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                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                   FORM 10-KSB

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

                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                       COMMISSION FILE NUMBER 0 - 23672

                          YIFAN COMMUNICATIONS, INC.
                (Name of small business issuer in its charter)

              DELAWARE                                 06-1607651
   (state or other jurisdiction of                  (I.R.S. Employer
   incorporation of organization)                  identification No.)

    41-60 Main Street, Suite 210
     Flushing, Queens, New York                           11355
(address of principal executive office)                (Zip Code)

Issuer's Telephone Number (727) 443-3434

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

     Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.

     Yes [X]    No [_]

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [_]

     The Issuer's revenue for the year ended December 31, 2002 was $1,538,339.

     Based on the average bid and asked price of the Issuer's Common Stock on
May 15, 2003, as reported on the NASD's OTC Bulletin Board, the aggregate market
value of the 4,587,451 shares of Common Stock held by non-affiliates was
$1,720,294.

     On May 15, 2003, the Issuer had a total of 13,726,951 shares of Common
Stock issued and outstanding.

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PART I

     This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including, without limitation, statements regarding our
expectations, beliefs, intentions or future strategies that are signified by the
words "expect," "anticipate," "intend," "believe," or similar language. All
forward-looking statements included in this report are based on information
available to us on the date hereof, and we assume no obligation to update any
such forward-looking statements. Our business and financial performance are
subject to substantial risks and uncertainties. Actual results could differ
materially from those projected in the forward-looking statements. In evaluating
our business, you should carefully consider the information set forth below
under the caption " Risk Factors." Readers are cautioned not to place undue
reliance on these forward-looking statements.

Item 1. Description of Business

Our Corporate History

     Incorporation and Name Changes. 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 our corporate
domicile by means of a statutory merger with Smart Games Interactive, Inc., a
newly formed 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 newly formed
Delaware corporation that was a wholly owned subsidiary of our company
immediately before the merger. This merger was completed on July 28, 2000.

     Prior Business Operations. Originally, our company created, designed,
developed and assembled interactive electronic game simulators. However, the
cash flow from these operations was not sufficient to pay operating costs and
our company had accumulated losses of approximately $5,570,000 by December 31,
1996. After several unsuccessful attempts to attract additional financing, our
former board of directors decided to terminate all ongoing business operations
in the third quarter of 1997.

     During the year ended December 31, 1998, our former board of directors
liquidated substantially all of our company's inventories and other operating
assets and used the proceeds to reduce its outstanding liabilities. Our company
was inactive and insolvent during the entire fiscal year ended December 31,
1999. At December 31, 1999, our company had no material assets and approximately
$700,000 in unpaid liabilities.

     Year 2000 Restructuring. On March 30, 2000, our former board of directors
approved the sale of a controlling interest in our company to Tobem Investments.
It then appointed Tobem's nominee, Sally A. Fonner, to serve as a member of the
board of directors. After appointing Ms. Fonner to serve as a member of the
board, all of our former directors resigned and Ms. Fonner became the sole
director of our company. Immediately thereafter, our company and Tobem entered
into a Project Management Agreement (the "PMA") with Capston Network Company
("Capston"), a corporation owned by Ms. Fonner. Under the PMA, Capston was
specifically authorized and obligated to (a) manage our company's ministerial
accounting and administrative functions, (b) negotiate the payment and/or
compromise of our company's outstanding liabilities; and (c) negotiate a
business combination agreement with a suitable privately held company

     Between March 30, 2000 and July 28, 2000, Capston and Ms. Fonner devoted
substantial time and effort to negotiations with our company's creditors. As a
result of these negotiations, the creditors agreed to accept aggregate cash
payments of $98,107 in full settlement of approximately $700,000 in outstanding
indebtedness. During this same period, our company incurred aggregate operating
expenses of $35,179, for an aggregate cash outflow of $123,286. Of this amount,
$75,000 was paid from the cash contributed by Tobem. The $48,286 balance was
paid by Capston and accounted for as a stock purchase. Our company also issued
shares to its former legal counsel for unpaid fees. After giving effect to all
of the foregoing transactions, our company had 32,500,000 shares issued and
outstanding. Of this number, Tobem owned 15,000,000 shares and Capston owned
3,500,000 shares.

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     On July 27, 2000, Tobem and Capston consented to an amendment to our
company's Certificate of Incorporation that implemented a 1 for 40 reverse split
of our outstanding common stock ("Old Common") and increased our authorized
capitalization to 100,000,000 shares of $0.008 par value common stock ("Common
Stock") and 10,000,000 shares of $.008 par value preferred stock ("Preferred
Stock"). The Amendment was a negotiated element of the Yifan Transaction
described below and ultimately became effective on September 25, 2000.

     Acquisition of Yifan.com, Inc. On July 30, 2000, our company entered into a
reorganization agreement with Yifan.com, Inc., a New York corporation, resulting
in our present organization, Yifan Communications, Inc.


Introduction to Our Business

     We are an Internet communications, e-commerce and software development
company that provides a variety of software products and Internet services
tailored to the specific needs of the Chinese speaking population. While over
one-quarter of the world's population reads and writes Chinese, Internet sites
written in the Chinese language are relatively rare and the companies that focus
on the needs of the Chinese speaking population are ordinarily much smaller than
their English language counterparts. We believe that over the next 15 to 20
years, the Chinese language Internet will become an important communications
medium. We also believe underdeveloped communications infrastructure,
unpredictable regulatory policies and immature markets are likely to impede the
growth and development of the Internet in the Peoples Republic of China (the
"PRC") and other Chinese speaking countries. Since we believe the market for
Chinese language Internet services will develop at different rates in different
parts of the world, we intend to grow our business by focusing first on the
needs of Chinese communities in North America and other industrialized nations.
Then, when the infrastructure, regulatory policies and market potential in the
PRC and other less-developed Chinese speaking countries justifies the
anticipated cost of expansion, we intend to expand our operations into these
larger markets.

     We established our first Chinese language Internet portal, www.yifan.com,
in May 1997. This Portal focused primarily on the needs of the Chinese community
in the New York Metropolitan area. As our business developed, we expanded our
Portal network and embarked on an ambitious software development program that
has resulted in several proprietary software products, including:

     o    Search Engine - provides one of the fastest Chinese language search
          capabilities on the Internet;

     o    Translation Utility - converts pages from Simplified to Traditional
          Chinese characters on the fly;

     o    Web Crawler - captures both Chinese formatted web-pages and Chinese
          character information by searching multithreads on the Internet;

     o    Content Manager Shell - provides the core programming modules needed
          by users who want to establish Chinese language "content" sites;

     o    E-commerce Shell - provides the core programming modules needed by
          merchants who want to establish business to business ("B2B") and
          business to consumer ("B2C") e-commerce sites;

     o    E-Reader/Tollgate Utility - protects copyright owners by allowing
          users to download books and other copyrighted materials in a form that
          can only be read on the computer that downloaded the document;

     o    Remote Learning Products - facilitates Internet-based education
          programs in Chinese,

     o    Chinese language chat room software.

     By 1999, we had expanded our Portal network to four domains. In October
2000, we purchased the business plan and preliminary software source code for a
proposed Internet web site that will provide members with a convenient and cost
effective nationwide information clearinghouse for available grocery diversion
transactions. In January 2001, we launched our first e-commerce site at
www.yifanmall.com. Our second e-commerce site at www.grocer2grocer.com was
launched in the second quarter of 2001. We presently serve 50,000 registered
users and more than half million unregistered users and generate an average of
three million page impressions per day. To date, we have grown

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our business with virtually no advertising or promotion, other than word of
mouth. We are focusing our principal efforts on:

     o    Building an active online community of Internet users who are bound
          together by a common language, history and culture;

     o    Developing software tools, server networks and business systems that
          we will use in an Application Service Provider ("ASP") environment to
          provide e-commerce facilities for our business clients;

     o    Developing software tools and business systems that we will license to
          business clients that want to establish and maintain stand-alone
          e-commerce and content provider web sites; and

     o    Developing company-owned e-commerce sites that will function as
          stand-alone profit centers while serving as working demonstrations of
          our software and business systems.

     As a diversified communications, e-commerce and software development
company, we intend to derive revenues from a variety of sources including:

     o    Sale of advertisements, promotions and sponsorships to merchants and
          other advertisers;

     o    Development  and  management of e-commerce  web sites for our business
          clients;

     o    Sales  and   licenses  of  our   proprietary   software   and  related
          maintenance; and

     o    Operation of company-owned e-commerce web sites.

