**U.S.
      SECURITIES AND EXCHANGE COMMISSION**


Washington,
      D.C. 20549





**Form
      10-KSB**





(Mark
      One)





**|X|
      ANNUAL REPORT UNDER SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
                the fiscal years ended
            December
                31, 2005





**|_|
      TRANSITION REPORT UNDER SECTION 13 OR 15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





For
      the
      transition period from ______________ to ______________





*Commission
      File Number 0-23672*


_______________________________________________





**Yifan
      Communications, Inc.**





(Exact
      name of registrant as specified in its charter)





_______________________________________________








Delaware
            06-1607651(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)








100
                William Street, Suite 2000, New York, New York
            10038(Address
                of principal executive offices)
            (zip
                code)





Registrant’s
      telephone number, including area code:


(212)
      809-9888





_______________________________________________





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





None.





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





Common
      Stock, $0.008 par value per share


_______________________


(Title
      of
      Class)









Indicate
      by Check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
      (or for such shorter period that the registrant was required to file such
      reports), and (2) has been subject to such filing requirements for the past
      90
      days. Yes |_| No |X|.





Check
      whether the issuer is a shell company (as defined in Rule 12b-2 of the Exchange
      Act). Yes |X| No |_|.





Indicate
      by check mark if disclosure of delinquent filers in response to Item 405 of
      Regulation S-B (§229.405 of this chapter) is not contained herein, and will not
      be contained, to the best of registrant's knowledge, in definitive proxy or
      information statements incorporated by reference in Part III of this Form
      10-KSB. |_|





Issuer’s
      revenue for the most recent fiscal year: None.





Indicate
      by check mark whether the registrant is an accelerated filer (as defined in
      Rule
      12b-2 of the Act).


Yes
      |_|
      No |X|.





As
      of
      March 8, 2006, the aggregate market value of the voting and non-voting common
      equity held by non-affiliates computed by reference to the closing sales price
      of such stock as of such date on the Pink Sheets, was $1,886,124.24.





As
      of
      March 8, 2006, there were 17,801,951 shares of common stock outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE:**





Portions
      of the registrant’s Proxy Statement to be filed with the Securities and Exchange
      Commission in March, 2006 are incorporated by reference into Part III of
      this Form 10-KSB.





**FORWARD-LOOKING
      STATEMENTS**





Certain
      statements made in this Annual Report on Form 10-KSB are “forward-looking
      statements” (within the meaning of the Private Securities Litigation Reform Act
      of 1995) regarding the plans and objectives of management for future operations.
      Such statements involve known and unknown risks, uncertainties and other factors
      that may cause actual results, performance or achievements of Yifan
      Communications, Inc. (the “Company”) to be materially different from any future
      results, performance or achievements expressed or implied by such
      forward-looking statements. The forward-looking statements included herein
      are
      based on current expectations that involve numerous risks and uncertainties.
      The
      Company's plans and objectives are based, in part, on assumptions involving
      the
      continued expansion of business. Assumptions relating to the foregoing involve
      judgments with respect to, among other things, future economic, competitive
      and
      market conditions and future business decisions, all of which are difficult
      or
      impossible to predict accurately and many of which are beyond the control of
      the
      Company. Although the Company believes its assumptions underlying the
      forward-looking statements are reasonable, any of the assumptions could prove
      inaccurate and, therefore, there can be no assurance the forward-looking
      statements included in this Report will prove to be accurate. In light of the
      significant uncertainties inherent in the forward-looking statements included
      herein, the inclusion of such information should not be regarded as a
      representation by the Company or any other person that the objectives and plans
      of the Company will be achieved.










**PART
      I**





**Item
      1. Business.**




**Introduction**





Yifan
      Communications, Inc. (“Yifan”, the “Company”, “we” or “us”), a development stage
      company, is incorporated in Delaware and maintains its principal offices at
      100
      William Street, Suite 2000, New York, New York 10038. Its telephone number
      is
      (212) 809-9888.





Yifan
      is
      currently a “shell company” as defined by the Securities and Exchange Commission
      (the “SEC”) to be “a company with no or nominal operations, and with no or
      nominal assets or assets consisting of solely cash and cash equivalents”
pursuant to Rule 405 of the Securities Act of 1933, as amended (the “Securities
      Act”), and Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).





The
      Company’s current operations consist solely of owning and maintaining seven
      principal Internet domain names: www.yifan.com , www.yifan.net , www.yifannet.com and www.yifanmall.com ,
      all of
      which are written in the Chinese language. The Company also owns but does not
      currently maintain www.gotofind.com and www.grocer2grocer.com .





***HISTORICAL***





We
      were
      incorporated under the laws of the State of Ohio in October 1991 as Sports
      Sciences, Inc. At our 1996 annual meeting, our stockholders approved a plan
      to
      change our name and corporate domicile by means of a statutory merger with
      Smart
      Games Interactive, Inc., a Delaware corporation that was a wholly-owned
      subsidiary of our company immediately before the merger. This merger was
      completed on October 11, 1996.





On
      July
      21, 2000, our Board of Directors approved a plan to change our name by means
      of
      a statutory merger with Yifan Communications, Inc., a Delaware corporation
      that
      was a wholly-owned subsidiary of the Company immediately before the merger.
      This
      merger was completed on July 28, 2000.





On
      July
      30, 2000, the Company entered into a reorganization agreement with Yifan.com,
      Inc., a New York corporation, thereby resulting in our current organization,
      Yifan Communications, Inc. In connection with this reorganization, on September
      22, 2000 the Company amended its Certificate of Incorporation to increase its
      authorized capital to 100,000,000 shares of common stock, par value $.008 (the
      “Common Stock”) and 10,000,000 shares of preferred stock, par value $.008 (the
“Preferred Stock”). Concurrently, the Company effected a 1-for-40 reverse split
      of the outstanding Common Stock.





In
      October 2000, we purchased the business plan, Internet domain name and
      preliminary web-site design elements for www.grocer2grocer.com .





In
      January 2001 we established a demonstration business-to-consumer (B2C)
      e-commerce site in conjunction with the Hong Kong Supermarket chain. This online
      grocery store at www.yifanmall.com uses our
      proprietary B2C e-commerce software shell in a “real world” small business
      setting. We did not incur any fixed expenses for inventory, facilities or
      additional staff. Rather, we ran our online store in exactly the same manner
      as
      any other small business that expanded into e-commerce.




1




In
      addition to our online grocery store, we used our e-commerce shell to develop
      a
      demonstration business-to-business (B2B) e-commerce site located at www.grocer2grocer.com .
      This
      site is devoted to a niche market in the grocery industry known as “grocery
      diversion.” In substance, the grocery diversion industry specializes in
      reselling manufacturer’s overstocks and special sale merchandise from sellers
      who have excess inventory to buyers who want to save a little on their
      purchases. We hired a former vice president of a leading national grocery
      wholesaler to manage our grocer2grocer business.





We
      also
      maintained our websites throughout the years 2001 through 2003. The target
      market for our websites could be broadly described as the Chinese speaking
      population of the world, but we believe such a broad description is overly
      simplistic. We believe that the larger Chinese speaking market actually consists
      of several distinct segments including the Chinese communities of North America,
      the Chinese communities of industrialized Europe, the Chinese exporters in
      Hong
      Kong, Taiwan and developing Asian nations, the Chinese consumers in Hong Kong,
      Taiwan, the People’s Republic of China (the “PRC”) and developing Asian nations,
      the Chinese business in the PRC; and the Chinese consumers in the PRC. Moreover,
      in developing our websites, our overall business strategy has been carefully
      developed to seek and take these fundamental differences into account, maximize
      our potential operating revenue and minimize our exposure to developing and
      unpredictable markets.





Effective
      December 31, 2003, the Company discontinued all existing business operations
      and
      resolved to explore new business opportunities, including a potential merger
      transaction. Effective January 1, 2004, the Company became a development stage
      company. While the Company continues to own and maintain its websites and domain
      names, Yifan does not earn revenues or profits from them. Rather, the Company
      is
      focusing on the acquisition of or merger with a target company or business
      seeking the perceived advantages of being a publicly held corporation. The
      Company’s principal business objective for the next 12 months and beyond such
      time will be to achieve long-term growth potential through a combination with
      a
      business rather than immediate, short-term earnings. The Company will not
      restrict its potential candidate target companies to any specific business,
      industry or geographical location and, thus, may acquire any type of
      business.





We
      are in
      discussions with a company based in the PRC regarding a possible business
      combination. There can be no assurance that this or any combination transaction
      can or will be consummated.





**Patents
      and Trademark**





We
      have
      certain trademark, copyright, trade secret protection and licenses to protect
      our intellectual property rights. Despite our precautions, it may be possible
      for third parties to obtain and use our intellectual property without
      authorization. Furthermore, the validity, enforceability and scope of protection
      of intellectual property rights in the Internet-related industries is uncertain
      and still evolving. The laws of the PRC and certain other countries do not
      protect intellectual property to the same extent as the laws of the United
      States.




We
      own
      the Internet domain names www.yifan.com , www.yifan.net , www.yifannet.com , www.gotofind.com , www.yifanmall.com and www.grocer2grocer.com .




2





Many
      parties are actively developing chat, homepage, search and related Web
      technologies, including seeking patent protection. There may be patents issued
      or pending that are held by others and that cover significant parts of our
      technology, business methods or services. For example, we are aware that a
      number of patents have been issued in areas of e-commerce, Web-based information
      indexing and retrieval and online direct marketing. Disputes over rights to
      these technologies are likely to arise in the future. We cannot be certain
      that
      our products do not or will not infringe valid patents, copyrights or other
      intellectual property rights held by third parties. We may be subject to legal
      proceedings and claims from time to time relating to the intellectual property
      of other in the ordinary course of business. Given that we have discontinued
      our
      active business operations, the value of this intellectual property to a
      potential business combination target is uncertain at best.





**Competition**





The
      Shell
      Market





Currently,
      with our primary goal the acquisition of a target company or business seeking
      the perceived advantages of being a publicly held corporation, the Company
      faces
      vast competition from other shell companies with the same objectives. The
      Company is in a highly competitive market for a small number of business
      opportunities which could reduce the likelihood of consummating a successful
      business combination. A large number of established and well-financed entities,
      including small public companies and venture capital firms, are active in
      mergers and acquisitions of companies that may be desirable target candidates
      for us. Nearly all these entities have significantly greater financial
      resources, technical expertise and managerial capabilities than we do;
      consequently, we will be at a competitive disadvantage in identifying possible
      business opportunities and successfully completing a business combination.
      These
      competitive factors may reduce the likelihood of our identifying and
      consummating a successful business combination.





**Employees**





As
      of
      December 31, 2005, we had four employees. In February 2006, the Company reduced
      its employees to three.





**RISK
      FACTORS**





An
      investment in our securities is highly speculative and subject to numerous
      and
      substantial risks. These risks include those set forth below and elsewhere
      in
      this Form 10-KSB. Readers are encouraged to review these risks carefully before
      making any investment decision.





**We
      may not be able to raise sufficient capital to successfully operate or expand
      our business.**




Our
      current business operations require capital expenditures for nominal maintenance
      of our websites and continuing as a public reporting company. Myint J. Kyaw
      (aka
      Jeffrey Wu), our current Chief Executive Officer and Chairman of the Board
      of
      Directors, has been providing financing to the Company since November 2003.
      If
      we cannot obtain additional capital, whether from Jeffrey Wu or elsewhere,
      we
      may have to delay potential mergers, acquisitions or development expenditures,
      which can be expected to harm our competitive growth potential. We cannot be
      sure that we will be able to secure additional financing on acceptable terms.
      Any failure to obtain such financing, or obtaining financing on terms not
      favorable to us, can be expected to have a material adverse effect on our future
      business prospects.




