10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED September 30, 2008

Commission File Number: 000-52728

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

Washington
(State or other jurisdiction of incorporation or organization)

76-0674579
(IRS Employer Identification Number)

Suite #4200, 601 Union Street, Seattle, Washington 98101
(Address of principal executive offices)(Zip Code)

(206) 652-3451
(Registrant's telephone no., 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 reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X]    No [   ]

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

The number of shares of the Company's common stock issued and outstanding on September 30,2008 was
30,000,012.

Indicate by check mark whether the registrant is a large 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]

Table of Contents

PART I FINANCIAL INFORMATION
	Item 1 – Financial Statements - Unaudited
	Item 2 – Management’s Discussion and Analysis of Financial Conditions and Results of Operations
	Item 3—Quanitative and Qualitative Disclosure about Market Risk
	Item 4 – Controls and Procedures
PART II OTHER INFORMATION
	Item 1 – Legal Proceedings
	Item 1A – Risk Factors
	Item 2 – Unregistered Sales of Equity Securities
	Item 3 – Exhibits
	Item 4 – Submission of Matters to a Vote of Security Holders
	Item 5 – Other Information
	Item 6 – Exhibits

PART I – FINANCIAL INFORMATION

Item 1.                     Financial Statements- Unaudited

NORTHPORT CAPITAL INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 AS OF SEPTEMBER 30, 2008 (UNAUDITED)

NORTHPORT CAPITAL INC.

CONTENTS

Pages

Condensed Consolidated Balance Sheets as of September 30, 2008 (Unaudited) and December 31, 2007 (Audited)	1
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months and nine months ended September 30, 2008 and 2007 (Unaudited)	2
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2008 and 2007 (Unaudited)	3
Notes to Condensed Consolidated Financial Statements as of September 30, 2008 (Unaudited)	4 - 7

1

NORTHPORT CAPITAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
		September 30,			December 31,
		2008			2007
		(Unaudited)			(Audited)
CURRENT ASSETS
Cash and cash equivalents	$	109,248		$	13,934
Prepaid expenses and other current assets		40,431			8,027
Total Current Assets		149,679			21,961
PROPERTY AND EQUIPMENT, NET		357,172			345,695
TOTAL ASSETS	$	506,851		$	367,656
LIABILITIES AND STOCKHOLDERS' DEFICITS
CURRENT LIABILITIES
Accounts payable	$	-		$	549
Other payables and accrued liabilities		501,560			170,797
Note payable		-			109,378
Other taxes payable		1,055			1,476
Due to stockholders		23,177			677,378
Deferred revenue		17,914			55,979
Total Current Liabilities		543,706			1,015,557
LONG-TERM LIABILITIES
Due to a stockholder		-			100,000
TOTAL LIABILITIES		543,706			1,115,557
COMMITMENTS AND CONTINGENCIES		-			-
STOCKHOLDERS' DEFICIT
Common stock ($0.001 par value, 100,000,000 shares authorized,
30,000,012 shares issued and outstanding as of
September 30, 2008; 26,500,000 shares issued and
outstanding as of December 31, 2007)		30,000			26,500
Additional paid-in capital		1,489,201			160,634
Retained earnings (Accumulated deficit)
Unappropriated		(1,599,411	)		(1,026,301	)
Appropriated		129,897			129,897
Accumulated other comprehensive loss		(86,542	)		(38,631	)
Total Stockholders' Deficits		(36,855	)		(747,901	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICITS	$	506,851		$	367,656

The accompanying notes are an integral part of these financial statements

2

NORTHPORT CAPITAL INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS (UNAUDITED)

		For the three months ended						For the nine months ended
		September 30,						September 30,
		2008			2007			2008			2007
NET SALES
Provision of platform for electronic
filing of tax returns	$	28,959		$	48,956		$	99,795		$	166,423
Color photo printing		1,766			709			5,448			709
Total net sales		30,725			49,665			105,243			167,132
COST OF SALES
Provision of platform for electronic
filing of tax returns		(21,757	)		(22,303	)		(67,031	)		(80,152	)
Color photo printing		(21,759	)		(23,167	)		(48,375	)		(23,167	)
Total cost of sales		(43,516	)		(45,470	)		(115,406	)		(103,319	)
GROSS PROFIT (LOSS)		(12,791	)		4,195			(10,163	)		63,813
OPERATING EXPENSES
Selling, general and administrative expenses		110,029			74,764			305,482			174,727
Professional and consulting fees		85,250			3,000			94,250			35,606
Research and development expenses		51,063			12,730			121,699			85,025
Depreciation		3,586			3,296			11,106			11,335
Total Operating Expenses		249,928			93,790			532,537			306,693
LOSS FROM OPERATIONS		(262,719	)		(89,595	)		(542,700	)		(242,880	)
OTHER INCOME (EXPENSES)
Other income		379			48			532			240
Interest income		84			-			119			57
Imputed interest expenses on
due to stockholders		(6,663	)		(9,978	)		(31,061	)		(19,554	)
Loss on disposals of property
and equipment		-			(10	)		-			(1,391	)
Total Other Expenses, net		(6,200	)		(9,940	)		(30,410	)		(20,648	)
LOSS FROM OPERATIONS BEFORE TAXES		(268,919	)		(99,535	)		(573,110	)		(263,528	)
INCOME TAX EXPENSE		-			-			-			-
NET LOSS		(268,919	)		(99,535	)		(573,110	)		(263,528	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation loss		(3,071	)		(5,492	)		(47,855	)		(13,503	)
COMPREHENSIVE LOSS	$	(271,990	)	$	(105,027	)	$	(620,965	)	$	(277,031	)
Net loss per share-basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.01	)
Weighted average number of shares outstanding
during the period-basic and diluted		28,703,267			26,500,000			27,703,287			26,500,000

The accompanying notes are an integral part of these financial statements

3

NORTHPORT CAPITAL INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		Nine months ended September 30,
		2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(573,110	)	$	(263,528	)
Adjusted to reconcile net loss to cash used in
operating activities:
Depreciation - cost of sales		24,319			23,422
Depreciation		11,106			11,335
Loss on disposals of property and equipment		-			1,391
Stocks issued for services		1,000			-
Imputed interest expenses on due to stockholders		31,061			19,554
Changes in operating assets and liabilities
Decrease (Increase) in:
Prepaid expenses and other current assets		(32,404	)		(346	)
(Decrease) Increase in:
Accounts payable		(549	)		8,069
Other payables and accrued liabilities		330,763			(19,900	)
Deferred revenue		(38,065	)		(46,016	)
Other taxes payable		(421	)		(748	)
Net cash used in operating activities		(246,300	)		(266,767	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(23,995	)		(260,935	)
Proceeds on disposals of property and equipment		-			6,709
Net cash used in investing activities		(23,995	)		(254,226	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of common stock		100,000			-
Repayment of note payable		(109,378	)		-
Due to stockholders		445,805			585,608
Net cash provided by financing activities		436,427			585,608
EFFECT OF EXCHANGE RATES ON CASH		(70,818	)		(14,309	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		95,314			50,306
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		13,934			24,462
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	109,248		$	74,768

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
During 2008, the Company issued 2,400,012 shares of common stock valued at $1,200,006 to settle amounts due to stockholders.