Our Business Strategy

     Our board of directors is controlled by "old economy" businessmen who know
how to buy a product and move it out the door at a profit. We have selected a
target market that has favorable demographics and immense growth potential. We
focus on the current needs of existing and users and business customers in our
target market. We are meticulous when it comes to cost control and are willing
to invest in new technology only when there is a direct link between the
investment and a clearly identified revenue stream. While we believe aesthetics
are important, they are a secondary consideration. Our primary goals are
functionality, reliability, utility, ease of use, and value.

     Our business goal is to capitalize on the growth of the Internet among
Chinese users worldwide. We believe Chinese users represent one of the fastest
growing and potentially one of the largest user groups on the Internet. To reach
this goal, we intend to offer a comprehensive suite of Internet products,
services and software solutions to our users and believe that by offering an
integrated platform of content, community, commerce and services, we will be
well positioned to capitalize on the growth of the Chinese language Internet.
Our platform includes the following:

     o    Online Community. We will continue to emphasize online communities and
          rely on user feedback, word of mouth advertising and responsiveness to
          community needs as a foundation for future growth.

     o    Portal Network. Our portal network is committed to content, community
          and commerce, and provides a platform for a rich variety of online
          products and services.

     o    Advertising Platform. Our portal network provides a desirable platform
          for ad hosting and targeted advertising to the Chinese communities we
          serve.

     o    Cost-Effective Software Solutions. Our proprietary Chinese language
          software solutions facilitate the development of web-based businesses
          in a variety of fields ranging from content and information services
          to B2B and B2C e-commerce.

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     Initial Focus on North America. Our operations to date have focused
primarily on serving the Chinese communities in North America. Our products and
services are tailored to the specific interests, needs and viewing habits of our
users. We began our operations in the New York Metropolitan area and the bulk of
our key employees still call the New York Metropolitan area home. Our local
presence allows us to better understand the needs of both Internet users and
Internet-based businesses, and our commitment to community helps us build and
maintain strong relationships. While the Chinese communities in North America
represent less than one percent of the world's Chinese population, they have a
disproportionately large share of the total purchasing power. In general, people
of Chinese extraction who live in North America are more affluent, better
educated and more technically proficient than the general population. The
Chinese community is also more insular than many ethnic groups and clearly
identifiable "China-Town" districts, busy centers of commerce, culture and
community, can be found in most major American cities. For these reasons and
others, we believe the Chinese community in North America is a particularly
desirable and cohesive niche market.

     Easy Access to Information. We produce, collect, translate, enhance and
supplement content for our portal network. As online Chinese language content
improves, we expect our portal network to generate increasing traffic and become
a highly desirable forum for directed advertising. Each of our Portals provides
easy access to content, community and e-commerce offerings that appeal to
individual users. We seek to make our Portals the first and most frequent
destination for Chinese language Internet users through Online Communities. We
believe our Online Communities will be a major source of traffic and user
loyalty as the Internet becomes an integral part of the Chinese lifestyle.

     Proprietary Online Directory. Our Yifan online directory, the centerpiece
of our portal network, was carefully designed and has been continuously refined
to reflect the unique cultural characteristics and thinking and viewing habits
of our users. Our editorial staff reviews and classifies web pages according to
content and integrates that information into a hierarchical directory structure.
As a result, most web pages lie at the end point of at least 3 distinct search
paths. Our directory is highly complex, proprietary and specific, and we believe
it would be very difficult for our competitors to duplicate our directory.

     Superior Search Capabilities. Our proprietary search engine is a unique
Java application that has been written entirely in Chinese and is designed to
meet the challenges posed by the Chinese language and its pictographic
characters. We have found that the use of Java technology for our search engine
results in superior execution speed and more comprehensive searches. At the date
of this Report, we believe our search engine provides one of the fastest Chinese
language search capabilities on the Internet. We have also developed a
proprietary web crawler that is written in Visual C++, and automatically
searches the Web to identify and classify Chinese language web pages.

     Attractive Platform for Advertising and e-Commerce. We believe that our
Portals provide an attractive platform for advertisers and merchants because we
have become a leading Internet brand in North America and provide direct access
to the Chinese community, a user group with a highly desirable demographic
profile. We are currently developing a client service group that will be
dedicated to developing and enhancing relationships with advertisers and
maximizing the effectiveness of their advertising campaigns. We intend to take
advantage of our high visitor traffic by developing a user-friendly e-commerce
platform that will allow a variety of merchants to easily establish B2B and B2C
e-commerce capabilities. We also plan to facilitate e-commerce activity by
providing order tracking and product database management services.

     Unique Chinese Language Web Solutions. We are actively developing Chinese
language software products that facilitate the creation, operation, maintenance
and management of Chinese language Internet sites. These products range from
Chinese language search and translation tools to content provider and e-commerce
shells that contain all the programming modules necessary to develop a web-based
business serving the Chinese community. Our strategy is to differentiate
ourselves based on the breadth of our integrated services, the caliber of our
resources, and our responsiveness to user needs. Through our portal network, we
intend to offer our clients the distribution channels they require for bringing
traffic to their Web site, while also enabling us to track and measure our
success in directing viewers to our clients web sites. Our e-commerce strategy
is conducive to multiple revenue streams, including software sales, professional
services, advertising fees, and e-commerce fees.

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Our Target Market

     Our target market could be broadly described as the Chinese speaking
population of the world, but that broad description would be overly simplistic.

We believe that the larger Chinese speaking market actually consists of several
distinct segments:

     o    Chinese communities of North America;

     o    Chinese communities of industrialized Europe;

     o    Chinese  exporters in Hong Kong,  Taiwan the PRC and developing  Asian
          nations;

     o    Chinese consumers in Hong Kong, Taiwan and developing Asian nations;

     o    Chinese business in the PRC; and

     o    Chinese consumers in the PRC.

     While all segments of our target market share a common language, the
history, culture, demographic characteristics, geographic dispersion, relative
size and near-term commercial potential of the various Chinese market segments
vary considerably. Therefore, we believe each of the principal Chinese market
segments presents a different risk/reward profile and our overall business
strategy has been carefully developed to take these fundamental differences into
account, maximize our potential operating revenue and minimize our exposure to
developing and unpredictable markets. The principal milestones in our overall
growth strategy are:

     o    Enhance  North  American  Leadership.  Our current user base  includes
          approximately  50,000 registered users and the bulk of these users are
          located in the Northeastern U.S. We are actively seeking to expand our
          user base on the West Coast and  enhance our  leadership  posit ion in
          the North American market. We intend to grow our North American market
          share by acquiring other Chinese language Internet companies that have
          established  West Coast  appeal and by  continuing  to  emphasize  the
          value,  utility and  functionality  of our Online  Community.  We also
          intend to expand  our  product  and  service  offerings  to more fully
          satisfy the information and e-commerce  needs of our users. We believe
          that as our user base and our e-commerce  activities  expand,  we will
          become a particularly  attractive platform for advertisers who wish to
          target the Chinese community in North America.

     o    Leverage North American  Leadership  into  Industrialized  Europe.  We
          believe  most of the  lessons  we have  learned  with  respect  to the
          creation  and  development  of an  Online  Community  will be  readily
          transferable  to  industrialized   Europe.  In  general,  the  Chinese
          communities in Europe are similar to the Chinese  communities in North
          America   in   terms   of  size,   affluence,   education,   technical
          sophistication  and  cohesiveness.  Therefore,  we  intend  to  pursue
          European expansion as the second step in our corporate development.

     o    Leverage  Leadership  into  Import-Export  e-Commerce.  We  believe  a
          leadership  position in the North American and European markets can be
          readily  leveraged  across   international   borders  to  attract  B2B
          e-commerce in the import-export sector. In particular,  we believe our
          sophisticated   portal  network  and  our  affluent  and   technically
          proficient user base will be  particularly  attractive to merchants in
          Taiwan,  Hong Kong,  the PRC and other  developing  Asian nations that
          want to  establish  e-commerce  facilities  for  exports  directed  to
          Chinese communities in North America and Europe.

     o    Leverage  Experience with Online Communities and e-Commerce into Asia.
          We believe  many of the lessons we have  learned  with  respect to the
          creation  and   development  of  Online   Communities   will  also  be
          transferable to Chinese  communities in Asian countries other than the
          PRC that have adequate  communications  infrastructure and predictable
          regulatory  regimes.  While the Chinese  communities  in Asia are more
          diverse and generally less technically  sophisticated than the Chinese
          communities in North America and Europe, these Chinese communities are
          significantly larger and represent a much greater potential for Online
          Community development and B2C e-commerce.

