the Company’s President as unsecured loan and imputed interest is computed at 5% per annum on the amount due. The balance is due on demand.

Future Financings

We anticipate continuing to rely on equity sales of our common shares or debt convertible to equity 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

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.

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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

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

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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 maintain its accounting records in their functional currencies of Renminbi (“RMB”).

Foreign currency transactions during the period 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 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 Other Comprehensive Income.

The translation difference recorded for the three months ended 2011 and 2010 was a loss of $9,727 and a loss of $409, respectively.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amount could have been, or could be, converted into US Dollar at the rates used in translation.

Long-lived assets

In accordance with FASB Codification Topic 360 (“ASC Topic 360”), “Accounting for the impairment or disposal of Long-Lived Assets", long-lived assets and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long- lived assets. The Company reviews long-lived assets to determine that carrying values are not impaired. During the three months ended March 31, 2011 and March 31, 2010, the company

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recorded impairment loss of $2,203 and $0, respectively.

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.

Disclosure about Fair value of Financial Instruments

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

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

Income and Other Taxes and Obligatory Payments

The Company accounts for income taxes under the FASB Codification Topic 740-10-25, “Accounting for Income Taxes” (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their

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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 Codification™ (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 Codification™ (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

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certain grandfathered guidance having an effective 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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. 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

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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 Quarterly Report on Form 10-Q. As a result of such evaluation, Chief Executive Officer and the Chief Financial Officer have 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 May 13, 2011. 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 May 13, 2011, the Company’s internal control over financial reporting was effective.

This Quarterly 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 that has materially affected, or is reasonably likely to materially affect,

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our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

(a)			Exhibits
31			Rule 13a-14(a)/15d-14(a) Certifications
32		Section 1350 Certification (CFO)

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NORTHPORT NETWORK SYSTEMS INC.

Per:	/s/ Yan Zhao
	Yan Zhao
	Chief Executive Officer, President and  Director
	Date: May 13, 2011
Per:	s/ Jim H. Qian
	Jim H. Qian
	Chief Financial Officer and Director
	Date: May 13, 2011

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