The accompanying notes are an integral part of these financial statements

1

NORTHPORT CAPITAL INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS AS OF SEPTEMBER 30, 2008 (UNAUDITED)

NOTE 1	BASIS OF PRESENTATION
	The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
	In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments consisting only of normal recurring accruals considered necessary to present fairly the Company's consolidated financial position at September 30, 2008, the consolidated results of operations and comprehensive loss for the three months and nine months ended September 30, 2008 and 2007, and consolidated cash flows for the nine months ended September 30, 2008 and 2007. The consolidated results for the three and nine months ended September 30, 2008 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2008. These financial statements should be read in conjunction with the Company’s annual report on Form 10-K as filed with the Securities and Exchange Commission.
NOTE 2	GENERAL ORGANIZATION AND BUSINESS
	Northport Capital Inc. (“Northport Capital”) was incorporated under the laws of the State of Colorado on July 25, 2000. Dalian Beigang Information Industry Development Company Limited (“Dalian Beigang”) was incorporated in the People’s Republic of China (“PRC”) on June 20, 1997 with its principal place of business in Dalian, PRC.
	Northport Capital is an investment holding company. Dalian Beigang is principally engaged in the provision of platforms, among other things, to customers in Dalian for electronic filing of tax returns and payment of taxes. In accordance with the business permit, the Company’s right of operation expires on June 20, 2026 and is renewable.
	During 2005, Dalian Beigang entered into a project to develop a color photo printing business in China. A trade name “Colorstar” was registered with the China State Administration for Industry and Commerce in China as well as a Chinese patent was applied for on this technology. The system network and self service digital printer design are now at a fully commercial stage in China. Two units are currently in Vancouver, Canada for evaluation regarding North American market modifications needed. An initial agreement was entered into on March 1, 2008 with China Netcom for joint operations of 564 Colorstar units at China Netcom retail outlets on a revenue sharing basis. Additional revenue generating features are also being developed for Colorstar units. All intellectual property rights on Colorstar are registered in the name of Dalian Beigang.
	On June 23, 2005, Northport Capital entered into a definitive agreement with the stockholders of Dalian Beigang in which Northport Capital exchanged 100% of the registered and fully paid up capital of Dalian Beigang for $150,000 satisfied by the issue of 1,500,000 shares of common stock of $0.001 par value to the stockholders of Dalian Beigang.
	Northport Capital and Dalian Beigang are hereafter referred to as (“the Company”).
NOTE 3	PRINCIPLES OF CONSOLIDATION
	The accompanying unaudited condensed consolidated financial statements consolidate the unaudited financial statements of Northport Capital and its 100% owned subsidiary Dalian Beigang.
	All significant inter-company accounts and transactions have been eliminated in consolidation.
NOTE 4	COMMITMENTS AND CONTINGENCIES
	Commitments

	The Company leases office spaces from third parties under two operating leases which expire on January 31, 2009 and March 9, 2009 respectively at a monthly rental of $761 and $1,715 respectively. As of September 30, 2008, the Company has outstanding commitments of $11,616 with respect to the above operating leases, which are due in 2009.
NOTE 5	STOCKHOLDERS’ EQUITY
	(A) Stocks issued for services

On February 25, 2008, the Company issued 1,000,000 common shares of restricted common stock to the original inventor of the Colorstar technology in return for his agreement to continue his services employment with the Company and to continue his research and development activities on Colorstar. The stock was valued at $0.001 par value. The Company recognized consulting expense of $1,000 included in professional and consulting fees for the nine months ended September 30, 2008.

(B) Unregistered sales of equity securities

On August 11, 2008, the Company issued a total of 100,000 shares of common stock at $1 per share to two third parties.

(C) Stocks issued for settlement of loans

On August 18, 2008, the Company issued 2,400,012 shares of common stock to 2 stockholders or their nominees for settlement of the loans owed by the Company in the aggregate amount of $1,200,006 at the conversion price of $0.5 per share.

NOTE 6	RELATED PARTY TRANSACTIONS
	On July 10, 2008, note payable of $109,378 was assigned by the lender to a stockholder of the Company. Immediately after this assignment, the Company is indebted to the stockholder for $109,378.
	On August 18, 2008, the Company issued 2,400,012 shares of common stock to 2 stockholders or their nominees for settlement of the loans owed by the Company in the aggregate amount of $1,200,006 at the conversion price of $0.5 per share.
	As of September 30, 2008, a stockholder loaned $23,177 to the Company as unsecured loan and imputed interest is computed at 5% per annum on the amount due. Pursuant to an agreement dated June 20, 2007, $100,000 is repayable on or before March 31, 2009 and the remaining balance is repayable on demand.
	Total imputed interest expenses recorded as additional paid-in capital amounted to $6,663 and $31,061 for the three and nine months ended September 30, 2008 respectively.
NOTE 7	SEGMENTS
	The Company operates in two reportable segments; provision of platforms for electronic filing of tax returns and payment of taxes and color photo printing. The accounting policies of the segments are the same as described in the summary of significant accounting policies. The Company evaluates segment performance based on income from operations. All inter-company transactions between segments have been eliminated. As a result, the components of operating income for one segment may not be comparable to another segment. The following is a summary of the Company’s segment information for the nine months ended September 30, 2008 and 2007:

		Provision of platform
		for electronic filing of			Color photo
		tax returns			printing			Total
2008
Revenues	$	99,795		$	5,448		$	105,243
Gross profit (loss)		32,764			(42,927	)		(10,163	)
Net loss from operations		(246,694	)		(212,060	)		(458,754	)
Total assets		105,635			347,466			453,101
Depreciation and amortization		15,982			19,443			35,425
2007
Revenues	$	166,423		$	709		$	167,132
Gross profit (loss)		86,271			(22,458	)		63,813
Net loss from operations		(107,228	)		(89,886	)		(197,114	)
Total assets		158,410			233,534			391,944
Depreciation and amortization		28,133			6,624			34,757

A reconciliation is provided for unallocated amounts relating to corporate operations which is not included in the segment information.