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     o    Leverage Leadership into B2B e-Commerce in the PRC. As the final step
          in our development, we will attempt to enter the B2B e-commerce market
          within the PRC itself. Since the PRC presents numerous technical and
          regulatory challenges, there can be no assurance that our efforts to
          establish B2B e-commerce capabilities in this market will ever be
          successful. Moreover, there can also be no assurance that the bulk of
          the B2B e-commerce in the PRC will not ultimately go to other portal
          networks that provide a broader array of Internet services to
          businesses and consumers in the PRC.

     We believe the telecommunications infrastructure in the PRC and other
developing Asian nations will not be adequate for several years. In addition,
since active user involvement and the free and unrestricted flow of information,
ideas and opinions are core features of our Online Communities, we believe the
PRC and other developing Asian nations will present limited opportunities until
there are significant changes in the prevailing regulatory regimes. Therefore,
we do not intend to establish Online Communities or B2C e-commerce facilities in
the PRC and other developing Asian nations for an extended period of time.

     We do not intend to take one giant leap into the future. Instead, we will
take a series of carefully planned and executed steps to increase our value to
Internet users and business customers in our target market. Most of our
investments will be relatively small and all of our investments will be expected
to generate short-term results. Moreover, all of our investments will be
intended to serve as showcases for business customers who can benefit from the
use of our software and services. While we intend to seek additional capital
from time to time, we anticipate that the bulk of our growth will be financed
from internally generated cash flow.

Recent Developments

     We view our Portal network as a potential source of significant advertising
revenue. More importantly, however, we view our portal network as a foundation
for our software and service marketing activities. Because of the highly
entrepreneurial nature of the Chinese market, a large proportion of our
potential individual users are also potential business customers. We believe the
bulk of our potential business customers will be looking for "concrete proof"
that a modest investment in Internet technology can have a positive and lasting
impact their bottom lines. Therefore, our greatest challenge will be showing our
potential business customers how the use of our software and services can
increase the current profitability of their businesses.

     In September 2000, we entered into our first Internet advertising contract.
This agreement with DoubleClick, Inc. authorizes DoubleClick to resell banner
advertising space on certain of our web pages and provides for a per impression
fee that increases as our number of impressions increases. We have since entered
into another Internet advertising contract with 247RealMedia. Because we are
beginning to place banner advertising space on a larger number of web pages, we
expect future advertising revenues to increase significantly.

     In January 2001, we established a demonstration 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. Under the terms of our agreement with Hong Kong
Supermarket, we buy items for our on-line store as orders come in, package the
orders in a small space provided by Hong Kong Supermarket and ship the orders by
UPS. In general, our purchase price is between 80% and 90% of the posted shelf
price for the goods and our selling price is between 120% and 130% of the posted
shelf price. We will not incur any fixed expenses for inventory, facilities or
additional staff. Instead, we will run our on-line store in exactly the same
manner as any other small business that expanded into e-commerce.

     Since we created our on-line grocery store using our e-commerce shell and
HTML programmers who work from Hong Kong and the PRC, our total cost to develop
and launch the site was approximately $15 per inventory item, a figure that
compares quite favorably to the $150 per item that is common in today's market.
Even after allowing for a reasonable mark-up for overhead and profit, we expect
to be able to offer our business customers a very cost-effective B2C e-commerce
option.

     In addition to our on-line grocery store, we are currently using our
e-commerce shell to develop a demonstration B2B e-commerce site that will be
located at www.grocer2grocer.com. This site will be devoted to a niche market in

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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. While grocery diversion is not a "high
margin" business, it can quite profitable because of the large average
transaction size and the high volume of business conducted. We have hired a
former vice president of a leading national grocery wholesaler to manage our
grocer2grocer business. Except for personnel costs, we will not incur any fixed
expenses for inventory or facilities. In substance, we will run our on-line
grocery diversion business in exactly the same manner as any other grocery
diverter that expanded into e-commerce.

     Our grocery diversion accounts for most of our current revenues. We
purchased the business plan, Internet domain name, business plan and all
preliminary web-site design elements for www.grocer2grocer.com in October 2000.
Grocery diversion operations in the year ended December 31, 2002 realized
approximately $1,433,000 in revenue from grocery transactions. After deducting
the associated cost of goods sold, our grocery diversion activities contributed
approximately $155,000 in gross profit.

     We expect our on-line grocery store and grocery diversion activities to
contribute to our operating overhead and business expansion from inception. More
importantly, we expect these two operating business units to serve as concrete
examples of how a small business can implement Internet technologies in a
cost-effective manner. These business units, therefore, will serve the dual
purposes of funding our corporate expansion and demonstrating the utility of our
software products in real world settings.

     We plan to enter into other on-line businesses from time to time as
opportunities present themselves. In each case, however, our primary goal will
be to create self-sustaining business units that demonstrate the utility of our
products and services in a real world setting where a modest investment in
technology can make a significant difference in bottom line profitability.

Competition

     There are many companies that distribute online content and services
targeting Chinese users. We compete with distributors of content and services
over the Internet, including Web directories, search engines, content sites,
Internet service providers and sites maintained by government and educational
institutions. These sites compete with us for visitor traffic, advertising
dollars, e-commerce transactions and potential partners. The Chinese language
Internet is new and rapidly evolving. Competition is intense and is expected to
increase significantly in the future because there are no substantial barriers
to entry in our market.

     We have many competitors in the Chinese language Internet market, including
China.com, Netease, Sina.com Sohu.com and Yahoo! China. In addition, a number of
existing or new Internet portals, including those controlled or sponsored by
government entities, may have competitive advantages over us in terms of:

     o    Brand recognition;

     o    Financial and technical resources; and

     o Access to original content.

     However, we believe we have competitive advantages over our competitors
because of:

     o    Our brand name, which is one of the most recognized among North
          American Chinese language Internet users;

     o    Our exclusive focus on the needs of the Chinese community;

     o    Our ability to offer products and services that are tailored to the
          specific interests, needs and viewing habits of Chinese Internet
          users; and

     o    The experience and quality of our management team.

     We compete with other Chinese language Internet portals for advertising and
e-commerce revenues primarily on the following basis:

     o    Brand recognition;

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     o    Volume of traffic and users;

     o    Quality of Web site and content;

     o    Quality of online advertising and e-commerce services;

     o    Variety of e-commerce service options;

     o    Effectiveness of sales and marketing efforts; and

     o    Price.

     Our competitors may in the future achieve greater market acceptance and
gain additional market share. It is also possible that new competitors may
emerge and acquire significant market share. In particular, our online directory
also faces competition from software and other Internet products and services
incorporating search and retrieval capabilities. In addition, operators of
leading Web sites or Internet service providers, including large corporations
such as Microsoft/MSN, Yahoo!, Terra Lycos and America Online, currently offer,
and could expand, their online products and services targeting the Chinese
community. We also compete with traditional forms of media, like newspapers,
magazines, radio and television for advertisers and advertising revenue. Please
refer to "Risk Factors" for a more detailed discussion of the risks we face from
our competitors.

Intellectual Property and Proprietary Rights

     We regard our copyrights, service marks, trademarks, trade secrets and
other intellectual property as critical to our success. We rely on trademark and
copyright law, trade secret protection, non-competition and confidentiality
and/or license agreements with our employees, customers and others 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 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.net, www.yifannet.com,
www.gotofind.com, www.yifanmall.com, www.shopsinomall.com, www.planetsino.com.
and www.grocer2grocer.com. We intend to register or purchase additional domain
names as we expand and diversify our business activities.

     Many parties are actively developing chat, homepage, search and related Web
technologies. We expect these parties to continue to take steps to protect these
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 the 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 others in the ordinary course of our business.

     We may license technology from third parties. The market is evolving and we
may need to license additional technologies to remain competitive. We may not be
able to license these technologies on commercially reasonable terms or at all.
In addition, we may fail to successfully integrate any licensed technology into
our services. Our inability to obtain any of these licenses could delay product
and service development until alternative technologies can be identified,
licensed and integrated.

Employees

     As of May 15, 2003, we had 2 full-time employees in the United States. We
also employ a total of 20 consultants, including 11 consultants who telecommute
from Hong Kong and the PRC. This staff supports our software and web site
development efforts, and enables us to provide customized e-commerce solutions
at a very attractive cost. None of our employees or consultants is represented
under collective bargaining agreements. We consider our relations with our
employees and consultants to be good.