3




**There
        could be conflicts of interest among management which may be adverse to your
        interests.**





Conflicts
      of interest create the risk that management may have an incentive to act
      adversely to the interests of other investors. A conflict of interest may arise
      between our management's personal pecuniary interest and its fiduciary duty
      to
      our stockholders. Although management does not have voting control of the
      Company, management will continue to have day to day operating control of the
      Company and a large voting block of the common stock. Such influence may not
      necessarily be consistent with the interests of our other stockholders.




**If
      we raise additional funds through the issuance of equity securities, or
      determine in the future to issue or register additional common stock, your
      percentage ownership will be reduced, you will experience dilution which could
      substantially diminish the value of your stock and such issuance may convey
      rights, preferences or privileges senior to your rights which could
      substantially diminish your rights and the value of your stock.**





We
      may
      issue additional shares of common stock for various reasons and may grant
      additional stock options to employees, consultants, officers, directors and
      third parties. If we determine to register for sale to the public additional
      shares of common stock granted in any future financing or business combination,
      a material amount of dilution can be expected to cause the market price of
      the
      common stock to decline. One of the factors which generally affects the market
      price of publicly traded equity securities is the number of shares outstanding
      in relationship to assets, net worth, earnings or anticipated earnings.
      Furthermore, the public perception of future dilution can have the same effect
      even if actual dilution does not occur.





In
      order
      for us to obtain additional capital or complete a business combination, we
      may
      find it necessary to issue securities, including but not limited to any or
      all
      shares of common stock or preferred stock, in some cases conveying rights senior
      to those of the current holders of common stock. Those rights may include voting
      rights, liquidation preferences and conversion rights. To the extent we convey
      senior rights, the value of our common stock can be expected to
      decline.





**We
      sustained losses in the fiscal years ended December 31, 2005 and 2004.**





The
      Company incurred a net loss for fiscal years 2005 and 2004 $594,935 and
      $438,645, respectively. The losses were attributable to our lack of an operating
      business and our continued nominal operations in order to maintain the Company
      as a publicly traded entity.





**If
      we incur indebtedness, we may become too highly leveraged and would be in risk
      of default.**





There
      is
      no contractual or regulatory limit to the amount of debt we can take on,
      although we intend to follow a conservative debt policy. If our policy were
      to
      change or be eliminated due to unforeseen circumstances, we could become more
      highly leveraged, which could adversely affect our ability to meet our
      obligations and we would then be in risk of default, which could have a material
      adverse effect on our financial condition, results of operations, business
      prospects and long term future viability.





**Our
      business will have no revenues unless and until we merge with or acquire an
      operating business.**





We
      are a
      development stage company and have had no revenues from operations. We may
      not
      realize any revenues unless and until we successfully merge with or acquire
      an
      operating business.




4





**We
      currently face and continue to face significant competition.**





The
      Company is in a highly competitive market for a small number of business
      opportunities which could reduce the likelihood of consummating a successful
      business combination. We are and will continue to be an insignificant
      participant in the business of seeking mergers with, joint ventures with and
      acquisitions of small private and public entities. A large number of established
      and well-financed entities, including small public companies and venture capital
      firms, are active in mergers and acquisitions of companies that may be desirable
      target candidates for us. Nearly all these entities have significantly greater
      financial resources, technical expertise and managerial capabilities than we
      do.
      Consequently, we may be at a competitive disadvantage in identifying possible
      business opportunities and successfully completing a business combination.
      These
      competitive factors may reduce the likelihood of our identifying and
      consummating a successful business combination.





**Future
      success is highly dependent on the ability of management to locate and attract
      a
      suitable acquisition.**





The
      nature of our operations is highly speculative and there is a consequent risk
      of
      loss of your investment. The success of our plan of operation will depend to
      a
      great extent on the operations, financial condition and management of the
      identified business opportunity. While management intends to seek business
      combinations with entities having established operating histories, we cannot
      assure you that we will be successful in locating candidates meeting that
      criterion. In the event we complete a business combination, the success of
      our
      operations may be dependent upon management of the successor firm or venture
      partner firm, and numerous other factors beyond our control.





**Consummation
      of a business combination could result in a change in control of the Company
      and
      substantial dilution of its equity owners.**





It
      is
      likely the Company will acquire its participation in a business opportunity
      through the issuance of its common stock or other securities. Although the
      terms
      of any such transaction cannot be predicted, it should be noted that in certain
      circumstances the criteria for determining whether or not an acquisition is
      a
      so-called "tax free" reorganization under Section 368(a)(1) of the Internal
      Revenue Code of 1986, as amended (the "Code"), depends upon whether the owners
      of the acquired business own 80% or more of the voting stock of the surviving
      entity. If a transaction were structured to take advantage of these provisions
      rather than other "tax free" provisions provided under the Code, all prior
      stockholders would in such circumstances retain 20% or less of the total issued
      and outstanding shares. Under other circumstances, depending upon the relative
      negotiating strength of the parties, prior stockholders may retain substantially
      less than 20% of the total issued and outstanding shares of the surviving
      entity. This could result in substantial dilution to the equity of those
      stockholders of the Company prior to such reorganization.





The
      present stockholders of the Company will likely not have control of a majority
      of the voting shares of the Company following a reorganization transaction.
      As
      part of such a transaction, all or a majority of the Company's directors may
      resign and new directors may be appointed without any vote by
      stockholders.





Our
      Certificate of Incorporation authorizes the issuance of a maximum of
      100,000,000 shares of common stock and a maximum of 10,000,000 shares of
      preferred stock. Any merger or acquisition effected by us may result in
      substantial dilution in the percentage of our common stock held by our then
      existing stockholders. Moreover, the common stock issued in any such merger
      or
      acquisition transaction may be valued on an arbitrary or non-arm’s-length basis
      by our management, resulting in an additional reduction in the percentage of
      common stock held by our then existing stockholders. To
      the
      extent that additional shares of common stock or preferred stock are issued
      in
      connection with a business combination or otherwise, dilution to the interests
      of our stockholders will occur and the rights of the holders of common stock
      might be materially adversely affected.




5





**The
      Company may face tax consequences if it consummates a business combination
      that
      results in a change of control.**





Income
      taxes are based on income (loss) for financial reporting purposes and reflect
      a
      current tax liability (asset) for the estimated taxes payable (recoverable)
      in
      the current tax year, if any. Deferred tax assets or liabilities are determined
      based on the difference between financial reporting and tax bases of assets
      and
      liabilities and are measured using enacted tax laws and rates. A valuation
      allowance is provided on deferred tax assets if it is determined that it is
      more
      likely than not that the asset will not be realized. If the Company’s Board of
      Directors pursues a future corporate reorganization or other change in corporate
      ownership that will cause the ownership change by 50% or more, then the use
      of
      certain net operating loss carryforwards may be limited.





**The
      Company may enter into and consummate a business combination without the
      approval or consent of the stockholders. If stockholder approval is necessary,
      obtaining such approval could result in delay of the consummation of such
      transaction.**





In
      the
      case of an acquisition, the transaction may be accomplished upon the sole
      determination of management without any vote or approval by stockholders. In
      the
      case of a statutory merger or consolidation directly involving the Company,
      it
      will likely be necessary to call a stockholders' meeting and obtain the approval
      of the holders of a majority of the outstanding shares. The necessity to obtain
      such stockholder approval may result in delay and additional expense in the
      consummation of any proposed transaction and will also give rise to certain
      appraisal rights to dissenting stockholders. Most likely, management will seek
      to structure any such transaction so as not to require stockholder
      approval.





**The
      Company has no existing agreement for a business combination or other
      transaction.**





While
      we
      are in current discussions regarding a possible transaction, currently, we
      have
      no arrangement, agreement or understanding with respect to engaging in a merger
      or joint venture with, or acquisition of, a private or public entity. No
      assurances can be given that we will successfully identify and evaluate suitable
      business opportunities or that we will conclude a business combination. We
      cannot guarantee we will be able to negotiate a business combination on
      favorable terms. While the Company has unrestricted flexibility in seeking,
      analyzing and participating in potential business opportunities, the Company
      anticipates its investigation into potential acquisition candidates to be
      focused primarily on companies operating and existing in the People’s Republic
      of China.





**The
      time and cost of preparing a private company to become a public reporting
      company may preclude us from entering into a merger or acquisition with the
      most
      attractive private companies.**





Target
      companies that fail to comply with SEC reporting requirements may delay or
      preclude acquisition. Sections 13 and 15(d) of the Exchange Act require
      reporting companies to provide certain information about significant
      acquisitions, including certified financial statements for the company acquired,
      covering one, two, or three years, depending on the relative size of the
      acquisition. The time and additional costs that may be incurred by some target
      entities to prepare these consolidated financial statements may significantly
      delay or essentially preclude consummation of an acquisition. Otherwise suitable
      acquisition prospects that do not have or are unable to obtain the required
      audited statements may be inappropriate for acquisition so long as the reporting
      requirements of the Exchange Act are applicable.




6





**Any
      potential acquisition or merger with a foreign company may subject us to
      additional risks.**





If
      we
      enter into a business combination with a foreign concern, we will be subject
      to
      risks inherent in business operations outside of the United States. These risks
      include, for example, currency fluctuations, foreign currency control issues,
      regulatory problems, punitive tariffs, unstable local tax policies, trade
      embargoes, risks related to shipment of raw materials and finished goods across
      national borders and cultural and language differences. Foreign economies may
      differ favorably or unfavorably from the United States economy in growth of
      gross national product, rate of inflation, market development, rate of savings,
      and capital investment, resource self-sufficiency and balance of payments
      positions, and in other respects.





**The
      Company’s stock is thinly traded and may experience price volatility, which
      could affect a stockholder’s ability to sell the Company’s stock or the price
      for which it can be sold.**





There
      has
      been and may continue to be, at least for the immediate future, a limited public
      market for the common stock of the Company. The volume of shares traded through
      December 31, 2005 was minimal, making it difficult to accurately gauge the
      value
      of the common stock. Should this trend continue, we would anticipate shareholder
      difficulty in finding a buyer for any offered shares. This could reduce the
      price per share paid by any purchaser below the per share price that could
      have
      been obtained had there been a more robust trading market and potentially below
      the book value of the common stock.




**Our
      Board of Directors may authorize and issue shares of preferred stock with
      certain designations and preferences unfavorable to holders of common stock,
      without stockholder approval.**





Our
      Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares
      of preferred stock with designations, rights and preferences determined from
      time to time by its Board of Directors. The Board of Directors is empowered,
      without stockholder approval, to issue preferred stock with dividend,
      liquidation, conversion, voting, or other rights which could adversely affect
      the voting power or other rights of the holders of the common stock. On February
      15, 2006, we filed a Certificate of Designation which designated 100,000 shares
      of Preferred Stock as “Series A Preferred Stock” (the “Series A Stock”). The
      Series A Stock has conversion rights, liquidation rights and voting rights
      which
      may substantially dilute the value of the common stock.




The
      Series A Stock shall initially be convertible into common stock at the rate
      of
      437.70111 **** shares
      of
      common stock per share of Series A Stock (the “Conversion Ratio”). The Series A
      Stock shall automatically convert into a number of fully paid and nonassessable
      shares of common stock based on the Conversion Ratio then in effect at such
      time
      that one of the following events occur: (1) a combination of the Company’s
      common stock on the basis of at least 1-for-7, (2) a merger with the Company
      or
      a wholly-owned subsidiary of the Company pursuant to which each outstanding
      share of common stock is to be exchanged for no more than 1/7 of a share of
      common stock of the surviving corporation in such merger or (3) the increase
      in
      the number of authorized shares of common stock or other transaction as a result
      of which, immediately following such event, and without taking into account
      any
      other obligations to issue common stock which the Company has or may at such
      time have, there is a sufficient number of authorized but unissued shares of
      common stock to permit such conversion.