		Nine months ended September 30,
		2008			2007
Total net loss for reportable segments	$	(458,754	)	$	(197,114	)
Unallocated amounts relating to corporate operations:
Advisory and professional fees		(94,250	)		(48,133	)
Others		(20,106	)		(18,281	)
	$	(573,110	)	$	(263,528	)

NOTE 8	THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
	In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement is effective for us beginning January 1, 2009. We do not expect the adoption of SFAS 141R to have a material impact on our financial position and results of operations.
	In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.
	In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We are currently evaluating the disclosure implications of this statement.

	In May 2008, the FASB released SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that presented in conformity with generally accepted accounting principles in the United States of America. SFAS No. 162 will be effective 60 days following the SEC’s approval of the PCAOB amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not believe SFAS 162 will have a significant impact on the Company’s consolidated financial statements.
	In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts, an interpretation of FASB Statement No. 60.” The scope of this Statement is limited to financial guarantee insurance (and reinsurance) contracts, as described in this Statement, issued by enterprises included within the scope of Statement 60. Accordingly, this Statement does not apply to financial guarantee contracts issued by enterprises excluded from the scope of Statement 60 or to some insurance contracts that seem similar to financial guarantee insurance contracts issued by insurance enterprises (such as mortgage guaranty insurance or credit insurance on trade receivables). This Statement also does not apply to financial guarantee insurance contracts that are derivative instruments included within the scope of FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The Company does not believe SFAS 163 will have a significant impact on the Company’s consolidated financial statements.
NOTE 9	GOING CONCERN
	As reflected in the accompanying financial statements, the Company has an accumulated deficit of $1,599,411 at September 30, 2008. The Company’s current liabilities also exceed its current assets by $394,027 and the Company used cash in operations of $246,300. These factors raise substantial doubt about its ability to continue as a going concern. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent up the Company’s ability to raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
	Management has taken steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is now pursuing additional funding and potential merger or acquisition candidates, which would enhance stockholders’ investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year.
NOTE 10	SUBSEQUENT EVENTS
	(A) Acquisition of a subsidiary

On October 9, 2008, the Company entered into a material definitive agreement with the stockholders of Shenyang Ling Xiao Aviation Service Co Ltd. (“Ling Xiao”) to acquire 51% equity interest of Ling Xiao for 2,700,000 treasury shares of common stock of the Company valued at $2 per share. The consideration was based on 51% of five times the estimated first year’s net earnings of Ling Xiao. After completion of a review of Ling Xiao operations and its audited financial statements for the period ended March 31, 2009, the parties agree to issue additional Northport Capital Inc. treasury shares to cover any excess profit beyond the formula estimate of 2,700,000 shares. Ling Xiao is engaged in travel agency business.

(B) Annual General Meeting

On October 9, 2008, the stockholders approved the following:

(i) The stockholders approved a plan of merger for the reincorporation of the Company from Colorado to Washington State, and to change of the name of the Company to “Northport Network Systems, Inc.” which became effective on November 7, 2008;

(ii) The stockholders approved the authorization of one hundred million (100,000,000) shares of preferred stock with a par value of $.001 in connection with the reincorporation merger; and

(iii) The shareholders approved the Company’s 2008 Stock Option Plan authorizing the issuance of two million seven hundred fifty thousand (2,750,000) shares of common stock of the Company.

Item 2.                     Management’s Discussion and Analysis of Financial Conditions and Results of Operation

The following Management’s Discussion and Analysis or Plan of Operations is intended to help the reader understand our operations and our present business environment. The following discussion of our plans, results of operations and financial condition as at and for the three and nine month periods ended September 30,2008 should be read in conjunction with our unaudited interim financial statements and related notes for the three and nine month periods ended September 30,2008 included in this quarterly report.

As used in this quarterly report: (i) the terms “we”, “us”, “our” and the “Company” mean Northport Capital, Inc.; and all dollar amounts refer to United States dollars unless otherwise indicated.

Critical Accounting Policies

Our significant accounting policies are discussed in the notes to the unaudited interim financial statements included in Item 1. Financial Statements. Please also refer to our annual report on Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2008 for a more detailed discussion of our critical accounting estimates.

These policies have been consistently applied in all material respects and address such matters as revenue recognition and depreciation methods. The preparation of the financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. The accounting treatment of a particular transaction is specifically dictated by accounting principles, generally accepted in the United States of America, with no need for management’s judgment in their application. There are also areas in which management’s judgment in selecting any viable alternative would not produce a materially different result.

Overview

We conduct business in North America under the name of Northport Capital, Inc. We own a Chinese company, Dalian Beigang Information Industry Development Company Limited (“Dalian Beigang”), that operates two separate businesses- (1) TENET (or “Tenet”), a tax filing and preparation service for federal commercial taxpayers in Dalian, Liaoning Province in the People’s Republic of China (“PRC”). Tenet, developed and designed by Dalian Beigang, and further engineered through collaboration with the Dalian National Tax Bureau beginning in January of 1999, is geared only towards Chinese commercial business owners and not individual tax filers. Dalian Beigang anticipates expanding its Tenet operations to other Chinese cities as the Company can so afford; and (2) “Colorstar” a digital photo processing kiosk technology, which business is now being commercialized in China. The technology has been developed on a “platform” basis and presented in a kiosk format. The initial application of the technology is as a stand-alone, digital photo processing kiosk, allowing users to select and print standard size photos for a fee. Other applications for the platform are currently being developed.

During 2007 we installed a number of Colorstar photo processing kiosks in the Dalian area under informal franchise arrangements. Minor income amounts were generated from these units, although the purpose of such installations was to generate consumer feedback and also to prove that units were operating effectively and correctly. By December 31, 2007 we had confirmed that the latest Colorstar model met all operating conditions established by management. We launched commercial introduction of the Colorstar kiosks during the three month period ended March 31, 2008 and currently a total of 12 units are installed. No significant advertising or promotion activities related to these kiosk units have been undertaken to date. Manufacture of additional units is currently in process.

The Company had a total accumulated deficit of $ $ 1,599,411 at September 30, 2008. Management has taken steps to revise its operating and financial requirements, which it believes will be sufficient to provide the Company with the ability to continue operations. The Company is actively pursuing private placement funding as well as enhanced banking arrangements, both of which would enhance stockholders’ investment and ensure ongoing corporate operations.

Our authorized capital stock consists of 100,000,000 shares of common stock, $0.001 par value per share, of which 30,000,012 shares were issued and outstanding, fully paid and non-assessable as at September 30, 2008.