                                       9
<PAGE>

     All of our officers have entered into confidentiality, non-competition and
non-solicitation agreements with us. In addition, a significant percentage of
our employees and consultants own shares of our Common Stock, or participate in
our employee stock option plan.

Principal Risk Factors of Our Business

We have limited financial resources and we will need substantial additional
capital, which we may not be able to obtain.

     Our Company had approximately $250,000 in cash and accounts receivable at
December 31, 2002. We believe these resources will be adequate to provide for
our operating expenses for a period of six to twelve months from the date of
this Report. Thereafter, we will need additional capital to pay our operating
expenses and finance our planned expansion.

     We will need at least $3 to $5 million in additional capital to fund our
current operating expenses and our planned expansion. In addition, long-term
capital requirements are difficult to plan in the rapidly changing Internet
industry. We currently expect that we will need capital to pay our ongoing
operating costs, fund additions to our portal network and computer
infrastructure, pay for the expansion of our sales and marketing activities and
finance the acquisition of complementary assets, technologies and businesses. We
intend to pursue additional financing as opportunities arise.

     Our ability to obtain additional financing in the future will be subject to
a variety of uncertainties, including:

     o    Changes in the demand for online information services;

     o    Changes in the nature of our business  resulting from the introduction
          of new services;

     o    Changes in the nature of our  business  resulting  from our entry into
          new markets;

     o    Changes in our future results of operations,  financial  condition and
          cash flows;

     o    Changes in investors' perceptions of and appetite for Internet-related
          securities;

     o    Changes  in capital  markets in which we may seek to raise  financing;
          and

     o    Changes in general  economic,  political  and other  conditions in our
          target markets;

     The inability to raise additional funds on terms favorable to us, or at
all, would have a material adverse effect on our business, financial condition
and results of operations. If we are unable to obtain additional capital when
required, we will be forced to scale back our planned expenditures, which would
adversely affect our growth prospects.

     For the first time in our company history, we showed an annual net income
in 2002. The primary source of this income is from our grocery diversion
operations. To date, all of our operating losses in prior years have been paid
from capital. We anticipate that our Company will continue to incur operating
losses for the foreseeable future due to a high level of planned operating and
capital expenditures, increased sales and marketing costs, additional personnel
costs, greater levels of product development and our overall expansion strategy.
It is likely that our operating losses will increase in the future and we may
never sustain profitability.

The market for our outstanding shares is limited and the current market price of
the Old Common bears no relationship to our assets, earnings or any other
established criteria of value.

     The book value per share of our Common Stock was approximately $.15 per
share at December 31, 2002. Trading in our Common Stock has been limited and
sporadic and the closing prices were $.25 bid and $.50 asked on May 15, 2003.
These trading values bear no necessary relationship to our assets, earnings or

                                       10
<PAGE>

any other established criteria of value. At this time an investment in our
Company must be considered an investment based on the perceived value of our
strategic plan and the track record of our officers and directors. None of these
factors can be quantified.

     There is no active, sustained and liquid public market for our Common Stock
at the date of this Report and there can be no assurance that such a market will
develop in the future. If a market for our Common Stock does develop, the price
of our Common Stock may be highly volatile. Therefore, our stockholders may
experience difficulty in selling their shares should they desire to do so. The
stock markets in general and the OTC Bulletin Board in particular are subject to
periods of extreme volatility during which the market prices of securities can
fluctuate substantially. The price of our securities may be adversely affected
by such volatility notwithstanding our actual operating performance.

We are subject to the SEC's Penny Stock Rules

     The SEC's "Penny Stock Rules" govern trading of our Common Stock. These
rules apply to all Bulletin Board stocks that cost less than $5.00 per share and
are issued by companies having less than $5,000,000 in net tangible assets. We
have approximately $1,500,000 in net tangible assets and the market price of our
Common Stock is currently $.25 bid and $.50 asked. Accordingly, there is no
assurance that the Company will ever be exempt from the Penny Stock Rules. The
Penny Stock Rules impose substantial sales practice burdens and requirements
upon broker-dealers who sell such securities to persons other than established
customers and accredited investors. Before effecting transactions covered by the
Penny Stock Rules, a broker-dealer must make a special suitability determination
for each purchaser and receive the purchaser's written agreement to the
transaction prior to the sale. Consequently, the Penny Stock Rules may affect
the ability of broker-dealers to effect market transactions in our Common Stock.
The Penny Stock Rules may also affect the ability of persons now owning or
subsequently acquiring our securities to resell such securities in any trading
market that may develop. Such factors may have a material adverse impact on the
market price of our Common Stock.

We will probably issue additional equity securities to raise additional capital
and acquire other companies or operating assets.

     We have the authority to issue 100,000,000 shares of Common Stock and
10,000,000 shares of Preferred Stock without a vote of the stockholders. A total
of 13,726,951 shares of Common Stock are issued and outstanding at the date of
this Report.

     The Board will have the authority to issue all or any part of our
authorized and unissued capital stock to raise additional capital or finance
acquisitions. The Board will also have the authority to fix the rights,
privileges and preferences of the holders of Preferred Stock, which may be
superior to the rights of holders of the Common Stock. It is likely that we will
seek additional equity capital and attempt to acquire other companies or
operating assets in the future as we develop our business and implement our
growth strategy. A future issuance of additional shares of Common Stock or
Preferred Stock will probably dilute the percentage ownership interest of our
current shareholders and may dilute the book value per share of the Company's
outstanding equity securities.

We have generated limited operating revenue to date.

     During the year ended December 31, 2002, we generated approximately
$1,400,000 in revenue from our grocery diversion operations and after deducting
the associated cost of goods sold, our gross profit in the year ended December
31, 2002 was approximately $155,000.

     As a result of our limited operating history, our business model and our
growth strategy are unproven. We cannot be certain that our business model and
our growth strategy will continue to be successful or that we will be able to
compete effectively, achieve market acceptance or otherwise address the risks
associated with our existing and proposed business activities.

Our growth strategy and plans for expansion through acquisitions may not be
effective

      Our growth strategy is expected to place a significant strain on our
managerial, operational and financial resources. To effectively manage our
planned growth and diversification, we must improve our existing operational and
financial control systems, implement additional management control systems,

                                       11
<PAGE>

expand our operating staff and effectively train and manage our employees. We
will probably be required to make substantial additions to our executive staff
within the next 12 months. There can be no assurance that we will be able to
hire suitable executive officers or employees, or that we will be able to
effectively train and manage our staff. There can also be no assurance that our
systems, procedures and internal controls will be adequate to support our future
operations or that our management will be able to fully exploit potential market
opportunities. If we are unable to effectively manage growth, our business,
results of operations and financial condition will be adversely effected.

     As a key component of our growth strategy, we intend to acquire companies
and assets that we feel will enhance our revenue growth, operations and
profitability. Any future acquisitions may require the use of significant
amounts of cash, potentially dilutive issuances of equity securities and
amortization expenses related to goodwill and other intangible assets, each of
which could materially and adversely affect our business. Any future
acquisitions will involve numerous business and financial risks, including:

     o    Difficulties in integrating new operations, technologies, products and
          staff;

     o    Diversion of management attention from other business concerns;

     o    Cost and availability of acquisition financing; and

     o    Potential loss of key employees.

     We will need to be able to successfully integrate any businesses we may
acquire in the future, and the failure to do so could have a material adverse
effect on our business, results of operations and financial condition. Moreover,
our expansion into new markets could result in:

     o    Unexpected changes in regulatory requirements;

     o    Potentially adverse tax and regulatory consequences;

     o    Export  restrictions and controls such as those relating to encryption
          technology;

     o    Tariffs and other trade barriers; and

     o    Political instability and fluctuations in currency exchange rates.

     Any of the above could have a material adverse effect on the success of our
future expansion.

Although we expect to generate revenue from advertising in the future, such
revenue may not be substantial

     Online advertising is a key component of our business strategy, and we
anticipate that a substantial portion of our future revenues will be derived
from online advertising. We expect to derive an increasingly significant amount
of revenue from hosting online advertising that is directed to the Chinese
communities we serve. Our proposed online advertising activities are unproven.