7




Pursuant
      to the Certificate of Designation, in the event of a liquidation of the Company
      or a merger or consolidation where, as a result of such, the holders of all
      the
      capital stock of the Company own less than 50% of all the capital stock of
      the
      Company, the holders of the Series A Stock shall be entitled to receive in
      cash,
      out of the assets of the Company, an amount per share for each outstanding
      share
      of the Series A Stock equal to $.008 for each share of common stock into which
      the shares of the Series A Stock are then convertible, before any payments
      shall
      be made or any assets distributed to the holders of the common stock or other
      junior securities.




Holders
      of the Series A Stock are entitled to one vote for every share of common stock
      their Series A Stock could be converted into as of the date of such vote. In
      addition, without the affirmative vote of the holders (acting together as a
      class) of at least a majority of the Series A Stock at the time outstanding
      given in person or by proxy at any annual or special meeting, or, if permitted
      by law, in writing without a meeting, the Company shall not alter, change or
      amend the preferences or rights of the Series A Stock.




The
      Company has not yet issued any of the Series A Stock. Holders of the common
      stock, at the time the Series A Stock is issued and subsequently converted
      into
      common stock, will experience dilution which could substantially diminish the
      value of the common stock. Further, in the event of issuance, the Series A
      Stock
      or other preferred stock could be utilized, under certain circumstances, as
      a
      method of discouraging, delaying or preventing a change in control of the
      Company.




**It
      may be difficult for a third party to gain control of the Company, even if
      the
      acquisition of control would be in the best interests of its
      stockholders.**





The
      Company’s Certificate of Incorporation and the Delaware General Corporation Law
      contain provisions that may have the effect of making more difficult or delaying
      attempts by others to obtain control of the Company, even when those attempts
      may be in the best interest of stockholders. Delaware law also imposes
      conditions on certain business combination transactions with “interested
      stockholders” (as defined therein). The Certificate of Incorporation authorizes
      the Board of Directors, without stockholder approval, to issue one or more
      series of Preferred Stock, which could have voting and conversion rights that
      adversely affect the voting power of the holders of its Common Stock.





**Forward-looking
      statements should not be relied on because they are inherently
      uncertain.**





Certain
      statements and information contained in this Form 10-KSB regarding matters
      that
      are not historical facts are forward-looking statements, as that term is defined
      under applicable securities laws. These include statements concerning the
      Company’s future, proposed and anticipated activities, certain trends with
      respect to its revenue, operating results, capital resources and liquidity,
      and
      certain trends with respect to the markets in which the Company competes or
      its
      industry in general. Forward-looking statements, by their very nature, include
      risks and uncertainties, many of which are beyond the Company’s control.
      Accordingly, actual results may differ, perhaps materially, from those
      anticipated in or implied by such forward-looking statements.





**Item
      2. Property.**





**Facilities
      and Equipment**





On
      June
      30, 2003, the Company entered into a lease agreement (the “Lease”) with
      Lighthouse 100 William LLC, of which Jeffrey Wu, our Chief Executive Officer,
      Secretary and director, holds a majority ownership interest. Pursuant to the
      Lease, the Company agreed to lease a portion of certain real property located
      at
      100 William Street, New York, New York (the “Leased Premises”) for an annual
      rent equal to $152,272.78 in the first year, $161,230.01 in the second year
      and
      $179,144.45 in the third year, with annual rents increasing approximately 8%
      each year thereafter. The Lease is effective until December 31, 2010.




8





From
      January 1, 2004 through August 5, 2005, the Company sublet a portion of the
      Leased Premises to Flushing Asset Management for $2,000 per month.





On
      August
      2, 2005, the Company agreed to sublease a portion of the Leased Premises to
      Anthony Morali, PLLC on a month-to-month basis, commencing October 1, 2005.
      The
      monthly rent equals $2,000.00 for the first 12 months and increases 3% per
      annum
      every year thereafter.





The
      Company does not lease, own or use any other facilities or equipment.





**Item
      3. Legal Proceedings.**





The
      Company is not party to any legal proceedings nor is it aware of any
      investigation, claim or demand made on the Company that may reasonably result
      in
      any legal proceedings.





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





The
      information required by this Item is incorporated by reference to the 2006
      Proxy
      Statement to be filed with the SEC in March, 2006.





**PART
      II**





**Item
      5. Market for Common Equity, Related Stockholder Matters and Issuer Purchases
      of
      Equity Securities.**





SECTION
      15(G) OF THE EXCHANGE ACT





The
      shares of our common stock are covered by Section 15(g) of the Exchange Act,
      and
      Rules 15g-1 through 15g-6 promulgated thereunder, which impose additional sales
      practice requirements on broker-dealers who sell our securities to persons
      other
      than established customers and accredited investors.





Rule
      15g-2 declares any broker-dealer transactions in "penny stocks" unlawful unless
      the broker-dealer has first provided to the customer a standardized disclosure
      document.





Rule
      15g-3 provides that it is unlawful for a broker-dealer to engage in a " penny
      stock" transaction unless the broker-dealer first discloses and subsequently
      confirms to the customer the current quotation prices or similar market
      information concerning the penny
      stock in question.





Rule
      15g-4 prohibits broker-dealers from completing " penny
      stock" transactions for a customer unless the broker-dealer first discloses
      to
      the customer the amount of compensation or other remuneration received as a
      result of the penny
      stock transaction.





Rule
      15g-5 requires that a broker-dealer executing a " penny
      stock" transaction, other than one exempt under Rule 15g-1, disclose to its
      customer, at the time of or prior to the transaction, information about the
      sales person's compensation.





Our
      common stock may be subject to the foregoing rules. The application of the
      " penny
      stock" rules may affect our stockholders' ability to sell their shares because
      some broker-dealers may not be willing to make a market in our common stock
      because of the burdens imposed upon them by the " penny
      stock" rules.




9





**Common
      Stock**





Since
      May
      4, 2004, the Common Stock has been quoted on the Pink Sheets under the symbol
      “YIFN.” Prior to being listed on the Pink Sheets, Yifan was quoted on the
      Over-the-Counter Bulletin Board.





High
            
            LowFiscal
                Year Ended December 31, 2005Three
                months ended March 31, 2005
            
            
            .30
            
            
            .16Three
                months ended June 30, 2005
            
            
            .35
            
            
            .11Three
                months ended September 30, 2005
            
            
            .20
            
            
            .16Three
                months ended December 31, 2005
            
            
            .25
            
            
            .11Fiscal
                Year Ended December 31, 2004Three
                months ended March 31, 2004
            
            
            1.45
            
            
            .60Three
                months ended June 30, 2004
            
            
            .90
            
            
            .63Three
                months ended September 30, 2004
            
            
            1.00
            
            
            .26Three
                months ended December 31, 2004
            
            
            .50
            
            
            .11







Such
      quotations reflect inter-dealer bids, without retail mark-up, mark-down or
      commissions, and may not reflect actual transactions.





As
      of the
      date hereof, there are 154 holders of record of the Company's Common
      Stock.





**Preferred
      Stock**





Our
      Certificate of Incorporation authorizes the issuance of up to 10,000,000 shares
      of Preferred Stock with designations, rights and preferences determined from
      time to time by the Board of Directors. On February 15, 2006, we filed a
      Certificate of Designation which designated 100,000 shares of Preferred Stock
      as
“Series A Preferred Stock” (the “Series A Stock”).





The
      Series A Stock shall initially be convertible into Common Stock at the rate
      of
      437.70111 **** shares
      of
      Common Stock per share of Series A Stock (the “Conversion Ratio”). The
      Conversion Ratio is subject to adjustment. The Series A Stock shall
      automatically convert into a number of fully paid and nonassessable shares
      of
      Common Stock based on the Conversion Ratio then in effect at such time that
      one
      of the following events occur: (1) a combination of the Company’s Common Stock
      on the basis of at least 1-for-7, (2) a merger with the Company or a
      wholly-owned subsidiary of the Company pursuant to which each outstanding share
      of Common Stock is to be exchanged for no more than 1/7 of a share of common
      stock of the surviving corporation in such merger or (3) the increase in the
      number of authorized shares of Common Stock or other transaction as a result
      of
      which, immediately following such event, and without taking into account any
      other obligations to issue Common Stock which the Company has or may at such
      time have, there is a sufficient number of authorized but unissued shares of
      Common Stock to permit such conversion.




10




Pursuant
      to the Certificate of Designation, in the event of a liquidation of the Company
      or a merger or consolidation where, as a result of such, the holders of all
      the
      capital stock of the Company own less than 50% of all the capital stock of
      the
      Company, the holders of the Series A Stock shall be entitled to receive in
      cash,
      out of the assets of the Company, an amount per share for each outstanding
      share
      of the Series A Stock equal to $.008 for each share of Common Stock into which
      the shares of the Series A Stock are then convertible, before any payments
      shall
      be made or any assets distributed to the holders of the Common Stock or other
      junior securities.




Holders
      of the Series A Stock are entitled to one vote for every share of Common Stock
      their Series A Stock could be converted into as of the date of such vote. In
      addition, without the affirmative vote of the holders (acting together as a
      class) of at least a majority of the Series A Stock at the time outstanding
      given in person or by proxy at any annual or special meeting, or, if permitted
      by law, in writing without a meeting, the Company shall not alter, change or
      amend the preferences or rights of the Series A Stock.




The
      Company has not yet issued any of the Series A Stock through the date of this
      filing .





**Dividend
      Policy**





The
      Company has not declared or paid any cash dividends on its Common Stock and
      does
      not intend to declare or pay any cash dividend in the foreseeable future. The
      payment of dividends, if any, is within the discretion of the Board of Directors
      and will depend on the Company’s earnings, if any, its capital requirements and
      financial condition and such other factors as the Board of Directors may
      consider.





**Equity
      Compensation Plans**




Plan
                Category
            
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            
            Weighted-average
                exercise price of outstanding options, warrants and rights
            
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                (a))***(a)***
            
            ***(b)***
            
            ***(c)***Equity
                compensation plans approved by security holders
            
            0*
              
              0**
            
            N/A
              
              N/A
            
            500,000
              
              1,500,000Equity
                compensation plans not approved by security holders (1)
            
            N/A
            
            N/A
            
            N/ATotal
            
            None
            
            N/A
            
            2,000,000





*****  The
      Company's Non-Employee Directors' Stock Option Plan provides that options to
      purchase 25,000 shares of Common Stock are to be granted to non-employee
      directors each year. However, these options were not granted. The company has
      received waivers of the right to receive these options from all potentially
      eligible current and former directors, except for one former director who may
      have the right to receive options to purchase 25,000 shares of Common
      Stock.





******  1,500,000
      options are available pursuant to the
      Company’s Amended Year 2000 Incentive Stock Plan.




11




**Recent
      Sales of Unregistered Securities**





In
      January 2006, the Company issued 25,000 shares of Common Stock to Michael Yung
      in exchange for his services as Chief Executive Officer and President of the
      Company during the period from June 30, 2003 to December 3, 2003.





In
      January 2006, the Company issued 200,000 shares of Common Stock to Lewis V.
      Wu
      in connection with the acquisition of Grocer2Grocer.com Corp. in 2000.





In
      January 2006, the Company issued 2,100,000, 700,000, 350,000 and 700,000 shares
      of Common Stock to Fred Hung, Jerry Li, David Liu and M.K. Chow, respectively,
      for their services rendered to the Company through December 31,
      2005.