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. We registered certain of our shares by way of Form SB2 which was deemed effective by the Securities and Exchange Commission (the “SEC”) on July 13, 2007. Our common shares currently trade on the NASD OTC Bulletin Board under the symbol NPCA and have been trading since January 16, 2008, when we received NASD approval to do so.

On August 25, 2008 the Board of Directors of the Company approved a filing of a definitive Schedule 14A regarding proxy documents for the Company’s Annual Meeting of Shareholders (the “Annual Meeting”). The Schedule 14A stated that the Company’s Annual Meeting date will be October 9, 2008 and the Record Date for the Annual Meeting will be August 27, 2008. The specific agenda items were as follows:

(i) The shareholders would be asked to approve a plan of merger for the reincorporation of the Company from Colorado to Washington State, and also change the name of the Company to “Northport Network Systems, Inc.”;

(ii) The shareholders would be asked to approve a requirement that not less than twenty-five percent (25%) of all the votes entitled to be cast on an issue will have the right to call a special meeting of the shareholders by submitting a written demand to the Company;

(iii) The shareholders would be asked to elect Zhao Yan, Zhongbo Jia and James Wang to serve as directors of the Company;

(iv) The shareholders would be asked to approve the authorization of one hundred million (100,000,000) shares of preferred stock with a par value of $.001 in connection with the reincorporation merger;

(v) The shareholders would be asked to approve a Company 2008 Stock Option Plan authorizing the issuance of two million seven hundred fifty thousand (2,750,000) shares of common stock of the Company; and

(vi) The shareholders would be asked to approve the appointment of Jimmy C.H. Cheung & Co. as the Company’s independent accountants.

Subsequent Events

At the Annual Meeting held on October 9, 2008, all of the agenda items were approved and after all state government approvals had been received, a Form 8K was filed on November 17, 2008 confirming the above changes. A new NASD trading symbol will be requested as will a new CUSIP number and IRS tax number.

Facilities

Our North American executive office consists of approximately 100 square feet of temporary space located at Suite #4200, 601 Union Street, Seattle, Washington, 98101. The lease is a month-to month arrangement with the option to increase space as needs require. The current monthly rent is $225. The telephone numbers used at the location are 206-652-3451 and 206-508-3689 and the facsimile number is 206-652-3205.

The Company’s China business operates from a 557 square meter office facility located at Suite #512, A. No. 1 Huoju Road Qixianlinq Industrial Base – High-Tech Zone in Dalian. We use this facility for all corporate activities as well as Tenet production, design and training functions. The Company leases this office space from third parties under two operating leases which expire on January 31, 2009 and March 9, 2009 respectively at monthly rental rates of $761 and $1,715 respectively.

As of September 30, 2008, the Company has outstanding commitments of $11,616 with respect to the above operating leases in Dalian.

China Operations

To date, our business operations have been entirely conducted through our wholly owned Chinese subsidiary, Dalian Beigang. The business operates in two separate industries- Tenet tax filing software systems and Colorstar digital photo processing kiosk technology applications. As at September 30,2008, we had 8243 Tenet subscribers in Dalian and had installed a total of twelve Colorstar kiosks which are operational.

Tenet is also available in the city of Yingkou through a co-operation agreement between Dalian Beigang and Yingkou City Beigang Network Information Industry Service Co., Ltd., a wholly owned subsidiary of Lenovo Corporation, which is a Chinese computer manufacturer and retailer (“Lenovo Yingkou”). A key decision in the selection of Lenovo Yingkou as the Tenet licensee in Yingkou was their excellent relationship with the Yingkou tax bureau which had been stated to us independently by the Yingkou tax bureau management. As at September 30, 2008, Lenovo Yingkou had 886 subscribers.

Since December 31, 2007, we have concentrated our business efforts on the launch of our Colorstar digital photo processing kiosk technology, initially in Liaoning province in China.

The China Tax Software Business

Tenet, developed by Dalian Beigang in concert with the federal tax authorities in Dalian, China, is a proprietary online federal tax reporting and payment system – the first of its kind in the PRC – and has been approved by the National Tax Bureau of China. The “Tenet” system, an acronym for “Taxation Electronic Network,” is intranet based and utilizes a secure LAN (local area network) system that is based on Internet technology. Commercial tax payers can access the Tenet system by entering into subscription agreements with Dalian Beigang, which generate revenue for the Company.

It is recognized that there are other firms that are also marketing online reporting systems to local tax bureaus, but none couple tax payment to tax reporting as does Tenet. In addition, these lack the safety and security aspects offered by Tenet. The advantage of such systems is that they are available at no or little cost to users. Typically, smaller and less sophisticated firms make use of such systems. As a network system established independently, the Tenet system is a part of the Internet. The firewall of the system is used against any illegal access so that hackers from the Internet are unable to access and attack it directly. Tenet’s competitors do not have comparable safety and security systems as that of Tenet.

As of September 30,2008, there were 8243 subscribers in Dalian (of approximately 35,000 available businesses in total) and an additional 886 subscribers in Yingkou, Liaoning province. During the past two years, a number of free online tax declaration systems have e merged and these offer almost the same function as the Tenet system in terms of reporting. Although there are security and service problems, these systems are free and have attracted business users. As a result, the number of users in the Tenet System as at September 30,2008, has dropped from the number as at the 2005 year-end.

Management is currently reviewing the Tenet system in terms of continuing or shutting down this division. A decision on this issue will be made by year end 2008.

Colorstar Graphic Printing Technology

Beginning in the first quarter of 2008, we began commercializing our Colorstar digital photo processing technology by way of kiosk installations in Liaoning province in China.

Key aspects of the technology that differentiate it from other kiosk digital photo systems include silver halide print technology instead of thermal print processes, reduced print times and lower cost per processed photo- this allowing for lower price points. A trade name of Colorstar was registered with the China State Administration for Industry and Commerce in China as well as a Chinese patent applied for on the technology. All intellectual property rights are reserved in the name of Dalian Beigang.

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

Over the past two years various test units were developed and installed in commercial locations in Dalian so as to generate consumer response and also to measure unit operating characteristics. Test models of the latest version were installed in various locations in and around Dalian beginning in June 2007, including malls, hotels, telephone retail shops, and internet cafes. Total expenditures on research and development undertaken by Dalian Beigang on this project for the years ended December 31, 2006 and 2007, amounted to $125,146 and $100,822, respectively. Expenditures related to ongoing research and development of Colorstar in the three month period ended September 30, 2008 were $51,063 as compared to $12,730 during the comparable period in 2007.