     The development of software that blocks Internet advertisements before they
appear on a user's screen may hinder the growth of online advertising. The
expansion of ad blocking on the Internet may decrease our revenues because when
an ad is blocked, it is not downloaded from our ad server, which means that such
advertisements are not tracked as a delivered advertisement. In addition,
advertisers may choose not to advertise on the Internet and on our Portal
network because of the use of Internet advertisement blocking software. The use
of software that blocks Internet advertisements may materially and adversely
affect our business. Any reduction in traffic on our Portals or in the frequency
of completed advertising downloads may cause advertisers to withdraw from
advertising relationships, which, in turn, could reduce our future advertising
revenues.

We rely on software and hardware systems that are susceptible to failure

     Any system failure or inadequacy that causes interruptions in the
availability of our services, or increases the response time of our services, as
a result of increased traffic or otherwise, could reduce user satisfaction,
future traffic and our attractiveness to advertisers and consumers. In addition,
as the amount of traffic increases, there can be no assurance that we will be

                                       12
<PAGE>

able to scale our systems proportionately. There also can be no assurance that
our ad serving technology can properly track the number of impressions if
traffic increases substantially. We are also dependent upon Web browsers, ISPs,
and other Web site operators. Therefore we may suffer from system failures
unrelated to our systems and services.

     We have limited backup systems and redundancy and we have experienced
system failures in the past, which have disrupted our operations. We do not
presently have a disaster recovery plan in the event of damage from fire,
floods, earthquakes, power loss, telecommunications failures, break-ins and
similar events. If any of the foregoing occurs, we may experience a complete
system shut-down. To improve performance and to prevent disruption of our
services, we may have to make substantial investments to deploy additional
servers or one or more copies of our Portals to mirror our online resources.
Although we carry property insurance with low coverage limits, our coverage may
not be adequate to compensate us for all losses that may occur. To the extent we
do not address the capacity restraints and redundancy described above, such
constraints could have a material adverse effect on our business, results of
operations and financial condition.

We rely on content provided by third parties to attract viewers and advertisers

     We rely on a number of third-party relationships to create traffic and
provide content in order to make our Portals more attractive to advertisers and
consumers. Third party content on our Portals includes stock quotes, news,
essays, games. Most of these arrangements are not exclusive and are short-term
or may be terminated at the convenience of the other party. There can be no
assurance that our existing relationships will result in sustained business
partnerships, successful service offerings, significant traffic on our Portals
or significant revenues for us.

We are controlled by our officers and directors, whose interests may differ from
other shareholders.

      Our current officers and directors own approximately 68% of our
outstanding Common Stock. Accordingly, they will have sufficient voting power to
control the outcome of any corporate transaction or other matter submitted to
the shareholders for approval, including mergers, consolidations and the sale of
all or substantially all of our assets, election of directors and other
significant corporate actions. They will also have the power to prevent or cause
a change in control. In addition, without the consent of these shareholders, we
could be prevented from entering into transactions that could be beneficial to
us. The interests of these shareholders may differ from the interests of the
other shareholders.

The sale or availability for sale of substantial amounts of our Common Stock
could adversely affect its market price.

      Sales of substantial amounts of our Common Stock in the public market, or
the perception that these sales could occur, could adversely affect the market
price of our Common Stock and could materially impair our future ability to
raise capital through offerings of our equity securities. There are 13,726,951
shares of common stock outstanding at the date of this Report. Item 2.
Properties

      Until March of 2001, we rented a small office in Stonybrook, New York from
an unaffiliated landlord on a month-to-month basis. We intend to lease
approximately 2,000 square feet of office space in Flushing, Queens, New York
from an affiliate of Jeffery Wu, a member of our board of our directors. The
proposed lease will provide for a monthly rental of $12,000. Until the build-out
on our office space is completed, the landlord has agreed to provide
approximately 500 square feet of temporary office space on a rent-free basis. We
have no real property and our tangible personal property, including computers
and office equipment, is limited. We have no material inventories and the bulk
of our operating assets consist of cash and capitalized software development
costs.

Item 3. Legal Proceedings

     We are not a party to any pending legal proceeding, nor is our property the
subject of a pending legal proceeding, which is not routine litigation
incidental to our business or in which the amount involved, exclusive of
interest and costs, exceeds ten percent of our current assets.

                                       13
<PAGE>

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

      No matters were submitted for a vote of our security holders during the
fourth quarter or the year ended December 31, 2002.


PART II

Item 5. Market for Common Equity and Related Stockholder Matters


     Our Common Stock is listed on the NASD's Electronic Over-the-Counter
Bulletin Board (symbol: YIFN). The following table sets forth, for the periods
shown, the high and low trading prices for the Common Stock. The quoted prices
reflect interdealer prices without retail markup, markdown or commissions, and
may not necessarily represent actual transactions. On May 15, 2003, the closing
bid and asked prices for our Common Stock were $0.05 and $0.45, respectively.

                                                         Low             High
      Year ending December 31, 2002
      January 1 through December 31, 2002              $0.01            $0.20
      Fourth Quarter                                   $0.01            $0.05

      Year ending December 31, 2001
      January 1 through December 31, 2001               $.25            $1.00

      On May 15, 2003, the number of stockholder accounts of record was 164.


Item 6. Plan of Operations.


Results of Operations.

     At December 31, 2001, Yifan LLC had $1,848,348 in total assets, including
$203,886 in cash and accounts receivable, $58,524 in equipment, $646,261 in
capitalized software development costs, and $937,000 in investments and
goodwill. At that date, we had $1,198 in accounts payable, $14,922 in other
current liabilities, resulting in a net stockholder's equity of $1,832,228.

     At December 31, 2002, we had $1,886,070 in total assets, including $259,941
in cash and accounts receivable, 39,193 in equipment, $644,261 in capitalized
software development costs, and $937,000 in investments and goodwill. At that
date, we had $1,141 in accounts payable, and $10,655 in other current
liabilities, resulting in a net stockholders' equity of $1,874,275.

     During the year ended December 31, 2001, we generated advertising revenue
from DoubleClick and from grocery diversion activities. After deducting the
associated cost of goods sold, our grocery diversion activities contributed
approximately $42,000 in gross profit.

     The year ending December 31, 2002 is the first year we have generated
revenues from web hosting, software sales or consulting. During the year ended
December 31, 2002, we generated advertising revenue from our contracts with
DoubleClick and 247RealMedia, and from grocery diversion transactions. We expect
that revenue from our contracts with DoubleClick and 247RealMedia will
constitute the bulk of our advertising revenue until additional sponsorships can
be negotiated. We do not anticipate a limited customer base for our grocery
diversion activities.


Plan of Operations for Our Company

     We anticipate that our Company will continue to incur operating losses for
the foreseeable future due to a high level of planned operating and capital
expenditures, increased sales and marketing costs, additional personnel costs,
greater levels of product development and our overall expansion strategy. It is
likely that our operating losses will increase in the future and we may never
achieve or sustain profitability.

                                       14
<PAGE>

     At December 31, 2002, we had $1,874,275 in stockholders' equity and
approximately $250,000 in cash and accounts receivable. We believe these
resources will be adequate to provide for our operating expenses for a period of
three to six months from the date of this Report. Thereafter, we will need
additional capital to pay our operating expenses and finance our planned
expansion.

     We will need at least $3 to $5 million in additional capital in the
immediate future. In addition, long-term capital requirements are difficult to
plan in the rapidly changing Internet industry. We currently expect that we will
need capital to pay our ongoing operating costs, fund additions to our portal
network and computer infrastructure, pay for the expansion of our sales and
marketing activities and finance the acquisition of complementary assets,
technologies and businesses. We intend to pursue additional financing as
opportunities arise.

     Our ability to obtain additional financing in the future will be subject to
a variety of uncertainties. The inability to raise additional funds on terms
favorable to us, or at all, would have a material adverse effect on our
business, financial condition and results of operations. If we are unable to
obtain additional capital when required, we will be forced to scale back our
planned expenditures, which would adversely affect our growth prospects.

     We have the authority to issue 100,000,000 shares of Common Stock and
10,000,000 shares of preferred stock without a vote of the stockholders. A total
of 13,726,951shares of Common Stock were issued and outstanding on December 31,
2002 and at the date of this Report.

     The Board will have the authority to issue all or any part of our
authorized and unissued capital stock to raise additional capital or finance
acquisitions. The Board will also have the authority to fix the rights,
privileges and preferences of the holders of Preferred Stock, which may be
superior to the rights of holders of the Common Stock. It is likely that we will
seek additional equity capital and attempt to acquire other companies or
operating assets in the future as we develop our business and implement our
growth strategy. A future issuance of additional shares of Common Stock or
Preferred Stock will probably dilute the percentage ownership interest of our
current shareholders and may dilute the book value per share of the Company's
outstanding equity securities.