**Item
      6. Management’s Discussion and Plan of Operations**





*The
      following discussion of the Company’s consolidated financial condition and
      results of operations as well as certain statements and information under Item
      1
“Business” include certain forward looking statements. When used in this report,
      the words “expects,” “intends,” “plans” and “anticipates” and similar terms are
      intended to identify forward looking statements that relate to the Company’s
      future performance. Such statements involve risks and uncertainties. The
      Company’s actual results may differ materially from the results discussed here.*




**Overview**




Yifan
      Communications, Inc. was an Internet communications, e-commerce and software
      development company organized to provide a variety of software products and
      Internet services tailored to the specific needs of the Chinese-speaking
      population in North America. Over the years, the Company developed and acquired
      several websites, four of which are currently being maintained but none of
      which
      conduct any transactions.





As
      of
      December 31, 2003, the Company discontinued all of its operations and became
      a
      development stage company. Since that time, Yifan has devoted all of its efforts
      to develop or acquire a new line of business through business combination
      transactions. There has been no significant revenue since December 31, 2003
      except for a nominal amount of sub-lease income.





Since
      December 2003, when the Company ceased all revenue producing operating
      activities, the principal activity of the Company has been to seek other
      economic opportunities, including but not limited to the possibility of a
      business combination. During this period, the Board of Directors decided to
      retain the services of certain personnel and external professionals. Myint
      J.
      Kyaw (aka Jeffrey Wu), our current Chief Executive Officer and Chairman of
      the
      Board of Directors, has advanced working capital funds to the Company in order
      to facilitate this plan (the “Kyaw Loan”).





In
      2004
      and 2005, the Company was a development stage company and operations were
      principally maintaining a lease and sub-lease income and incurring expenses
      in
      connection with the efforts to acquire a new line of business through business
      combination transactions.





On
      December 21, 2005, Yifan (BVI), Inc. was formed and incorporated under the
      laws
      of the British Virgin Islands. Yifan (BVI), Inc. is an inactive wholly owned
      subsidiary of Yifan Communications, Inc. The Company intends to use Yifan (BVI),
      Inc. as a vehicle to consummate any future business combinations.




12





**Results
      of Operations**





**For
      Year Ended December 31, 2005 Compared to Year Ended December 31,
      2004.**





Commencing
      January 2004, the Company had no income other than sub-lease income. In January
      2004, the Company entered into a sub-lease agreement for a portion of its leased
      office space, with the permission of the landlord, for $24,000 per annum, on
      a
      month-to-month basis. In the third quarter of 2005, the office space was vacant
      for a month. The current sub-lease agreement commenced October 1, 2005 and
      continues of on a month-to-month basis. Sub-lease income was $21,000 and $24,000
      for the years ended December 31, 2005 and 2004, respectively, and is accounted
      for income offset against operating expenses for each year.





Operating
      expenses before offset of sub-lease income amounted to $615,935 for the year
      ended December 31, 2005 compared to $462,645 for the year ended December 31,
      2004. The increase $153,290 in operating expenses was primarily the result
      of
      increase in professional fees in 2005, as part of the Company’s efforts in
      filing their reports with the SEC and pursuing a business combination
      transaction. Operating expenses for year ended December 31, 2005 primarily
      consist of office rent of $171,609, professional fees of $246,988, consulting
      expense of $57,733 and salaries of $70,908. Operating expenses for year ended
      December 31, 2004 primarily consist of office rent of $220,945, professional
      fees of $50,368, consulting expense of $30,744 and salaries of
      $57,693.





In
      2004,
      Myint J. Kyaw advanced working capital to fund the operations of the Company.
      The loan balances were $895,388 and $336,055 plus accrued interest thereon
      amounting to $54,773 and $13,506 as of December 31, 2005 and 2004, respectively.
      The Kyaw Loan is due December 31, 2006 with interest at prime plus 2% (9.25%
      and
      7.25% at December 31, 2005 and 2004, respectively). Under the terms of the
      promissory notes with Mr. Kyaw, repayment of principal and interest was not
      required in 2005 and 2004. On December 6, 2005, the Board of Directors resolved
      that the loan payable may be converted to common and preferred stock at $.008
      per share. Mr. Kyaw has expressed the intent to convert the loan plus accrued
      interest.




In
      December 2005, the Company authorized the issuance of 3,875,000 shares of common
      stock at a value of $.008 per share which were granted to two current employees,
      two consultants and one former employee. The Company granted 1,050,000 shares
      of
      common stock to two employees under the Employee’s incentive Stock Plan. The
      Company recorded $8,400 as salaries which were included in the consolidated
      statements of operations for the year ended December 31, 2005. The Company
      granted 2,800,000 shares of common stock to two consultants pursuant to
      consulting agreements totaled $22,400 which was recorded as consulting expense
      and included in the consolidated statements of operations for the year ended
      December 31, 2005. 25,000 shares of common stock were issued to a former
      employee pursuant to a settlement agreement valued at $200 which was recorded
      as
      salaries and included in the consolidated statements of operations for the
      year
      ended December 31, 2005.





Net
      loss
      for the year ended December 31, 2005 was $594,935 compared to $438,645 for
      the
      year 2004. At December 31, 2005 and 2004, total outstanding shares (including
      shares to be issued) of the Company’s common stock was 17,601,951 and 13,726,951
      shares, respectively. For the years ended December 31, 2005 and 2004, weighted
      average shares outstanding were 13,823,826 and 13,726,951, respectively. Net
      loss per common share, both basic and diluted, amounted to $0.04 per share
      for
      the year ended December 31, 2005 compared to $0.03 per share for the year ended
      December 31, 2004.




13





**Liquidity,
      Capital Resources and Going Concern**





As
      of
      December 31, 2005 and 2004, the Company had 10 million authorized but unissued
      preferred shares and 100 million authorized common shares, with 13,726,951
      shares issued and outstanding as of each such date. As of December 31, 2005,
      there were 3,875,000 shares to be issued. The Company’s Board of Directors has
      the
      authority to issue all or any part of our authorized and unissued capital stock
      to raise additional capital or finance acquisitions as well as the authority
      to
      fix the rights, privileges and preferences of the preferred stock.





Up
      until
      November 2003, the Company’s operations were entirely funded by the original
      capital contributed to the Company and to a much lesser extent, cash flows
      provided by operating activities. These funding sources became inadequate for
      the Company to support its daily operations. As a result, the Kyaw Loan began
      in
      November 2003. This loan is due December 31, 2006 with interest at prime plus
      2%. For the period from November 2003 to December 31, 2005, the Kyaw Loan
      totaled $895,388 representing the only source of funds for the Company and
      remained outstanding as of December 31, 2005





The
      Company intends to continue relying on loans from Kyaw to finance its operations
      until it can successfully complete a business combination transaction. The
      Company may also issue additional common or preferred shares to raise additional
      funds to finance new business acquisitions or to pay for professional fees
      or
      other costs associated with such acquisitions. There is no assurance, however,
      that additional financing from these sources can be obtained on acceptable
      terms
      or that a business combination transaction can be completed.





On
      January 26, 2006, the Board of Directors designated a class of Series A
      Convertible Preferred Stock authorizing 100,000 shares. The Company was
      permitted by the Board to convert up to the maximum amount of the loan payable
      to Kyaw into shares of common stock and shares of Series A Preferred stock
      at
      $.008 per share.





The
      Company’s consolidated financial statements have been presented assuming that
      the Company will continue as a going concern. As shown in the accompanying
      consolidated financial statements, the Company has incurred cumulative losses
      of
      $3,569,004 through December 31, 2005, and the Company had a working capital
      deficiency of $132,018. These conditions raise substantial doubt about the
      Company’s ability to continue as a going concern and as a result, the Company’s
      independent registered public accounting firm included an explanatory paragraph
      in its report on the Company’s consolidated financial statements for the year
      ended December 31, 2005 with respect to this uncertainty. Its ability to do
      so
      is dependent on finding economic opportunities that will achieve profitable
      operations, and to obtain any necessary financing. The accompanying consolidated
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty





Reverse
      Stock Split





The
      Board
      of Directors resolved it to be in the best interest of the Company and to
      present to the stockholders for their ratification and approval a reverse stock
      split. Each issued and outstanding share of common stock will be converted
      on a
      one-for-seven basis into .1428571428 of a share of common stock. The
      stockholders’ meeting to ratify and approve this matter is still
      pending.




14




Proforma
      net loss per share amounts on a post-split basis for the years ended December
      31, 2005 and 2004 would as follows:


**2005**
              
              **2004**Basic
                  and diluted:As
                  reported
              
              $
              (0.04
              )
              $
              (0.03
              )Proforma
                  (Unaudited)
              
              $
              (0.28
              )
              $
              (0.22
              )Weighted
                  average shares outstanding:As
                  reported
              
              
              13,823,826
              
              
              13,726,951Proforma
                  (Unaudited)
              
              
              1,974,832
              
              
              1,960,993





**Critical
      Accounting Policies and Estimates**





Management’s
      discussion and analysis of the Company’s consolidated financial condition and
      results of operations are based on its consolidated financial statements, which
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America. The preparation of these consolidated financial
      statements requires the Company to make estimates and assumptions that affect
      the reported amounts of assets and liabilities and the disclosure of contingent
      assets and liabilities at the date of the consolidated financial statements,
      as
      well as the revenues and expenses during the reporting periods. The Company
      evaluates its estimates and judgments on an ongoing basis. The Company bases
      its
      estimates on historical experience and on various other factors it believes
      are
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying value of assets and liabilities that are
      not
      readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.





**Sub-lease
      Income Recognition**





The
      Company maintains its financial records on the accrual basis of accounting.
      Sub-lease income is recognized as rentals become due. Sub-lease rent payments
      received in advance are deferred until earned. The sub-lease between the Company
      and the tenant is considered to be an operating lease. The sub-lease agreement
      is on a month to month basis.





**Income
      Taxes**





Assessment
      of the appropriate amount and classification of income taxes is dependent on
      several factors, including estimates of the timing and probability of
      realization of deferred income taxes and the timing of income tax payments.
      This
      process requires the Company to estimate its actual current tax exposure
      together with an assessment of temporary differences resulting from differing
      treatment of items, such as depreciation on property, plant and equipment,
      for
      tax and accounting purposes. These differences result in deferred tax assets
      and
      liabilities, which are included within our balance sheet. Since the Company
      has
      net operating losses carryforward at December 31, 2005 and 2004, a valuation
      allowance is provided on deferred tax assets if it is determined that it is
      more
      likely than not the asset will not be realized, because the ultimate realization
      of any deferred tax assets will be dependent on future taxable
      income.




15





**Item
      7. Financial Statements.**





**TABLE
      OF CONTENTS**





**Page(s)**Report
                of Independent Registered Public Accounting Firm
            F-1Consolidated
                Balance SheetsDecember
                31, 2005 and 2004
            F-2Consolidated
                Statements of OperationsFor
                the Years Ended December 31, 2005 and 2004Cumulative
                Period from January 1, 2004 to December 31, 2005
            F-3Consolidated
                Statements of Cash FlowsFor
                the Years Ended December 31, 2005 and 2004Cumulative
                Period from January 1, 2004 to December 31, 2005
            F-4Consolidated
                Statements of Stockholders’ DeficiencyFor
                the Years Ended December 31, 2005 and 2004Cumulative
                Period from January 1, 2004 to December 31, 2005
            F-5Notes
                to Consolidated Financial Statements
            F-6
                - F-15








16







REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








TO
      THE
      BOARD OF DIRECTORS AND STOCKHOLDERS OF


YIFAN
      COMMUNICATIONS, INC.