On February 6, 2008, we filed a Form 8-K announcing that, on February 1, 2008, Dalian Beigang had entered into a material definitive agreement with China Netcom (Group) Co., Ltd. (“CNC”), which is entitled Cooperation Agreement for Self-Service Digital Printing Business (the “Agreement”). Under the Agreement, beginning February 1, 2008, CNC will supply retail space and ADSL internet connections to a total of 564 of Dalian Beigang’s Colorstar digital photo processing kiosk units for a period of two years, after which the parties will have the option to extend the Agreement further. To date, a total of one kiosk unit is in operation at a CNC facility under this agreement and we expect the balance to be delivered and installed by the end of second quarter 2009.

The agreement partner, China Netcom, is a significant Chinese landline and broadband supplier with annual revenues in excess of $1.0 billion US. Of the 564 units, 300 will be installed in Internet cafe locations in Liaoning province that receive ADSL service from CNC. The other 264 units will be installed in CNC retail locations in Liaoning province. Under the Agreement, revenues generated from the units will be split 15% to CNC and 85% to Dalian Beigang. Dalian Beigang will also pay monthly fees to CNC for each unit’s ADSL connection, plus a service fee of approximately $30.30 per unit per month. Ownership of the kiosk units will remain with Dalian Beigang during and subsequent to the term of the Agreement. The Colorstar digital photo processing kiosk units destined for CNC installations utilize a “platform” that allows the units to provide a wide range of other features and capabilities such as bill payment, ticket purchasing, and a host of Internet access features including MP3 downloads.

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 has proved successful and is the current commercial model.

The network management server is fully developed and capable of meeting any and all necessary management and control functions. The Company`s core expertise of online security systems as developed for Tenet, has been instrumental in ensuring trouble free development and operation of the Colorstar financial controls systems.

The Digital Photo Processing Market in Northeast China

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

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

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

Traditional digital color printing shops in the Chinese domestic market utilize equipment technology of one of a number of 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 appears to have little strength in providing additional functions and network operating management platforms.

Colorstar Manufacturing

Manufacturing of all units required for the CNC agreement has been delayed although Dalian Beigang expects that all 542 units will be manufactured and installed by the end of the second quarter 2009. Currently Dalian Beigang has subcontracted manufacture and assembly of the units to an independent manufacturing company located in Dalian. We have identified multiple component suppliers who meet our quality, cost, and performance criteria. We intend to use more than one source for circuit board assembly to ensure a reliable supply over time.

The Colorstar manufacturing process involves a controlled process of parts ordering, quality control review of incoming components, fabrication/assembly of the various key elements such as the paper roll container, paper feeder, water/chemical container, feeder frame, paper dryer, paper outflow mechanism, electrical components and kiosk frame assembly. Upon final assembly completion, each unit is tested and checked by quality control personnel again prior to unit shipment.

Colorstar Operations

In China, management has entered into negotiations with a number of large organizations that operate retail facilities. Agreement relationships are planned to entail Dalian Beigang manufacturing and then installing kiosk units in partner locations and with 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 current kiosk design produces only a 4 inch by 6 inch size photo although we are configuring the printer to allow for development and printing of other sizes.

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

To date, units have had a Company staff person in attendance at all times to ensure customer familiarity with Colorstar operational features and to explain questions or issues that users may have. The plan is for these attendant functions to be handled by the retail partner staff after an initial operating period, likely 90 days. Since each unit is always connected to the Colorstar central server, management will always be able to identify maintenance, usage numbers or repair issues that arise for each individual unit. Dalian Beigang has established an online website to allow digital photo downloading direct from customers with photos mailed direct to customers or allowing them to pick up photos at their nearest Colorstar kiosk upon presentation of an order PIN number. Revenues from this site have been minor to date as no formal PR or advertising program has yet to be implemented.

In addition to large corporate agreements, Colorstar revenue from the sale of color photo printing services will also be derived from affiliate operations, which consist of franchise agencies and a licensing program. Since the Company will be 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 any related employees.

In China, franchise agents act as the Company's agent in a similar manner as a branch manager in a Company-owned locations. In the franchise arrangement, the Company has direct contractual relationships with its customers and contracts with customers are binding to the Company. The Company is also obligated for any related 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 has direct contractual relationships with 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 photos printed and such license fees are recorded by the Company as revenue.

During December 2007, two completed Colorstar units were shipped to Richmond, British Columbia, Canada for purposes of analysis to determine what modifications, if any, will be needed in order to introduce the technology into the North American market places. Once that analysis has been completed, we intend to complete our North American business plan and begin introduction of the technology in the US and in Canada. We expect that such analysis will be completed during fourth quarter 2008.

Sales and Marketing

In China, marketing of Colorstar to date has involved a team of four people making direct sales calls to major 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. Initial test units have been installed at locations under an informal franchise arrangement. Agreements with other potential partners await various approvals. On February 1, 2008, the Company entered into an agreement with China Netcom for supply and operation of 564 Colorstar units in Liaoning Province. Detailed disclosure of this agreement was by way of Form 8-K on February 6, 2008 and a news release of the same date. As at September 30, 2008, we had twelve kiosk units installed at facilities in and around Dalian. All are operational.

Intellectual Property

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

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

In addition to seeking patent protection, we will 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 filed to register the trade name “Colorstar” in China and in Canada.

Employees and Staffing

We had 79 full-time employees as of September 30, 2008. Our employees are not covered by any collective bargaining agreement and we have never experienced a work stoppage. We believe that our relations with our employees are good. The Company currently operates with a staff of 74 in Dalian, 2 in Yingkou and 1 in Beijing. One director operates from North American offices located in Seattle, Washington and one staff person operates from facilities in Richmond, British Columbia.

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

The 79 current staff members of Northport and Dalian Beigang are employed as follows:

Management	11
Accounting	3
Marketing	6
Tenet tax filing systems	10
Software Design/R and D	15
Colorstar Manufacturing	14
Colorstar Operations	15
Yingkou Office	2
Beijing office	1
North American offices and facilities	2
Total	79

Risks and Uncertainties

An investment on our common stock involves a number of very significant risks. Prospective investors should refer to the risk factors disclosed in our Form SB2 which was declared effective by the SEC on July 13, 2007.

There are a number of known material risks and uncertainties that are reasonably likely to have a material impact on our revenues, operations, liquidity and income over the short and long term. The primary risk that we face in respect to our Tenet business is our ability to obtain financing to cover working capital needs and to finance expansion of our Tenet system. In respect to our Colorstar business, we are actively in negotiations with a number of potential investors regarding funding for purposes of Colorstar unit manufacturing. In addition, we are also negotiating bank financing to cover Colorstar kiosk manufacturing costs that we are unable to finance ourselves.