     As a result of our limited operating history, our business model and our
growth strategy are unproven. We cannot be certain that our business model and
our growth strategy will be successful or that we will be able to compete
effectively, achieve market acceptance or otherwise address the risks associated
with our existing and proposed business activities.

                                       15
<PAGE>

Item 7. Financial Statements.



(A)   Audited Consolidated Financial Statements

                          Independent Auditors' Report


To the Board of Directors of
Yifan Communications, Inc.

      We have audited the accompanying consolidated balance sheet of Yifan
Communications, Inc. and its wholly-owned subsidiary Yifan.com, Inc. at December
31, 2002, and the related statements of income, retained earnings and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

     We have conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe our audit provides a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Yifan Communications, Inc.
at December 31, 2002, and the results of its operations and its cash flows for
the year then ended, in conformity with generally accepted accounting
principles.

                                                Martin Ender
                                                Want & Ender CPA, P.C.
                                                Certified Public Accountants

New York, New York
May 13, 2003

                                       16
<PAGE>

                           Yifan Communications, Inc.
                           Consolidated Balance Sheet
                             As at December 31, 2002


                                     Assets
--------------------------------------------------------------------------------
Current Assets

   Cash in banks .........................................          $    17,932
   Accounts receivable ...................................              242,009
   Prepaid expenses ......................................                3,676
                                                                    ------------

Total Current Assets .....................................              263,617
                                                                    ------------

Fixed Assets

   Computer and software equipment .......................               91,028
   Accumulated depreciation ..............................              (51,836)
                                                                    ------------

Total Fixed Assets .......................................               39,192
                                                                    ------------

Other Assets

   Capitalized Software ..................................              646,261
   Goodwill ..............................................              937,000
                                                                    ------------

Total other assets .......................................            1,583,261
                                                                    ------------

Total assets .............................................          $ 1,886,070
                                                                    ============

                      Liabilities and Stockholders' Equity
--------------------------------------------------------------------------------
Current liabilities

   Accounts payable ........................................        $     2,668
   Wages payable ...........................................              9,127
                                                                    ------------

Total Current Liabilities ..................................             11,795

Long Term Liabilities ......................................                  0
                                                                    ------------

Total liabilities ..........................................             11,795
                                                                    ------------

Stockholders Equity

   Common Stock, $.008 par value,
     Authorized 100,000,000 shares,
     Issued and outstanding 13,726,951 shares ..............            108,216
   Additional paid-in capital ..............................          2,247,990
   Retained earnings .......................................           (481,931)
                                                                    ------------
Total Stockholders' Equity .................................        $ 1,874,275
                                                                    ------------

Total Liabilities and Equity ...............................        $ 1,886,070
                                                                    ============

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

                                       17
<PAGE>

                           Yifan Communications, Inc.
                   Consolidated Statement of Income (Loss)
                      For the Year Ended December 31, 2002


--------------------------------------------------------------------------------
Income
   Revenues ..................................................        1,514,782
                                                                   -------------
Cost of Goods Sold ..........................................         1,281,680
                                                                   -------------

Gross Profit ................................................           233,102
                                                                   -------------

Operating Expenses
   Administrative Salaries ..................................            34,044
   Administrative Expenses ..................................             3,772
   Advertising Expenses .....................................             1,359
   Automobile Expense .......................................             6,816
   Bank and Finance Charges .................................             6,333
   Consulting ...............................................            51,023
   Dues & Subscriptions .....................................               502
   Insurance ................................................               496
   License and Permits ......................................                 0
   Network ..................................................            47,803
   Office Supplies ..........................................               807
   Outside Contracting ......................................             2,800
   Payroll Expenses .........................................            39,695
   Postage & Delivery .......................................               295
   Printing & Reproduction ..................................                 6
   Professional Fees ........................................             3,977
   Rent .....................................................                 0
   Repairs ..................................................                 0
   Shipping .................................................             2,071
   Telephone ................................................             3,952
   Travel & Entertainment ...................................               398
                                                                   -------------

Total Operating Expense .....................................           166,462
                                                                   -------------

Net Operating Income (Loss) .................................      $     66,640
                                                                   -------------
Taxes
   Payroll Taxes ............................................             4,400
   FUI and SUI  .............................................               930
                                                                   -------------

Total Taxes .................................................             5,330
                                                                   -------------

Net Income (loss) after taxes ...............................      $     61,310
                                                                   -------------
Other deductions
   Depreciation .............................................            19,332
                                                                   -------------

Total other deductions ......................................            19,332
                                                                   -------------
Other Income
   Dividend Income ..........................................                69
                                                                   -------------

Net Income (loss) for the period ............................      $     42,048
                                                                   =============

Net Income (loss) per common share ..........................       $       .00
                                                                   ============

Weighted average number of common shares outstanding ........        12,711,500
                                                                   ============

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

                                       18
<PAGE>

                           Yifan Communications, Inc.
                   Consolidated Statement of Income (Loss)
                      For the Year Ended December 31, 2001


--------------------------------------------------------------------------------
Income
   Revenues .................................................         1,227,685
                                                                   -------------
Cost of Goods Sold ..........................................         1,049,635
                                                                   -------------

Gross Profit ................................................           178,051
                                                                   -------------

Operating Expenses
   Administrative Salaries ..................................            15,919
   Administrative Expenses ..................................            80,100
   Advertising Expenses .....................................             2,225
   Automobile Expense .......................................             8,230
   Bank and Finance Charges .................................             1,510
   Consulting ...............................................            20,645
   Dues & Subscriptions .....................................                 0
   Insurance ................................................               645
   Network ..................................................            30,148
   Office Supplies ..........................................             2,663
   Outside Contracting ......................................             4,500
   Postage & Delivery .......................................                 0
   Printing & Reproduction ..................................                 0
   Professional Fees ........................................           165,291
   Rent .....................................................             1,368
   Repairs ..................................................               324
   Shipping .................................................             3,420
   Telephone ................................................             3,889
   Travel & Entertainment ...................................               779
                                                                   -------------

Total Operating Expense .....................................           341,659
                                                                   -------------

Net Operating Income (Loss) .................................      ($   163,608)
                                                                   -------------
Taxes
   Payroll Taxes ............................................             3,023
   FUI and SUI  .............................................               357
                                                                   -------------

Total Taxes .................................................             3,380
                                                                   -------------

Net Income (loss) after taxes ...............................      ($   166,988)
                                                                   -------------

Other deductions
   Depreciation .............................................            20,598
                                                                   -------------

Total other deductions ......................................            20,598
                                                                   -------------

Other Income
   Dividend Income ..........................................                 0
                                                                   -------------

Net Income (loss) for the period ............................      ($   187,586)
                                                                   =============

Net Income (loss) per common share ..........................      ($       .01)
                                                                   =============

Weighted average number of common shares outstanding ........        12,711,500
                                                                   =============

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

                                       19
<PAGE>

                           Yifan Communications, Inc.
                Consolidated Statement of Stockholders' Equity
                             As at December 31, 2002


--------------------------------------------------------------------------------

Common Stock, new
13,726,951 shares par value $.008 ........................          $   108,216

Additional paid-in capital ...............................            2,247,990
Retained Earnings ........................................             (523,978)
Net income (loss) for the year ...........................               42,048
                                                                    ------------

Balance December 31, 2002 ................................          $ 1,874,275
                                                                    ============

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

                                       20
<PAGE>

                           Yifan Communications, Inc.
                      Consolidated Statement of Cash Flows
                      For the Year Ended December 31, 2002


--------------------------------------------------------------------------------
Cash flow from operating activities
   Net income (loss) ........................................      $     42,048

Adjustments to reconcile net income to net cash provided
 by operating activities

   Depreciation and amortization ............................            19,332
   (Increase) decrease in accounts receivable ...............           (44,694)
   (Increase) decrease in other assets ......................            (1,000)
   (Increase) decrease in Accounts Payable ..................              (111)
   Increase (decrease) in Accrued Liabilities ...............            (4,214)
                                                                   -------------

Total adjustments ...........................................      ($    30,687)
                                                                   -------------

Net cash provided (used) by operating activities ............      $     11,361
                                                                   -------------

Cash flows from investing activities

   Cash payments for computer equipment .....................                 0
                                                                   -------------

Net cash provided (used) by investing activities ............                 0
                                                                   -------------

Cash Flows from Financing activities

   Proceeds from issuance of common stock ...................                 0
                                                                   -------------

Net cash provided (used) by financing activities ............                 0
                                                                   -------------

Net increase (decrease) in cash .............................            11,361
Cash at beginning of period .................................             6,571
                                                                   -------------

Cash at end of period .......................................      $     17,932
                                                                   =============

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

                                       21
<PAGE>

                           Yifan Communications, Inc.
                  Notes to Consolidated Financial Statements


1    Nature of Business

     Yifan Communications, Inc. (the "Company") is an Internet communications
and software development company that delivers content, community and commerce
targeted to the needs of the Chinese community in North America. The Company
provides a free service that gives its registered users access to a variety of
online features. The Company also provides Internet advertising and value-added
business services designed to enhance the Internet presence of its clients. The
Company currently operates under five principal Internet domain names
"yifan.com," "yifan.net," "yifannet.com," "gotofind.com" and "yifanmall.com."
All of the Company's Internet products and services are written in the Chinese
language. The Company's business goal is to capitalize on the growth of the
Internet among Chinese users and become a worldwide leader in the Chinese
language market.