We
      have
      audited the accompanying consolidated balance sheets of Yifan Communications,
      Inc. (A Development Stage Company) as of December 31, 2005 and 2004 and the
      related consolidated statements of operations, stockholders' deficiency and
      cash
      flows for each of the two years in the period ended December 31, 2005. These
      consolidated financial statements are the responsibility of the Company's
      management. Our responsibility is to express an opinion on these consolidated
      financial statements based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. We were not engaged to perform
      an
      audit of the Company's internal control over financial reporting. Our audits
      include consideration of internal control over financial reporting as a basis
      for designing audit procedures that are appropriate in the circumstances, but
      not for the purpose of expressing an opinion on the effectiveness of the
      Company's internal control over financial reporting. Accordingly, we express
      no
      such opinion. An audit also includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the financial statements, assessing
      the accounting principles used and significant estimates made by management,
      as
      well as evaluating the overall financial statement presentation. We believe
      that
      our audits provide a reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of Yifan
      Communications, Inc. (A Development Stage Company) at December 31, 2005 and
      2004
      the consolidated results of its operations and its cash flows for each of the
      two years in the period ended December 31, 2005 in conformity with accounting
      principles accepted in the United States of America.





The
      accompanying consolidated financial statements referred to above have been
      prepared assuming that the Company will continue as a going concern. As
      discussed in Note 2 to the consolidated financial statements, the Company's
      recurring net losses from operations and working capital deficiency raise
      substantial doubt about its ability to continue as a going concern. Management's
      plan in regard to these matters is also described in Note 2. The consolidated
      financial statements do not include any adjustments that might result from
      the
      outcome of this uncertainty.









February
      4, 2006




F-1




**YIFAN
      COMMUNICATIONS, INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**





**CONSOLIDATED
      BALANCE SHEETS**


**DECEMBER
      31, 2005 AND 2004**


**2005**
              
              **2004****ASSETS**Current
                  Assets:Cash
              
              $
              8,527
              
              $
              8,182Sublease
                  rent receivable
              
              
              6,000
              
              
              —Prepaid
                  expense
              
              
              4,000
              
              
              —Total
                  Current Assets
              
              
              18,527
              
              
              8,182Property
                  and equipment, at cost(net
                  of accumulated depreciation and amortizationof
                  $5,143 in 2005 and $2,150 in 2004)
              
              
              9,824
              
              
              12,817Total
                  Assets
              
              $
              28,351
              
              $
              20,999**LIABILITIES
                  AND STOCKHOLDERS' DEFICIENCY**Current
                  Liabilities:Accounts
                  payable and accrued expenses
              
              $
              147,545
              
              $
              157,491Franchise
                  taxes payable
              
              
              3,000
              
              
              —Tenant
                  deposit
              
              
              —
              
              
              2,000Total
                  Current Liabilities
              
              
              150,545
              
              
              159,491Long-term
                  liabilities:Deferred
                  rent
              
              
              164,216
              
              
              143,316Loans
                  from stockholder
              
              
              895,388
              
              
              336,0551,059,604
              
              
              479,371Total
                  Liabilities
              
              
              1,210,149
              
              
              638,862Stockholders'
                  Deficiency:Preferred
                  stock $.008 par value,Authorized
                  - 10,000,000 sharesIssued
                  and outstanding - none
              
              
              —
              
              
              —Common
                  stock $.008 par value,Authorized
                  - 100,000,000 shares;
              
              
              109,816
              
              
              109,816Issued
                  and outstanding - 13,726,951 sharesCommon
                  stock to be issued - 3,875,000 shares
              
              
              31,000
              
              
              —Additional
                  paid-in capital
              
              
              2,246,390
              
              
              2,246,390Deficit
                  accumulated during development stage
              
              
              (3,569,004
              )
              
              (2,974,069
              )Total
                  Stockholders' Deficiency
              
              
              (1,181,798
              )
              
              (617,863
              )Total
                  Liabilities and Stockholders' Deficiency
              
              $
              28,351
              
              $
              20,999




**The
      accompanying notes are an integral part of the consolidated financial
      statements.**




F-2




**YIFAN
      COMMUNICATIONS, INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**Cumulative****Period
                  from****Year
                  Ended**
              
              **Year
                  Ended**
              
              **January
                  1, 2004 to****December
                  31, 2005**
              
              **December
                  31, 2004****(A)**
              
              **December
                  31, 2005****(A)**Revenue
              
              $
              —
              
              $
              —
              
              $
              —Expenses:Operating
                  expenses
              
              
              594,935
              
              
              438,645
              
              
              1,033,580594,935
              
              
              438,645
              
              
              1,033,580Net
                  loss
              
              $
              (594,935
              )
              $
              (438,645
              )
              $
              (1,033,580
              )Net
                  loss per share,basic
                  and diluted
              
              $
              (0.04
              )
              $
              (0.03
              )Weighted
                  averageshares
                  outstanding
              
              
              13,823,826
              
              
              13,726,951




(A)
              On
                  December 31, 2003, the Company discontinued its operations. Effectively
                  January 1, 2004, the Company became a development stage
                  company.




**The
      accompanying notes are an integral part of the consolidated financial
      statements.**




F-3




**YIFAN
        COMMUNICATIONS, INC.**
 **(A
        DEVELOPMENT STAGE COMPANY)**
 
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**




**Cumulative****Period
                  from****Year
                  Ended**
              
              **Year
                  Ended**
              
              **January
                  1, 2004 to****December
                  31, 2005**
              
              **December
                  31, 2004**
              
              **December
                  31, 2005**Cash
                  flows from operating activitiesNet
                  loss
              
              $
              (594,935
              )
              $
              (438,645
              )
              $
              (1,033,580
              )Adjustments
                  to reconcile net loss tonet
                  cash used in operating activitiesDepreciation
                  and amortization
              
              
              2,993
              
              
              2,150
              
              
              5,143Non-cash
                  stock-based compensation
              
              
              31,000
              
              
              —
              
              
              31,000Deferred
                  rent
              
              
              20,900
              
              
              19,407
              
              
              40,307(Increase)/decrease
                  in accounts receivable
              
              
              (6,000
              )
              
              253
              
              
              (5,747
              )Increase
                  in prepaid expenses
              
              
              (4,000
              )
              
              —
              
              
              (4,000
              )Increase/(decrease)
                  in accounts payable andaccrued
                  expenses
              
              
              (9,946
              )
              
              156,234
              
              
              146,288Increase
                  in franchise taxes payable
              
              
              3,000
              
              
              
              
              
              3,000(Decrease)/increase
                  in tenant deposit
              
              
              (2,000
              )
              
              2,000
              
              
              —Total
                  adjustments
              
              
              35,947
              
              
              180,044
              
              
              215,991Net
                  cash used in operating activities
              
              
              (558,988
              )
              
              (258,601
              )
              
              (817,589
              )Cash
                  flows used in investing activitiesCapital
                  expenditures
              
              
              —
              
              
              (14,967
              )
              
              (14,967
              )Net
                  cash used in investing activities
              
              
              —
              
              
              (14,967
              )
              
              (14,967
              )Cash
                  flows provided by financing activitiesProceeds
                  from stockholder loans
              
              
              559,333
              
              
              275,909
              
              
              835,242Net
                  cash provided by financing activities
              
              
              559,333
              
              
              275,909
              
              
              835,242Net
                  increase in cash
              
              
              345
              
              
              2,341
              
              
              2,686Cash,
                  beginning of year
              
              
              8,182
              
              
              5,841
              
              
              5,841Cash,
                  end of year
              
              $
              8,527
              
              $
              8,182
              
              $
              8,527Supplemental
                  disclosures:Interest
                  paid
              
              $
              —
              
              $
              —
              
              $
              —Taxes
                  paid
              
              $
              1,967
              
              $
              21,256
              
              $
              23,223




**The
      accompanying notes are an integral part of the consolidated financial
      statements.**




F-4


**YIFAN
      COMMUNICATIONS, INC.**


**(A
      DEVELOPMENT STAGE COMPANY)**





**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS’ DEFICIENCY**





**EACH
      OF THE YEARS IN THE TWO YEAR PERIOD ENDED DECEMBER 31,
      2005**


**Common
                  Stock**
              
              **Common
                  Stock to be Issued**
              
              **Additional****Paid
                  in**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit****(A)**
              
              **Total**Balance
                  - January 1, 2004 (A)
              
              
              13,726,951
              
              $
              109,816
              
              
              —
              
              $
              —
              
              $
              2,246,390
              
              $
              (2,535,424
              )
              $
              (179,218
              )Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (438,645
              )
              
              (438,645
              )Balance
                  - December 31, 2004
              
              
              13,726,951
              
              
              109,816
              
              
              —
              
              
              —
              
              
              2,246,390
              
              
              (2,974,069
              )
              
              (617,863
              )Common
                  stock to be issued forsalaries
                  and consulting fees
              
              
              —
              
              
              —
              
              
              3,875,000
              
              
              31,000
              
              
              —
              
              
              —
              
              
              31,000Net
                  loss
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              —
              
              
              (594,935
              )
              
              (594,935
              )Balance
                  - December 31, 2005
              
              
              13,726,951
              
              $
              109,816
              
              
              3,875,000
              
              $
              31,000
              
              $
              2,246,390
              
              $
              (3,569,004
              )
              $
              (1,181,798
              )





(A)
              On
                  December 31, 2003, the Company discontinued its operations. Effectively
                  January 1, 2004, the Company became a development stage
                  company.








**The
      accompanying notes are an integral part of the consolidated financial
      statements.**




F-5




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      1** - **Organization
      and a Development Stage Company**





In
      July
      2000, Yifan Communications, Inc. (“Yifan” or “the Company”) (incorporated in
      Ohio in 1991 and became a Delaware corporation since 1996) and Yifan.Com Inc,
      a
      New York Corporation, completed a business combination accounted for as a
      reverse acquisition, in which Yifan was the legal acquirer and Yifan.Com Inc.
      was the accounting acquirer under the generally accepted accounting principles
      in the United States of America.





Yifan
      was
      an internet communications, e-commerce and software development company
      organized to provide a variety of software products and internet services
      tailored to the specific needs of the Chinese-speaking population in North
      America. The Company’s first website “yifan.com” was originally created in 1997.
      The Company still maintains four inactive websites and they are “yifan.com”,
“yifan.net”, “yifannet.com” and “yifanmall.com”. These websites are still being
      maintained but no longer accept any customer transactions. These websites were
      developed by the Company before December 31, 2003. In October 2000, the Company
      acquired the grocer2grocer website from a brother of the Company’s major
      stockholder which specialized in business to business internet transactions
      for
      the grocery industry. This site is no longer being maintained by the
      Company.





At
      December 31, 2003, the Company discontinued all of its operations and became
      a
      development stage company. Yifan has devoted all of its efforts to develop
      or to
      acquire a new line of business. There has been no significant revenue since
      December 31, 2003 except for a nominal amount of sub-lease income.





Since
      December 2003, when the Company ceased all revenue producing operating
      activities, the principal activity of the Company, has been to seek other
      economic opportunities including but not limited to the possibility of a
      business combination. The Board of Directors during this exploration or search
      period has decided to retain the services of certain personnel and external
      professionals. A major stockholder has advanced working capital funds to the
      Company in order to facilitate this plan.





On
      December 21, 2005, Yifan (BVI), Inc. was formed and incorporated under the
      laws
      of the British Virgin Islands. Yifan (BVI), Inc. is an inactive wholly owned
      subsidiary of Yifan Communications, Inc. The Company intends to use Yifan (BVI),
      Inc. as a vehicle to consummate any future business combinations.