With respect to Tenet operations, we continue to experience cash shortages resulting from advertising, marketing, selling and overhead expenses related to the Tenet tax software. We may require additional cash infusions before operations again achieve profitability. We may also require additional capital to finance any growth of our Tenet business, including purchases of computer equipment and recruitment of additional staff.

The Company is currently assessing the costs and benefits of continuing the Tenet division or shutting it down. A decision on this will be made by the end of forth quarter 2008.

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

Chinese government policies could have potential negative impacts on our business. Our business may be adversely affected by the relationship between the United States and China. This may impede our ability to operate in China. Likewise, 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. Additionally, Chinese laws and regulations could have a potential negative impact on us.

We rely on key members of our management team and the loss of any of their services would have a material adverse effect on our success and development. The majority of our directors and officers are non-residents of the United States and could be beyond reach in the event of litigation. In addition, the lack of availability in China of business liability insurance could materially affect our business.

Since our primary business operates in China, a re-evaluation of the Chinese Renminbi versus the US Dollar could have a negative effect on our financial results.

Resistance by users towards acceptance of our products could negatively affect our revenues and profits. Likewise, additional and unexpected competition could have a materially adverse effect on our business.

Results of Operations

SELECTED FINANCIAL INFORMATION

		For the three months ended						For the nine months ended
		September 30,						September 30,
		2008			2007			2008			2007
NET SALES
Provision of platform for electronic
filing of tax returns	$	28,959		$	48,956		$	99,795		$	166,423
Color photo printing		1,766			709			5,448			709
Total net sales		30,725			49,665			105,243			167,132
COST OF SALES
Provision of platform for electronic
filing of tax returns		(21,757	)		(22,303	)		(67,031	)		(80,152	)
Color photo printing		(21,759	)		(23,167	)		(48,375	)		(23,167	)
Total cost of sales		(43,516	)		(45,470	)		(115,406	)		(103,319	)
GROSS PROFIT (LOSS)		(12,791	)		4,195			(10,163	)		63,813
OPERATING EXPENSES
Selling, general and administrative		110,029			74,764			305,482			174,727
Professional and consulting fees		85,250			3,000			94,250			35,606
Research and development expenses		51,063			12,730			121,699			85,025
Depreciation		3,586			3,296			11,106			11,335
Total Operating Expenses		249,928			93,790			532,537			306,693
LOSS FROM OPERATIONS		(262,719	)		(89,595	)		(542,700	)		(242,880	)
OTHER INCOME (EXPENSES)
Other income		379			48			532			240
Interest income		84			-			119			57
Imputed interest expenses on
due to stockholders		(6,663	)		(9,978	)		(31,061	)		(19,554	)
Loss on disposals of property
and equipment		-			(10	)		-			(1,391	)
Total Other Expenses, net		(6,200	)		(9,940	)		(30,410	)		(20,648	)
LOSS FROM OPERATIONS BEFORE TAXES		(268,919	)		(99,535	)		(573,110	)		(263,528	)
INCOME TAX EXPENSE		-			-			-			-
NET LOSS		(268,919	)		(99,535	)		(573,110	)		(263,528	)
OTHER COMPREHENSIVE LOSS
Foreign currency translation loss		(3,071	)		(5,492	)		(47,855	)		(13,503	)
COMPREHENSIVE LOSS	$	(271,990	)	$	(105,027	)	$	(620,965	)	$	(277,031	)
Net loss per share-basic and diluted	$	(0.01	)	$	(0.00	)	$	(0.02	)	$	(0.01	)
Weighted average number of shares outstanding
during the period-basic and diluted		28,703,267			26,500,000			27,703,287			26,500,000

Revenues

Tenet revenues are received upon execution of new Tenet subscription contracts. Access to the Tenet system requires password usage which is altered annually at renewal dates. Annual fees are paid in advance and are 1200 Yuan for year one; 960 Yuan for year two; 720 Yuan for year three and 600 Yuan each year thereafter. As at September 30, 2008, Dalian Beigang had a total of 8,243 subscribers which reflected a net loss of 338 in subscribers during the previous three months. As at the year ended December 31, 2007, there were 8,562 subscribers in Dalian.

In Yingkou as at September 30, 2008, the Yinkou Lenovo Tenet operation had 886 subscribers, compared to 948 as at December 31, 2007. Fees charged to subscribers in Yingkou are similar to those in Dalian. Dalian Beigang will receive 30% of fee revenues from the Yingkou operations, once subscribers exceed 1,000 in total.

Typically, sales representatives sign up new subscribers after which subscribers attend training sessions at the Dalian office facility. Thereafter, new subscribers are eligible to attend additional training sessions at no charge if needed. Customer credit worthiness and bad debts are not material issues in the business.

Revenues are recognized upon subscription sign-on dates. Contract revenues, where the subscription terms extend beyond our year-end, are recognized under the percentage-of-completion method. The percentage of completion is determined by computing the percentage of the subscription period completed. As at September 30, 2008, a total of $17,914 was classified as deferred revenue, as compared to $55,979 classified as deferred revenue at December 31, 2007.

Revenues from Colorstar installations take the form of a revenue charge to users of the kiosks, and such revenues are typically split between the Company and the retail location on an 85/15 basis. As of September 30, 2008 , there were a total of 12 Colorstar kiosks in operation and Colorstar related revenues during the three month period were $1,766. We are in the process of fabricating the other 563 units needed in order to fulfill our agreement with CNC.

Results of the Three Month Period Ended September 30,2008

Total revenues for the quarter ended September 30, 2008, were $30,725 as compared to $49,665 in the similar period in 2007. The number of Tenet subscribers decreased by 338 during the period. Gross loss for the period was $12,791 and the loss from operations was $262,719. The overall net loss for the quarter was $268,919. The gross profit for the similar period in 2007 was $4,195 and loss from operations for that period was $89,595. The overall net loss for the 2007 comparable period was $99,535. As at September 30,2008, Dalian Beigang had a total of 8,243 subscribers which reflected a net decrease of 338 during the three month period.

The fee schedule for new subscribers calls for annual fees payable in advance and decreasing incrementally over a three year period. The annual fee in year three is 50% of the initial year one annual fee payment. During the past year, increasing numbers of subscribers reached the 50% fee level which reduced corporate revenues, especially since there has also been a decrease of some 1,988 subscribers since December 31, 2005, many of which had been year one and two level subscribers.

Because the Company has had insufficient working capital to actively promote the Tenet system to non-subscribers in Dalian, there have been fewer new subscribers at the high annual rate and a substantial percentage of subscribers are at the reduced rates. Subscriber numbers were 10,237 as at December 31, 2005 (which included 169 new subscribers); 8,562 as at December 31, 2006 (which included 102 new subscribers); and 8,243 as at September 30, 2008. The Company must raise sufficient funds in order to provide working capital for sales and marketing efforts to promote Tenet and increase the new subscriber numbers. 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.