2    Organization and History

(a)  Creation of yifan.com web site.

     Yifan He created the Internet web site "yifan.com" in May 1997. Mr. He
operated the yifan.com web site as a sole proprietorship and personal hobby
until January 1999.

(b)  Organization and operation of Yifan, LLC.

     Yifan LLC, a New York limited liability company was organized on January
22, 1999 to finance the further development and expansion of the "yifan.com,"
web site. In connection with the formation of Yifan LLC, Mr. Yifan He
contributed all his right title and interest in the yifan.com web site to Yifan
LLC, in exchange for a membership interest. During 1999, two individuals
contributed $145,298 in cash to Yifan LLC, in exchange for membership interests.
During 1999, three individuals contributed consulting services valued at $18,170
and five individuals contributed software development services valued at $18,020
to Yifan LLC, in exchange for membership interests. The valuation of these
personal service contributions is based on the cash consideration paid for
similar interests at the time the services were rendered.

(c)  Organization and operation of Yifan.com, Inc.

     On December 20, 1999, all of Yifan LLC, members executed an "Agreement
Respecting Allocation of Limited Liability Company Interests and Conversion to
Corporation" that authorized the creation of a successor corporation named
Yifan.com, Inc. and the transfer of Yifan LLC's assets and operations to such
corporation. The Articles of Incorporation of Yifan.com, Inc. were filed with
the Division of Corporations and State Records of the Department of State of the
State of New York on January 5, 2000. In connection with the organization of
Yifan.com, Inc. Yifan LLC conveyed all of its properties and business operations
to Yifan.com, Inc. and the members of Yifan LLC received a total of 4,750,000
shares of Yifan.com, Inc.'s $.01 par value common stock. Concurrently, the
pre-incorporation subscriptions were accepted and 115,500 shares were issued to
the subscribers.

     Between January 1 and July 30, 2000, Yifan.com, Inc. accepted subscriptions
to purchase 465,500 shares of its common stock at a price of $2 per share from
private placement investors. The net cash proceeds associated with these private
sales of securities were $931,000.

                                       22
<PAGE>

                           Yifan Communications, Inc.
                  Notes to Consolidated Financial Statements


2    Organization and History --continued

(d)  Business combination with the Company

     On July 30, 2000, Yifan.com, Inc. and all its stockholders and subscribers,
entered into a business combination agreement with the Company, a Delaware
corporation formerly known as Smart Games Interactive, Inc. In connection with
this Agreement:

    (i)   The Company effected a 1 for 40 reverse split of its issued and
          outstanding $.0002 par value common stock, and increased its
          authorized capital to 100,000,000 shares of $.008 par value common
          stock and 10,000,000 shares of $.008 par value preferred stock.

    (ii)  The stockholders and subscribers of Yifan.com, Inc. contributed all of
          their interest in Yifan.com, Inc. to the Company solely in exchange
          for 11,994,750 shares of $.008 par value common stock of the Company;

    (iii) The Company issued 179,921 shares of $.008 par value common stock to
          certain finders who assisted in the negotiation of the transaction;
          and (iv) A principal stockholder of the Company agreed to transfer
          89,961 shares of $.008 par value common stock to such finders.

Yifan.com,  Inc. paid a $350,000 merger and acquisition fee to Capston Network
Company in connection with the business combination  transaction.  This merger
and acquisition fee has been capitalized and is reflected in goodwill.

(e)  Acquisition of "grocer2grocer.com"

     In October 2000, the Company agreed to issue 200,000 shares of its $.008
par value common stock to purchase the business plan and preliminary software
source code for Grocer2Grocer.com, a proposed Internet web-site that will
provide members with a convenient and cost effective nationwide information
clearinghouse for available grocery diversion transactions. The assets acquired
in connection with this transaction included the Internet domain name
"grocer2grocer.com," together with all of the preliminary web-site design
elements, software source code, computer programs, business processes,
trademarks, copyrights and other intellectual property necessary for the
operation thereof. Since we did not acquire a material amount of tangible assets
in connection with the grocer2grocer.com transaction, the entire acquisition
price has been included in goodwill.

3.   Summary of Significant Accounting Policies

(a)  Reverse merger method of accounting

     Following the acquisition, the former management of Yifan.com, Inc. became
the management of the Company and the former stockholders of Yifan.com were
issued approximately 92% of the outstanding shares of the Company's $.008 par
value common stock.

     In accordance with generally accepted accounting principles, the Company's
acquisition of Yifan.com was accounted for as a reverse merger. As a result,
Yifan.com has been treated as the acquiring entity and the Company has been
treated as the acquired entity for accounting purposes, even though the Company
is the acquiring entity for legal purposes.

     The historical financial information of Yifan.com, Inc. has become the
historical financial information of the Company in connection with the
acquisition. Similarly, the historical equity and earnings of Yifan.com, Inc.
prior to the acquisition have been retroactively restated for the equivalent
number of shares to be received in connection with the acquisition.

      The balance sheet reflects the financial position of the Company as of
December 31, 2002. The related statements of operations, cash flow and
stockholders' equity reflect the operations of the Company for the year ended
December 31, 2002

                                       23
<PAGE>

                           Yifan Communications, Inc.
                  Notes to Consolidated Financial Statements


3.   Summary of Significant Accounting Policies--continued

(b)  Use of estimates

     The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

(c)  Cash and cash equivalents

     The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The Company
maintains cash balances in bank deposit accounts that may at times exceed
federally insured limits. The Company has not experienced any losses in such
accounts.

(d)  Property and equipment

     Property and equipment are recorded at cost. Depreciation is provided on
the straight-line method over the estimated useful lives of the assets, which
range from two to seven years. Expenditures for major renewals and betterments
that extend the original estimated economic useful lives of the applicable
assets are capitalized. Expenditures for normal repairs and maintenance are
charged to expense as incurred. The principal annual depreciation rates used are
as follows:

      Furniture and fixtures        20.0%
      Office equipment              20.0%
      Computer equipment            33.3%

(e)  Revenue recognition

In future periods, the Company expects to generate revenues from a variety of
sources including:

     o    Retail sales from its yifanmall.com web site

     o    Wholesale grocery sales from its grocer2grocer web site

     o    Web solutions including software sales and web site development,

     o    Hosting and maintenance service fees, and

     o    Advertising service fees.

(f)  Non-cash compensation and legal fees

     During 2000, the Company issued 180,000 shares of Common Stock as
compensation under an administrative services agreement and 360,000 shares of
Common Stock as compensation under a legal services agreement. For accounting
purposes, all such transactions were recorded at a value of $.89 per share. A
total of $240,300 in non-cash administrative and legal fees were charged to
expense in the current year. The $240,300 balance was carried as a prepaid
expense at year end and was amortized during the first six months of the year
ended December 31, 2001.

                                       24
<PAGE>

                           Yifan Communications, Inc.
                  Notes to Consolidated Financial Statements


3.   Summary of Significant Accounting Policies--continued

(g)  Software Development Costs

     The Company accounts for software development costs in compliance with the
requirements of FASB 86, which requires the capitalization of software
development costs once the technological feasibility of a software product is
established. During the year ended December 31, 2001, the Company capitalized a
total of $109,462 in software development costs. During the year ended December
31, 2002, no software development costs were capitalized. These capitalized
software development costs will be amortized in future periods in accordance
with the requirements of FASB 86.