**Note
      2 - Going Concern**





The
      Company’s consolidated financial statements have been presented assuming that
      the Company will continue as a going concern. As shown in the accompanying
      consolidated financial statements, the Company has incurred cumulative losses
      of
      $3,569,004 through December 31, 2005, and the Company had a working capital
      deficiency of $132,018. These conditions indicate that the Company may be unable
      to continue as a going concern. Its ability to do so is dependent on finding
      economic opportunities that will achieve profitable operations, and to obtain
      any necessary financing.




F-6





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      2 - Going Concern (continued)**





The
      accompanying consolidated financial statements do not include any adjustments
      that might result from the outcome of this uncertainty. Our independent
      registered public accounting firm has referred to the substantial doubt about
      our ability to continue as a going concern in their audit report on our
      consolidated financial statements included with this Annual Report on Form
      10-KSB with respect to this uncertainty.





**Note
      3 - Summary of Significant Accounting Polices**





(a)   Basis
      of
      Presentation and Use of Estimates





These
      consolidated financial statements include the accounts of the Company and its
      wholly owned inactive subsidiaries (Yifan.Com, Inc. and Yifan (BVI), Inc.).
      The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the dates of the financial statements and the reported amounts of revenue and
      expenses during the reporting period. Actual results could differ from those
      estimates.





(b)   Concentration
      of credit risk





The
      Company maintains cash balances in bank deposit accounts at high quality
      financial institutions that may at times exceed federally insured limits. The
      individual balances are insured by the Federal Deposit Insurance Corporation
      up
      to $100,000 per institution. The Company has not experienced any losses in
      such
      accounts. The Company considers all highly liquid investments purchased with
      an
      original maturity of three months or less to be cash equivalents. The Company
      did not have any cash equivalents at December 31, 2005 and 2004.





Financial
      instruments that potentially subject the Company to concentration of credit
      risk
      consist of rent receivable. The Company performs ongoing credit evaluations
      and
      maintains reserve for potential credit losses.





(c)   Fair
      value of financial instruments





The
      carrying values of financial instruments including cash, rent receivable and
      accounts payable approximate fair value due to the relatively short maturities
      of these instruments.





(d)   Property
      and equipment





Property
      and equipment consist of furniture and fixture and computer equipment, are
      stated at cost. Depreciation is computed using the straight-line method over
      the
      estimated useful lives of the assets over five years. When assets are retired
      or
      otherwise disposed of, the cost and the related accumulated depreciation are
      removed from the accounts and any resulting gain or loss is recognized. The
      cost
      of maintenance and repairs are charged to expense as incurred while additions
      and improvements that extend the life of the assets are capitalized.




F-7




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      3 - Summary of Significant Accounting Polices (continued)**





(e)   Sub-lease
      Income Recognition





The
      Company maintains its financial records on the accrual basis of accounting.
      Sub-lease income is recognized as rentals become due. Sub-lease rent payments
      received in advance are deferred until earned. The sub-lease between the Company
      and the tenant is considered to be an operating lease. The Company offsets
      its
      sub-lease income against the rent expense (See Note 9).





(f)   Valuation
      of long-lived assets





The
      Company’s method under current accounting rules for measuring impairment of
      long-lived assets is on an undiscounted cash flow basis. Long-lived assets
      held
      and used by the Company are reviewed for impairment when events or changes
      in
      circumstances indicate that their carrying amount may not be recoverable.
      Circumstances which can trigger a review include, among other conditions, cash
      flow deficits, historic or anticipated decline in revenue or operating profit
      and a material decrease in fair value of some or all of the assets. If such
      impairment exists, the carrying value of the assets is reduced to its estimated
      fair value based on discounted cash slows. Such a review has been performed
      by
      management and does not indicate an impairment of such assets.





(g)   Income
      Taxes





Income
      taxes are accounted for under the liability method whereby deferred tax asset
      and liability account balances are calculated at the balance sheet date using
      current tax laws and rates for the year in which the differences are expected
      to
      affect taxable income. A valuation allowance is recorded to reduce the carrying
      amounts of deferred tax assets if it is more likely than not that such assets
      will not be realized. In addition, if the Company’s Board of Directors pursue a
      future corporate reorganization or other change in corporate ownership that
      will
      cause the ownership change by 50% or more, then the use of certain net operating
      loss carryforwards may be limited.





(h)   Net
      loss
      per share





Net
      loss
      per common share is computed in accordance with the provisions of SFAS No.
      128,
“Earnings per Share”. SFAS No. 128 establishes standards for the computation,
      presentation, and disclosure of earnings (loss) per share. Basic per share
      amounts are computed by dividing the net loss available to common stockholders
      by the weighted average number of common shares outstanding during the year.
      Diluted per share amounts incorporate the incremental shares issuable upon
      the
      assumed exercise of the Company’s stock options and warrants and assumed
      conversion of the convertible securities. To date, there have been no stock
      options or warrants granted.





(i)  Reclassifications





Certain
      prior year amounts have been reclassified to conform to current year
      classifications.




F-8





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      4 - Accounts payable and accrued expenses**





Accounts
      payable and accrued expenses consists of:


**2005**
              
              **2004**Rent
              
              $
              —
              
              $
              98,529Professional
                  fees
              
              
              90,262
              
              
              44,293Interest
              
              
              54,773
              
              
              13,506Other
              
              
              2,510
              
              
              1,163$
              147,545
              
              $
              157,491





**Note
      5 - Stock Based Compensation**





The
      Company has an Employee’s Incentive Stock Plan under which stock options,
      performance shares, restricted stock and other awards in common stock are
      granted, and a Director’s Stock Option Plan, which are described more fully
      below. Effective January 1, 2003, the Company adopted the fair value recognition
      provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
“Accounting for Stock-Based Compensation”. To date, no stock options relating to
      the Employee’s Incentive Stock Plan or Director Stock Option Plan, as described
      below, have been granted. As of December 31, 2005, 1,050,000 shares of common
      stock were granted relating to the Employee’s Incentive Stock Plan.





(a)  Employee’s
      Incentive Stock Plan





Full-time
      employees of the Company and its subsidiary, including officers and employee
      directors, are eligible to participate in the Company’s Incentive Stock Plan
      (the “Plan”), which provides for the grant of incentive equity awards covering
      up to 1,500,000 shares of common stock. The Plan provides for the grant of
      (i)
      non-qualified stock options, (ii) incentive stock options, (iii) shares of
      restricted stock, (iv) shares of phantom stock and (v) stock bonuses
      (collectively, “Incentive Awards”). In addition, the Plan permits the grant of
      cash bonuses payable when a participant is required to recognize income for
      federal income tax purposes in connection with the vesting of shares of
      restricted stock or the grant of a stock bonus. A committee of the Board of
      Directors administers the Plan and has the power to determine, in its
      discretion, the number of shares subject to each incentive grant and the terms
      of the incentive grant.





(b)  Director’s
      Stock Option Plan





The
      Non-Employee Directors’ Stock Option Plan provides options to purchase 25,000
      shares of common stock to be granted to non-employee directors each year.
      However, these options were not granted. The Company has received waivers of
      the
      right to receive these options from all potentially eligible current and former
      directors, except for one former director who may have the right to receive
      options to purchase 25,000 shares of common stock.




F-9




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      6 - Income Taxes**





A
      100%
      valuation allowance was provided at December 31, 2005 and 2004 as it is
      uncertain if the deferred tax assets would be utilized. The increase in the
      valuation allowance was primarily due to the increase in the net operating
      loss
      carryforward. Federal net operating loss carryforwards were approximately
      $3,016,000 as of December 31, 2005. Such loss carry forwards expire in
      accordance with provisions of applicable tax laws and have remaining lives
      ranging from 18 to 20 years. The component of deferred tax assets at December
      31, 2005 and 2004 is as follows:


**2005**
              
              **2004**Net
                  operating lossCarry
                  forwards
              
              $
              935,000
              
              $
              765,600Deferred
                  rent
              
              
              50,900
              
              
              —Valuation
                  allowances
              
              
              (985,900
              )
              
              (765,600
              )Deferred
                  tax assets
              
              $
              —
              
              $
              —








**Note
      7 - Common Stock to be issued**





In
      December 2005, the Company authorized the issuance of 3,875,000 shares of common
      stock at a value of $.008 per share which were granted to two current employees,
      two consultants and one former employee. The Company granted 1,050,000 shares
      of
      common stock to two employees for year 2005 bonuses under the Employee’s
      incentive Stock Plan. The Company recorded $8,400 as salaries which were
      included in the consolidated statements of operations for the year ended
      December 31, 2005. The Company granted 2,800,000 shares of common stock to
      two
      consultants pursuant to consulting agreements totaled $22,400 for services
      rendered for the period October 1, 2005 through December 31, 2005, which was
      recorded as consulting expense and included in the consolidated statements
      of
      operations for the year ended December 31, 2005. 25,000 shares of common stock
      were issued to a former employee pursuant to a settlement agreement valued
      at
      $200 which was recorded as salaries and included in the consolidated statements
      of operations for the year ended December 31, 2005.




F-10





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      8 - Operating Expenses**





For
      the
      years ended December 31, 2005 and 2004, the Company incurred the following
      operating expenses:


**2005**
              
              **2004**Rent,
                  net of Sub-lease income
              
              $
              150,069
              
              $
              196,945Salaries
              
              
              70,908
              
              
              57,693Professional
                  fees
              
              
              246,988
              
              
              50,368Consulting
                  fees
              
              
              57,733
              
              
              30,744Other
              
              
              69,237
              
              
              102,895$
              594,935
              
              $
              438,645








**Note
      9 - Rental Expenses and Sub-lease Income**





The
      Company leases office space in New York City from a major stockholder which
      expires on December 31, 2010.





Under
      the
      terms of the lease which extends until December 31, 2010, the Company is
      required to pay rent beginning on January 1, 2004. The Company was given a
      rent
      payment holiday from July 1, 2003 to December 31, 2003. The Company is required
      to pay monthly the accounted portion of the fixed rent plus any additional
      rent
      pursuant to the terms of the lease. The lease provides for rent escalation
      clauses (step rents) over the term. Rent expense is recognized on a
      straight-line basis over the minimum lease term. Rent expense was $171,069
      and
      $220,945 for the years ended December 31, 2005 and 2004,
      respectively.





The
      Company’s commitment on a non-cancelable lease as of December 31, 2005 is as
      follows:


**Year
                  Ending**2006
              
              
              197,0592007
              
              
              214,9732008
              
              
              232,8882009
              
              
              250,8022010
              
              
              268,717




F-11





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      9 - Rental Expenses and Sub-lease Income (continued)**





Sub-lease:





Under
      the
      terms of the lease, the Company can sub-lease, with the permission of the
      landlord, a portion of its rental area. From January 1, 2004 through August
      14,
      2005, the Company sub-leased a portion of the premises on a month to month
      basis
      for $2,000 per month. In August 2005, the company entered into a new sub-lease
      agreement for a portion of its space area, effective October 1, 2005, for
      $24,000 per annum with 3% per annum rent accelerations should the sub-lease
      continue for more than one (1) year. The sublease is on a month-to-month
      basis.





Sub-lease
      income offset against operating expenses for the year ended December 31, 2005
      and 2004, and for the cumulative period from January 1, 2004 to December 31,
      2005 was $21,000, $24,000 and, $45,000, respectively.





**Note
      10 - Related Party Transactions**





During
      the years 2005 and 2004, a major stockholder advanced working capital funds
      to
      the Company. The loans are due December 31, 2006 with interest at prime plus
      2%
      (9.25% and 7.25% at December 31, 2005 and 2004, respectively). The loan balances
      at December 31, 2005 and 2004 were $895,388 and $336,055, respectively. The
      related interest expense was $41,267 and $13,190 for the years ended December
      31, 2005 and 2004, respectively, and is included in accounts payable and accrued
      expenses.