During the three month period, a total of 12 Colorstar kiosks were operational. Revenues received from user operations of such kiosks was $1,766. We have agreements in place for the installation of an additional 552 kiosks which we expect to have installed prior to the end of the second quarter 2009.

Selling, general and administrative expenses were $110,029 for the quarter ended September 30,2008 as compared to $74,764 in the comparable 2007 period. Although our expenses increased during this most recent

quarter, we have instituted cost savings and expense review actions with the intent to reduce our expenses to a break even basis and so as to maintain continued service level capabilities in the face of impaired revenues. A total of $51,063 was expended on research on the Colorstar digital photo technology during the quarter.

Results of the Nine Month Period Ended September 30,2008

The Company operates in two reportable segments; provision of platforms for electronic filing of tax returns and payment of taxes, and color photo printing. The accounting policies of the segments are the same as described in the summary of significant accounting policies. The Company evaluates segment performance based on income from operations. All inter-company transactions between segments have been eliminated. As a result, the components of operating income for one segment may not be comparable to another segment. The following is a summary of the Company’s segment information for the nine months ended September 30, 2008 and 2007:

		Provision of platform
		for electronic filing of			Color photo
		tax returns			printing			Total
2008
Revenues	$	99,795		$	5,448		$	105,243
Gross profit (loss)		32,764			(42,927	)		(10,163	)
Net loss from operations		(246,694	)		(212,060	)		(458,754	)
Total assets		105,635			347,466			453,101
Depreciation and amortization		15,982			19,443			35,425
2007
Revenues	$	166,423		$	709		$	167,132
Gross profit (loss)		86,271			(22,458	)		63,813
Net loss from operations		(107,228	)		(89,886	)		(197,114	)
Total assets		158,410			233,534			391,944
Depreciation and amortization		28,133			6,624			34,757

A reconciliation is provided for unallocated amounts relating to corporate operations which is not included in the segment information.

		Nine months ended September 30,
		2008			2007
Total net loss for reportable segments	$	(458,754	)	$	(197,114	)
Unallocated amounts relating to corporate operations:
Advisory and professional fees		(94,250	)		(48,133	)
Others		(20,106	)		(18,281	)
	$	(573,110	)	$	(263,528	)

Total revenues for the nine month period ended September 30, 2008, were $105,243 as compared to $167,132 in the similar period in 2007. Tenet fees continued to decrease as a result of more subscribers reaching the low end of their fee schedule, and our focus on Colorstar operations instead of enhanced Tenet subscription marketing efforts. The number of Tenet subscribers decreased by 338 during the nine months period since December 31, 2007. Gross loss for the period was $10,163 and the loss from operations was $542,700. The overall net loss for the nine month period was $573,110. The gross profit for the similar period in 2007 was $63,813 and loss from operations for that period was $242,880. The overall net loss for the 2007 comparable period was $263,528.

During the nine month period, a total of 12 Colorstar kiosks were installed and became operational. Revenues received from user operations of such kiosks was $5,448. We have agreements in place for the installation of an additional 552 kiosks which we expect to have installed prior to the end of the second quarter 2009.

Sales, general and administrative expenses were $305,482 for the nine month period ended September 30, 2008 as compared to $174,727 in the comparable 2007 period. Although our expenses increased during this most recent period, we have instituted cost savings and expense review actions with the intent to reduce our expenses to a break even basis and so as to maintain continued service level capabilities in the face of impaired revenues. A total of $121,699 was expended on research on the Colorstar digital photo technology during the period as compared to $85,025 in the 2007 comparable period.

Liquidity and Capital Resources

For the nine months ended September 30, 2008, our cash and cash equivalents increased by $95,314 to $109,248. The increase in cash was due to a combination of sale of shares to new investors and from increased loans provided by certain of our shareholders. As at September 30, 2008, our cash resources were such that we had a negative working capital position of $394,027.

On August 18, 2008, the Company issued 2,400,012 shares of common stock to 2 stockholders or their nominees for settlement of the loans owed by the Company in the aggregate amount of $1,200,006 at the conversion price of $0.5 per share.

On July 10, 2008, a note payable of $109,378 was assigned by the lender to a stockholder of the Company. Immediately after the assignment, the Company is indebted to the stockholder for $109,378.

As of September 30, 2008, a stockholder loaned $23,177 to the Company as an unsecured loan and imputed interest is computed at 5% per annum on the amount due. Pursuant to an agreement dated June 20, 2007, $100,000 is repayable on or before March 31, 2009 and the remaining balance is repayable on demand.

Total imputed interest expenses recorded as additional paid-in capital amounted to $6,663 and $31,061 for the three and nine months ended September 30,2008 respectively.

As reflected in the accompanying financial statements, the Company has a total accumulated deficit of $1,599,411 at September 30,2008. The Company’s current liabilities also exceed its current assets by $ 394,027 and the Company used cash in operations of $246,300 during the quarter. These factors raise substantial doubt about our ability to continue as a going concern. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent up the Company’s ability to raise additional capital, obtain financing and succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management has taken steps to revise its operating and financial requirements, which it believes are sufficient to provide the Company with the ability to continue as a going concern. The Company is now pursuing additional funding and potential merger or acquisition candidates, which would enhance stockholders’ investment. Management believes that the above actions will allow the Company to continue operations through the next fiscal year. On August 11, 2008, the Company issued a total of 100,000 shares of common stock at $1 per share to two third parties.

Management believes that sale of stock during the period, plus additional shareholder loans received, combined with expense reduction programs being initiated, will allow us to continue operations for the remainder of 2008. The Company is actively pursuing a number of private placement fundings which would further ensure continued operations.

As a result of our agreement with China Netcom, we expect Colorstar revenues to ramp up dramatically, coincident with kiosk installations. Our current plan is to have all 564 kiosk units installed by the end of the second quarter 2009.

Trends and Uncertainties That May Affect Future Results

For the nine months ended September 30, 2008, our cash and cash equivalents increased by $95,314 to $109,248. The increase in cash was due primarily from cash advances from stockholders and sale of new shares.

In order to increase Tenet revenues, we must be able to generate sufficient capital to advertise and promote our Tenet system to Dalian businesses not yet utilizing the system. The local national tax authorities support our program and directly competitive systems in Dalian are not likely to emerge given the issues of compatibility and potential problems with different interfaces. As at September 30, 2008, Dalian Beigang had 8243 subscribers of a total potential market of 35,000 business enterprises in Dalian.