On
      December 6, 2005 and January 26, 2006, the Board of Directors approved that
      the
      loan payable to this shareholder may be converted to common and preferred stock
      at $.008 per share and the stockholder has expressed the intent to convert
      the
      principal balance plus interest. The loan is classified as long term liability
      as of December 31, 2005.





During
      the year ended 2004, the Company purchased office furniture of approximately
      $12,000 from a company owned by a director of Yifan Communications,
      Inc.





**Note
      11 - Recent Issued Accounting Pronouncements**





SFAS
      No. 123 (Revised 2004) (“SFAS No. 123R”), “Share-Based Payment,”
issued in December 2004, is a revision of FASB Statement 123, “Accounting for
      Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting
      for Stock Issued to Employees,” and its related implementation guidance. The
      Statement focuses primarily on accounting for transactions in which an entity
      obtains employee services in share-based payment transactions. SFAS
      No. 123R requires a public entity to measure the cost of employee services
      received in exchange for an award of equity instruments based on the grant-date
      fair value of the award (with limited exceptions). That cost will be recognized
      over the period during which an employee is required to provide service in
      exchange for the award. On March 29, 2005, the SEC issued Staff Accounting
      Bulletin No. 107 (“SAB No. 107”), which provides the Staff’s views
      regarding interactions between SFAS No. 123R and certain SEC rules and
      regulations and provides interpretations of the valuation of share-based
      payments for public companies.




F-12




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      11 - Recent Issued Accounting Pronouncements (continued)**





SFAS
      No. 123(R) permits public companies to adopt its requirements using one of
      two methods:




(1)
      A
“modified prospective” method in which compensation cost is recognized beginning
      with the effective date (a) based on the requirements of SFAS
      No. 123(R) for all share-based payments granted after the effective date
      and (b) based on the requirements of SFAS No. 123 for all awards
      granted to employees prior to the effective date of SFAS No. 123(R) that
      remain unvested on the effective date.




(2)
      A
“modified retrospective” method which includes the requirements of the modified
      prospective method described above, but also permits entities to restate based
      on the amounts previously recognized under SFAS No. 123 for purposes of pro
      forma disclosures either (a) all prior periods presented or (b) prior
      interim periods of the year of adoption.





This
      statement is effective for the beginning of the first annual reporting period
      that begins after June 15, 2005, therefore, we will adopt the standard in
      the first quarter of fiscal 2006 and plan to use the modified prospective
      method. SFAS No. 123(R) also requires the benefits of tax deductions in
      excess of recognized compensation cost to be reported as a financing cash flow,
      rather than as an operating cash flow as required under current literature.
      This
      requirement will reduce net operating cash flows and increase net financing
      cash
      flows in periods after adoption.





At
      this
      time management does not believe that the adoption of SFAS No. 123(R) will
      materially impact our consolidated operating results, nor will there be any
      impact on our future consolidated cash flows.





In
      February 2006, the FASB issued FSP FAS 123(R)-4, Classification of Options
      and
      Similar Instruments Issued as Employee Compensation That Allow for Cash
      Settlement upon the Occurrence of a Contingent Event. Within certain share-based
      payment plans, a company can be required to settle outstanding options upon
      the
      occurrence of certain events, such as a change in control or liquidity of a
      company or the death or disability of the shareholder. This FSP amends
      paragraphs 32 and A229 of SFAS No. 123(R) to incorporate a profitability
      assessment by a company. Under SFAS No. 123(R), it is required that options
      and
      similar instruments be classified as liabilities if the entity can be required
      under any circumstances to settle the instrument in cash or other assets. Under
      the FSP, a cash settlement feature that can be exercised only upon the
      occurrence of a contingent event that is outside of the employee’s control does
      not meet the criteria for liability classification, and should remain to be
      classified in equity, unless it becomes probable that the contingent event
      will
      occur. The effective date for the guidance in this FSP is upon the initial
      adoption of SFAS No. 123(R). We will adopt this FSP in conjunction with the
      adoption of SFAS No. 123(R).




F-13




**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      11 - Recent Issued Accounting Pronouncements (continued)**





In
      December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary
      Assets”, an amendment of APB Opinion No. 29. SFAS 153 eliminates the
      exception from fair value measurement for nonmonetary exchanges of similar
      productive assets in paragraph 21 (b) of APB Opinion No. 29,
“Accounting for Nonmonetary Transactions” (““APB 29”), and replaces it with an
      exception for exchanges that do not have commercial substance. SFAS 153
      specifies that a nonmonetary exchange has commercial substance if the future
      cash flows of the entity are expected to change significantly as a result of
      the
      exchange. SFAS 153 is effective for the fiscal periods beginning after
      June 15, 2005 and was required to be adopted by the Company in the third
      quarter of 2005. The adoption of SFAS No. 153 did not have an impact on our
      consolidated financial position or consolidated results of operations.





In
      March
      2005, the FASB issued FIN No. 47, “Accounting for Conditional Asset
      Retirement Obligations - an interpretation of FASB Statement No. 143
“Accounting for Asset Retirement Obligations (“SFAS No. 143”)” (“FIN 47”).
      FIN 47 clarifies that the term conditional asset retirement obligation as used
      in SFAS No. 143, refers to a legal obligation to perform an asset
      retirement activity in which the timing and (or) method of settlement are
      conditional on a future event that may or may not be within the control of
      the
      entity. Accordingly, an entity is required to recognize a liability for the
      fair
      value of a conditional asset retirement obligation if the fair value of the
      liability can be reasonably estimated. The liability for the conditional asset
      retirement obligation should be recognized when incurred. This Interpretation
      also clarifies when an entity would have sufficient information to reasonably
      estimate the fair value of an asset retirement obligation. FIN 47 is effective
      for fiscal periods beginning after December 15, 2005, and we will adopt
      this provision, as applicable, during fiscal year 2006.





In
      May
      2005, the FASB issued SFAS No. 154, “Accounting Changes and Error
      Corrections - A Replacement of APB Opinion No. 20 and FASB Statement
      No. 3” (“SFAS No. 154”). SFAS No. 154 requires the retrospective
      application to prior periods’ financial statements of changes in accounting
      principle, unless it is impracticable to determine either the period-specific
      effects or cumulative effect of the accounting change. SFAS No. 154 also
      requires that a change in depreciation, amortization, or depletion method for
      long-lived non-financial assets be accounted for as a change in accounting
      estimate affected by a change in accounting principle. SFAS No. 154 is
      effective for accounting changes and corrections of errors made in fiscal years
      beginning after December 15, 2005 and we will adopt this provision, as
      applicable, during fiscal year 2006.





In
      November 2005, the FASB issued Staff Position No. 115-1, “The Meaning of Other
      Than Temporary Impairment and its Application to Certain Investments” (“FSP
      115-1”). FSP 115-1 provides accounting guidance for determining and measuring
      other-than-temporary impairments of debt and equity securities, and confirms
      the
      disclosure for investments in unrealized loss positions as outlined in EITF
      03-01, “The Meaning of Other-Than-Temporary Impairments ands its Application tom
      Certain Investments”. The accounting requirements are effective for us on
      January 1, 2006 and will not have a material impact on our financial position
      or
      cash flows.




F-14





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**Note
      12 - Subsequent events**





On
      January 26, 2006, the Board of Directors authorized and resolved the
      following:





(a) Series
        A
        Preferred Stock and Conversion of Loan Payable to stockholder





The
      Company is authorized to issue up to 10,000,000 shares of Preferred Stock.
      On
      January 26, 2006, the Board of Directors authorized the designation of “Series A
      Preferred Stock” of 100,000 shares. The Board of Directors also permitted the
      Company to convert up to the maximum of the amount of the loan payable to
      stockholder into shares of common stock and Series A Preferred
      stock.





(b) Reverse
        Stock Split





The
      Board
      of Directors resolved it to be in the best interest of the Company and to
      present to the shareholders for their ratification and approval a reverse stock
      split. Each issued and outstanding share of common stock will be converted
      on a
      one-for-seven basis into .1428571428 of a share of common stock. The
      stockholders’ meeting to ratify and approve this matter is still
      pending.





Proforma
      net loss per share amounts on a post-split basis for the years ended December
      31, 2005 and 2004 would as follows:


**2005**
              
              **2004**Basic
                  and diluted:As
                  reported
              
              $
              (0.04
              )
              $
              (0.03
              )Proforma
                  (Unaudited)
              
              $
              (0.28
              )
              $
              (0.22
              )Weighted
                  average shares outstanding:As
                  reported
              
              
              13,823,826
              
              
              13,726,951Proforma
                  (Unaudited)
              
              
              1,974,832
              
              
              1,960,993






F-15





**Item
      8. Changes in and Disagreements with Accountants on Accounting and Financial
      Disclosure.**





The
      Company engaged Friedman LLP, New York, New York, as its new independent
      registered public accounting firm as of November 15, 2005. The Company filed
      a
      current report on Form 8-K with the SEC on November 21, 2005 to this effect.




**Item
      8A. Controls and Procedures.**





The
      Company’s management is responsible for establishing and maintaining a system of
      disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e)
      under the Exchange Act) that is designed to ensure that information required
      to
      be disclosed by the Company in the reports that the Company files or submits
      under the Exchange Act is recorded, processed, summarized and reported, within
      the time periods specified in the Commission’s rules and forms. Disclosure
      controls and procedures include, without limitation, controls and procedures
      designed to ensure that information required to be disclosed by an issuer in
      the
      reports that it files or submits under the Exchange Act is accumulated and
      communicated to the issuer’s management, including its principal executive
      officer or officers and principal financial officer or officers, or persons
      performing similar functions, as appropriate to allow timely decisions regarding
      required disclosure.





In
      accordance with Exchange Act Rules 13a-15 and 15d-15, an evaluation was
      completed under the supervision and with the participation of the Company’s
      management, including the Company’s President and Secretary, of the
      effectiveness of the design and operation of the Company’s disclosure controls
      and procedures as of the end of the period covered by this Annual Report. Based
      on that evaluation, the Company’s management including the President, Principal
      Financial Officer and Secretary, concluded that the Company’s disclosure
      controls and procedures are effective, to provide reasonable assurance that
      information required to be disclosed in the Company’s reports filed or submitted
      under the Exchange Act is recorded, processed, summarized, and reported within
      the time periods specified in the Commission’s rules and forms. There have been
      no changes to the Company’s internal controls over financial reporting that
      occurred during our last fiscal quarter of the year ended December 31, 2005,
      that materially affected, or were reasonably likely to materially affect, our
      internal controls over financial reporting.





**Item
      8B. Other Information.** None.





**Part
      III**





**Item
      9. Directors and Executive Officers of the Registrant.**





(a)
      Identification of Directors and Executive Officers. The following table sets
      forth certain information regarding Yifan’s directors and executive officers for
      the fiscal year ended 2005:





**Name**
            **Age**
            **Position**
            **Term**Myint
                J. Kyaw
              (aka
                Jeffrey Wu)
            41
            Chief
                Executive Officer, Secretary
              and
                Director
            December
                9, 2003 thru present
              July
                28, 2000 thru presentGuan
                Liang
            44
            President,
                Director
            December
                11, 2003 thru presentSamuel
                Yen
            59
            Chief
                Financial Officer
            January
                1, 2006 thru present





17


The
      Company’s officers and directors are elected annually for a one year term or
      until their respective successors are duly elected and qualified  or
      until
      their earlier resignation or removal.





Myint
      J.
      Kyaw (aka Jeffrey Wu)





Chief
                Executive Officer, Secretary
            December
                9, 2003 thru presentDirector
            July
                28, 2000 thru presentVice
                President
            July
                28, 2000 thru December 9, 2003





Myint
      J.
      Kyaw (aka Jeffrey Wu) has been the Company’s Chief Executive Officer and
      Secretary since December 2003 and has been Chairman of the Board of Directors
      since July 2000. From July 2000 through December 2003, Mr. Kyaw was a Vice
      President of the Company. From July 1985 through the date hereof, Mr. Kyaw
      has
      also been the principal shareholder and Chief Executive Officer of Mong Chong
      Loong Trading, Inc., a privately held company that is one of the largest
      oriental dry food wholesalers and distributors in the United States. Mr. Wu
      also
      owns and serves as the Chief Executive Officer of the Hong Kong Supermarket
      Group, a position he has held since December 8, 2005, which operates one of
      the
      largest Chinese specialty supermarket chains in the Northeast United States
      and
      California. In addition to the food-related businesses, Mr. Wu is actively
      involved in real estate investments, with significant holdings of commercial
      properties throughout the New York metro area. Mr. Wu emigrated to the United
      States from Burma in 1973 at the age of nine.





Guan
      Liang





Guan
      Liang, the Company’s President and Director, is currently a principal
      shareholder of Manpolo International Trading Corp, a privately owned
      importer/wholesaler/retailer of oriental furniture and worshipping item
      supplies, and has served as its President since May 1994. From 1990-1994, Mr.
      Liang was the President of Man Yin International Trading, an
      importer/wholesaler/retailer of gift items. Mr. Liang also serves as Chairman
      to
      two of the largest Chinese community associations in the Eastern US, United
      Chinese Association of Eastern US since January, 2000 and American Chinese
      Merchant Association since January 1995. Mr. Liang was born in Guangzhou, China
      and relocated to the U.S. in 1985.





Samuel
      Yen





Samuel
      Yen was appointed the Company’s Chief Financial Officer effective January 1,
      2006. From June 2004 through December 2005, Mr. Yen was the chief financial
      officer for Mong Chong Loong Trading, Inc., a privately held company that is
      one
      of the largest oriental dry food wholesalers and distributors in the United
      States. From September 2003 through May 2004, Mr. Yen was self employed as
      a
      financial consultant. Prior to that time, Mr. Yen served as the sales director
      of AOpen America, a computer hardware manufacturer and distributor, from
      December 2002 until September 2003. From February 2002 until December 2002,
      he
      served as Vice President- Display Division of Benq Americas, a computer hardware
      manufacturer and distributor. From January 2001 through January 2002, Mr. Yen
      was self employed as a financial consultant.





(b)
      Significant Employees. As of the date hereof, the Company has no significant
      employees.




(c)
      Family Relationships. None.




18




(d)
      Involvement in Certain Legal Proceedings. There have been no events under any
      bankruptcy act, no criminal proceedings and no judgments, injunctions, orders
      or
      decrees material to the evaluation of the ability and integrity of any director,
      executive officer, promoter or control person of Registrant during the past
      five
      years.




(e)
      The
      Board of Directors acts as the Audit Committee and the Board has no separate
      committees. The Company does not have a qualified financial expert at this
      time
      because it has not been able to hire a qualified candidate. Further, the Company
      believes that it has inadequate financial resources at this time to hire such
      an
      expert. The Company intends to continue to search for a qualified individual
      for
      hire.





**COMPLIANCE
      WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934**




Section 16(a)
      of the Exchange Act, as amended requires the Company’s directors and officers,
      and persons who beneficially own more than 10% of a registered class of the
      Company’s equity securities, to file reports of beneficial ownership and changes
      in beneficial ownership of the Company’s securities with the SEC on Forms 3, 4
      and 5. Officers, directors and greater than 10% stockholders are required by
      SEC
      regulation to furnish the Company with copies of all Section 16(a) forms
      they file.




Based
      solely on the Company’s review of the copies of the forms received by it during
      the fiscal year ended December 31, 2005 and written representations that no
      other reports were required, the Company believes that no person who, at any
      time during such fiscal year, was a director, officer or beneficial owner of
      more than 10% of the Company’s common stock failed to comply with all
      Section 16(a) filing requirements during such fiscal year.




**CODE
      OF ETHICS**




We
      have
      not adopted a Code of Business Conduct and Ethics that applies to our principal
      executive officer, principal financial officer, principal accounting officer
      or
      controller, or persons performing similar functions in that our sole officer
      and
      director serves in all the above capacities.





**Item
      10. Executive Compensation.**





The
      following table sets forth the cash compensation paid by the Company to its
      President and all other executive officers for services rendered during the
      fiscal years ended December 31, 2005 and 2004.





Name
                and Position
            Year
            Annual
                Compensation
            Other
                CompensationJeffrey
                Wu, Chief Executive Officer,
              Secretary
                and Director
            2005
              2004
            None
              None
            None
              NoneGuan
                Liang, President and Director
            2005
              2004
            None
              None
            None
              None





On
      September 8, 2005, the Company paid $16,000 to Yifan He in exchange for his
      services as Chief Executive Officer and President of the Company during the
      period from July 28, 2000 to June 30, 2003 and for his maintenance, hosting
      and
      operations of websites owned by the Company.




19





**Employee’s
      Incentive Stock Plan**





On
      September 22, 2000 the stockholders ratified the adoption of the Company
      Incentive Stock Plan (the “Plan”). Full-time employees of the Company and its
      subsidiaries, including officers and employee directors, are eligible to
      participate in the Plan, which provides for the grant of incentive equity awards
      covering up to 1,500,000 shares of Common Stock. The Plan provides for the
      grant
      of (i) non-qualified stock options, (ii) incentive stock options, (iii) shares
      of restricted stock, (iv) shares of phantom stock and (v) stock bonuses
      (collectively, “Incentive Awards”). In addition, the Plan permits the grant of
      cash bonuses payable when a participant is required to recognize income for
      federal income tax purposes in connection with the vesting of shares of
      restricted stock or the grant of a stock bonus. A committee of the Board of
      Directors administers the Plan and has the power to determine, in its
      discretion, the number of shares subject to each incentive grant and the terms
      of the incentive grant. No employee options were granted during the years ended
      December 31, 2005 and December 31, 2004.





**Directors’
      Stock Option Plan**





On
      September 22, 2000 the stockholders ratified the adoption of The Directors’
Option Plan, which provides for the annual grant of an option to purchase 25,000
      shares of Common Stock to each member of the Board of Directors who is not
      a
      full-time employee of the Company. Options granted under the Directors’ Option
      Plan are subject to forfeiture if the holder resigns from the Board of Directors
      or is removed for cause before the date of the next annual meeting of the
      stockholders. Options granted under the Directors’ Option Plan become fully
      vested on the date of the first annual meeting of the stockholders following
      the
      date of the grant. The total number of shares available for grant under the
      Directors’ Plan is 500,000. No options were granted during the fiscal years
      ended December 31, 2005 and December 31, 2004.





**Option
      Holdings**





We
      currently do not have any existing or proposed options/SAR grants. ****





**Director
      Compensation**





We
      do not
      currently pay any cash fees to our Directors, but we pay Directors' expenses
      in
      attending board meetings. During the year ended December 31, 2005 no director
      expenses were reimbursed.





**Employment
      Agreements**





The
      Company is not a party to any employment agreements.





**Item
      11. Security Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters.**





The
      following tables set forth certain information as of December 31, 2005,
      regarding (i) each person known by the Company to be the beneficial owner of
      more than 5% of the outstanding shares of Common Stock, (ii) each director,
      nominee and executive officer of the Company and (iii) all officers and
      directors as a group.




20





Name
                and Address
            Amount
                and Nature of
              Beneficial
                Ownership as of December 31, 2005
            Percentage
                of ClassJeffrey
                Wu
            6,293,100
                (1)
            45%Guan
                Liang
            0
            —All
                Directors and Officers as a Group (2 individuals)
            6,293,100
            45%





**(1)**  **Includes
      450,000 shares of which are indirectly held by Mr. Wu in trust for the benefit
      of his minor child.**




**Item
      12. Certain Relationships and Related Transactions.**





The
      Company leases its facilities located at 100 William Street, New York, New
      York
      from Lighthouse 100 William LLC, of which Jeffrey Wu, our Chief Executive
      Officer, Secretary and director, holds a majority ownership interest. See above
      discussion in Item 2.





On
      April
      14, 2004, the Company purchased $11,500 worth of office furniture from Manpolo
      International Trading Corp., a corporation controlled by Guan Liang, our
      President and a director.








**Item
      13. Exhibits.**





Index
      to
      Exhibits


Exhibit
              
              Description*3.1
              
              Certificate
                  of Ownership and Merger Merging Yifan Communications, Inc. into
                  Smart
                  Games Interactive, Inc.**3.2
              
              Amendment
                  to the Certificate of Incorporation***3.3
              
              By-laws4.1
              
              Certificate
                  of Designation**10.1
              
              Amended
                  Year 2000 Incentive Stock Plan**10.2
              
              Non-Employee
                  Directors’ Stock Option Plan31.1
              
              Certification
                  of the Company’s Principal Executive Officer pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual
                  Report on Form 10-KSB for the year ended December 31, 2005


21


31.2
              
              Certification
                  of the Company’s Principal Financial Officer pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Annual
                  Report on Form 10-KSB for the year ended December 31, 200532.1
              
              Certification
                  of the Company’s Principal Executive Officer pursuant to 18 U.S.C. Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes Oxley
                  Act of
                  2002.32.2
              
              Certification
                  of the Company’s Principal Financial Officer pursuant to 18 U.S.C. Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes Oxley
                  Act of
                  2002.


*
            Filed
                as an exhibit to the Company's current report on Form 8-K, as filed
                with
                theSecurities
                and Exchange Commission on July 31, 2000, andincorporated herein by this
                reference.





**
            Filed
                as an exhibit to the Company's current report on Form 8-K, as filed
                with
                theSecurities
                and Exchange Commission on September 25, 2000, andincorporated
                herein by this reference.





***
            Filed
                as an exhibit to the Company’s current report on Form 8-K, as filed with
                theSecurities
                and Exchange Commission on January 25, 2006, and incorporatedherein
                by this reference.




____________________________




**Item
      14. Principal Accountant Fees and Services**





Friedman
      LLP (“Friedman”) is the Company's independent registered public accounting firm.
      The Company's Board of Directors has considered whether the provision of audit
      services is compatible with maintaining Friedman’s independence.





AUDIT
      FEES





The
      aggregate fees billed by Friedman for professional services rendered for the
      audit of our annual financial statements and review of financial statements
      included in our Form 10-KSB's or services that are normally provided in
      connection with statutory and regulatory filings were $108,465 for fiscal years
      2004 and 2003, and none for fiscal year 2005.





AUDIT-RELATED
      FEES





In
      fiscal
      2005, Friedman fees billed for other services were $38,953, which included
      a due
      diligence performed on two companies in China.





ALL
      OTHER
      FEES





In
      fiscal
      2005 and 2004, Friedman fees billed for other services were $0.




22





**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.




**Yifan
                Communications, Inc.**Dated:
                March 14, 2006
              By:
              /s/ Myint
                J.
                KyawMyint
                J. KyawChief
                Executive Officer, Secretary


Pursuant
      to the requirements of the Securities Exchange Act of 1934, this Report has
      been
      signed below by the following persons on behalf of Registrant and in the
      capacities and on the dates indicated.




Title
              Date/s/
                  Guan Liang
              
              President,
                  Director
              March
                  14, 2006Guan
                  Liang/s/
                  Samuel Yen
              
              Chief
                  Financial Officer
              March
                  14, 2006Samuel
                  Yen





23