As reflected in the accompanying financial statements, we had a total accumulated deficit of $ 1,599,411 at September 30, 2008. Our current liabilities exceed our current assets by $ 349,027 and during the nine month period, we used net cash in operations of $246,300.

In view of the matters described above, continued operation of the Company is dependent upon the Company’s ability to raise additional capital, reduce its operating expenses, obtain financing and succeed in its future operations. Management is taking steps to revise our operating and financial requirements, which we believe will be sufficient to provide us with the ability to continue as a going concern. Management believes that the above actions will allow us to continue operations through this fiscal year.

Recent Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (FASB) issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement is effective for us beginning January 1, 2009. We do not expect the adoption of SFAS 141R to have a material impact on our financial position and results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This statement improves the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require; the ownership interests in subsidiaries held by parties other than the parent and the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income, changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently, when a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value, entities provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 affects those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Early adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (SFAS 161). This statement is intended to improve transparency in financial reporting by requiring enhanced disclosures of an entity’s derivative instruments and hedging activities and their effects on the entity’s financial position, financial performance, and cash flows. SFAS 161 applies to all derivative instruments within the scope of SFAS 133, “Accounting for Derivative Instruments and Hedging Activities” (SFAS 133) as well as related hedged items, bifurcated derivatives, and nonderivative instruments that are designated and qualify as hedging instruments. Entities with instruments subject to SFAS 161 must provide more robust qualitative disclosures and expanded quantitative disclosures. SFAS 161 is effective prospectively for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application permitted. We are currently evaluating the disclosure implications of this statement.

In May 2008, the FASB released SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that presented in conformity with generally accepted accounting principles in the United States of America. SFAS No. 162 will be effective 60 days following the SEC’s approval of the PCAOB amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not believe SFAS 162 will have a significant impact on the Company’s consolidated financial statements.

In May 2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts, an interpretation of FASB Statement No. 60.” The scope of this Statement is limited to financial guarantee insurance (and reinsurance) contracts, as described in this Statement, issued by enterprises included within the scope of Statement 60. Accordingly, this Statement does not apply to financial guarantee contracts issued by enterprises excluded from the scope of Statement 60 or to some insurance contracts that seem similar to financial guarantee insurance contracts issued by insurance enterprises (such as mortgage guaranty insurance or credit insurance on trade receivables). This Statement also does not apply to financial guarantee insurance contracts that are derivative instruments included within the scope of FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” The Company does not believe SFAS 163 will have a significant impact on the Company’s consolidated financial statements.

Item 3.                     Quantitative and Qualitative Disclosures about Market Risk

Quantitative and qualitative market risks are discussed in Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

Item 4.                     Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934 (“Exchange Act”) we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as at September 30, 2008. This evaluation was carried out under the supervision and with the participation of our Chief Executive and Chief Financial Officer. Based upon that evaluation, our Chief Executive and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to them to allow timely decisions regarding required disclosure.

During our most recently completed fiscal quarter ended September 30,2008, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 4(T).              CONTROLS AND PROCEDURES.

(a) Disclosure controls and procedures.

We carried out an evaluation, under the supervision and with the participation of our management, including the President and Chief Executive Officer, and the Chief Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” [as defined in the Exchange Act Rule 13a-15(e)] as of the end of the period covered by this report. Based upon the evaluation of the effectiveness of the disclosure controls and procedures as of the end of the period covered by this quarterly report, our officers concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable, and not absolute assurance, of achieving the desired control objectives, and management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures.

(b) Changes in internal control over financial reporting.

There was no significant change in our internal control over financial reporting that occurred during the three months ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Nor were there any significant deficiencies or material weaknesses in our internal controls requiring corrective actions.

PART II – OTHER INFORMATION

Item 1.                     Legal Proceedings

We currently are not a party to any material legal proceedings and, to our knowledge, no such proceedings are threatened or contemplated.

Item 1A.                  Risk Factors

There have not been any material changes in the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2007 filed with the SEC on March 31, 2008.

Item 2.                     Unregistered Sales of Equity Security and Use of Proceeds

During the period ended September 30, 2008, we sold 100,000 shares of our stock to two third parties at a price of $1.00 per share.

Item 3.                     Defaults Upon Senior Securities

None.

Item 4.                     Submission of Matters to a Vote of Security Holders

On August 25, 2008 the Board of Directors of the Company approved the filing of the Company’s definitive Schedule 14A regarding proxy documents for the Company’s Annual Meeting of Shareholders (the “Annual Meeting”). The Schedule 14A stated that the Company’s Annual Meeting date will be October 9, 2008 and the Record Date for the Annual Meeting will be August 27, 2008.

The results of the voting at the Annual Meeting were disclosed in a Form 8-K filed by the Company on November 17, 2008.

Item 5.                     Other Information

None.

Item 6.                     Exhibits

(a) The following exhibits are filed with this Quarterly Report on Form 10-Q:

Exhibit
Number	Description of Exhibit
31.1	Rule 13a-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15(d)-14(a) Certification of Chief Financial Officer
32.1	18 U.S.C. Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NORTHPORT CAPITAL INC.

Per:     /s/ Zhao Yan                                                                  
            Zhao Yan 
            President, Chief Executive Officer, Principal Executive Officer and a director 
            Date: November 18, 2008

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Zhao Yan, certify that:

(1)	I have reviewed this Report on Form 10-Q for the quarterly period ended September 30, 2008 of Northport Capital Inc.;
(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
(4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(c)	Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
(5)	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: November 19, 2008.

/s/ Zhao Yan                                 
By:     Zhao Yan
Title:  Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, James Wang, certify that:

(1)	I have reviewed this Report on Form 10-QSB for the quarterly period ended September 30, 2008 of Northport Capital Inc.;
(2)	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
(3)	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
(4)	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(c)	Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
(5)	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

Date: November 19, 2008.

/s/James Wang                                           
By:      James Wang
Title:  Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER

PURSUANT TO
18 U.S.C. SECTION 1350

The undersigned, Zhao Yan, the Chief Executive Officer of Northport Capital Inc., and James Wang, the Chief Financial Officer of Northport Capital Inc., each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to their knowledge, the Report on Form 10-Q of Northport Capital Inc., for the quarterly period ended September 30, 2008, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and that the information contained in the Report on Form 10-QSB fairly presents, in all material respects, the financial condition and results of operations of Northport Capital Inc.

Date: November 19, 2008.

/s/Zhao Yan                              
Zhao Yan
President, Chief Executive Officer, Principal
Executive Officer and Director

/s/James Wang                          
James Wang
Secretary, Treasurer, Chief Financial Officer,
and Director