(h)  Net income/loss per share

     The Company computes earnings per share in accordance with SFAS No. 128,
"Earnings per Share". Under the provisions of SFAS No. 128, basic net income or
loss per share is computed by dividing the net income or loss available to
common shareholders for the period by the weighted average number of common
shares outstanding during the period. Diluted net income or loss per share is
computed by dividing the net income or loss for the period by the weighted
average number of common and common equivalent shares outstanding during the
period. Common equivalent shares, composed of incremental common shares issuable
upon the exercise of stock options, are included in diluted net income or loss
per share to the extent such shares are dilutive.

(i)  Employee's Incentive Stock Plan

     Full-time employees of the Company and its subsidiaries, 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. No employee options were granted during the year ended
December 31, 2002.

(j)  Director's Stock Option Plan

     The Directors' Option Plan 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 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 grant. The total number of shares available for grant under the
Director's Plan is 500,000. No option plan was granted during the 2002 fiscal
year.

4.   Concentration of Risks

     During the year ended December 31, 2002, the Company generated
approximately $55,000 of income from two advertising contracts with DoubleClick,
Inc and 247RealMedia. It also generated approximately $1,433,000 in revenue from
grocery diversion transactions.

     It is not possible to predict whether there will be significant
concentrations of risk in the grocery diversion or advertising contracts. in
future periods. The Company expects the revenue from its DoubleClick contract to
comprise the bulk of its advertising revenue until additional advertising
sponsorships can be negotiated. The Company does not anticipate a limited
customer base for its future merchandising activities.

                                       25
<PAGE>

Item 8.  Financial Disclosure.

Other Information

In June 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets, effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives. Application of the
non-amortization provisions of the Statement did not have a material effect on
our financial position or operations.


Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act.

DIRECTORS AND EXECUTIVE OFFICERS

     Our Company's directors and executive officers are identified in the
following table:

        Name              Age           Positions
      Yifan He            26     President, Chief Technical Officer and Director
      Liming Yung         38     Director
      Jeffery Wu          38     Director
      Ahn Tran            50     Director

     While we have no executive officers other than Mr. He, we rely extensively
on the experience and abilities of the other members of our board of directors.
Biographical information on our officers and directors is set forth below.

     Mr. Yifan He was the creator of the Yifan.com web site in 1997 and
previously served as Manager of Yifan, LLC, and as president of Yifan.com, Inc.
Mr. He has served as our President, Chief Technology Officer and a member of our
board of directors since August 17, 2000. For the last four years, Mr. He has
been responsible for day-to-day technical operations, strategy development,
technical design, product development and quality assurance. Mr. He has managed
the growth of the Company from a sole proprietorship through the formation of an
LLC, a reorganization of the LLC into Yifan, Inc. and the subsequent combination
of Yifan, Inc. with the Company. During this development period, Mr. He
supervised the expansion of the Company's staff to over 30 consultants and
employees, including a total of 7 PhDs. Mr. He's education includes a B.S. in
Computer Science from SUNY at Stony Brook. Mr. He was born in Xi'an, China, and
has been a U.S. resident since 1996. Mr. He also will attend the MBA program in
fall of 2003 at MIT Sloan Business School.

     Mr. Liming Yung has served as a part-time consultant to our Company and as
a member of our board of directors since August 17, 2000. Previously, Mr. Yung
served as a director of Yifan.com, Inc. and Yifan LLC. In addition to his duties
as a director of our Company, Mr. Yung is employed full-time as Senior Vice
President, Asian Markets for PaineWebber Inc., a position he has held since
1997. Mr. Yung's duties at Paine Webber include developing Asian markets in the
United States and overseas for that Company. Before joining PaineWebber, Mr.
Yung held a similar position with Citigroup as Vice President, Asia Development.
Prior to Citigroup, Michael held positions in sales and marketing, including two
years as Vice President, International Marketing, with Highfu International, a
producer and marketer of police equipment, where he was in charge of developing
and marketing new products. Mr. Yung holds investment licenses Series 7, 24 and
63, and is a graduate of The New York Institute of Technology, where he earned a
Bachelor of Science Degree in Marketing. Mr. Yung was born in Taipei, Taiwan and
relocated to the U.S. as a teenager in 1977.

     Mr. Jeffery Wu has served as a part-time consultant to our Company and as a
member of our board of directors since August 17, 2000. Previously, Mr. Wu
served as a director of Yifan.com, Inc. and Yifan LLC. In addition to his duties
as a director of our Company, Mr. Wu is a principal stockholder Officer of Hong

                                       26
<PAGE>

Kong Supermarket and has served as Chief Executive Officer of that company since
1994. During Mr. Wu's term as Chief Executive Officer, Hong Kong Supermarket has
become the largest Chinese specialty supermarket in the Northeastern U.S. Mr. Wu
is also a principal stockholder and Chief Executive Officer of Moo Chung Loong
(MCL) Trading, Inc., a $50 million wholesale food distributor that services Hong
Kong Supermarket and other retail grocery outlets. MCL is currently the largest
Asian food distributor in the Northeast. Mr. Wu is also actively involved in
real estate investments and has expanded his holdings from 3 thousand square
feet in 1985 to over 2 million square feet.

     Mr. Ahn Tran has served as a part-time consultant to our Company and as a
member of our board of directors since August 17, 2000. Mr. Tran is a principal
stockholder of Hong Kong Supermarket and has served as president of that company
since 1994. In this position, Mr. Tran is responsible for the daily operations
of six supermarkets averaging nearly $20 million in annual revenue each. During
Mr. Tran's term as President, Hong Kong Supermarket has become the largest
Chinese specialty supermarket in the Northeastern U.S. Mr. Tran is also a
stockholder of MCL Trading. Mr. Tran brings additional key strategic and
partnership expertise to the Company. Mr. Tran relocated to the U.S. 1980 with
his family and has quickly adapted to the entrepreneurial environment.

INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES

     The Company has no compensation committee, no audit committee, and no
nominating committee. Decisions concerning nominees for Director and executive
officer compensation for fiscal 2002 were made by the full Board of Directors.

     The Board of Directors held regular meetings and took action by unanimous
written consent on three occasions during the fiscal year ended December 31,
2002, in which all members of the board of directors took part.

     Our Directors are elected annually and hold office until the next annual
meeting of our stockholders or until their successors are elected and qualified.

     Officers are elected annually and serve at the discretion of the Board of
Directors. There is no family relationship between any of our directors and
executive officers. Board vacancies are filled by a majority vote of the Board.

SECTION 16(a) BENEFICIAL OWNERSHIP AND REPORTING COMPLIANCE

     The Company believes that all of its principal stockholders, officers and
directors failed to comply on a timely basis with the requirements of Section
16(a) of the Exchange Act during the year ended December 31, 2000. The following
schedule identifies each person who was required to file one or more reports
pursuant to Section 16(a) of the Exchange Act and either failed to file the
required report, or failed to file the required report on a timely basis. For
purposes of the table, all transactions prior to September 25, 2000 have been
restated to give pro forma effect to a 1 share for 40 reverse split that was
effected on that date.

                                       27
<PAGE>

<TABLE>
<CAPTION>
<S>                                 <C>               <C>           <C>               <C>             <C>
Tobem Investments Limited           Number of         Required      Reportable         Report            Report
10% Stockholder                      Shares           Form Type     Event Date        Due Date         Filing Date
       Stock Acquisition              375,000          Form 3       31-Mar-2000      10-Apr-2000       12-Sep-2000
       Annual Statement               375,000          Form 5                        14-Feb-2001       15-May-2001

Sally A. Fonner
Officer, Director and               Number of         Required      Reportable         Report            Report
10% Stockholder                      Shares           Form Type     Event Date        Due Date         Filing Date
       Stock Acquisition              375,000          Form 3       31-Mar-2000      10-Apr-2000       12-Sep-2000
       Stock Acquisition               87,500          Form 4       25-Jul-2000      10-Aug-2000       12-Sep-2000
       Stock Acquisition              180,000          Form 4       1-Aug-2000       10-Sep-2000       12-Sep-2000
       Option Acquisition              25,000          Form 4       25-Sep-2000      10-Oct-2000       15-May-2001
       Annual Statement               667,500          Form 5                        14-Feb-2001       15-May-2001

Yifan He
Officer, Director and               Number of         Required      Reportable         Report            Report
10% Stockholder                      Shares           Form Type     Event Date        Due Date         Filing Date
       Stock Acquisition            3,094,313          Form 3       25-Sep-2000      10-Oct-2000       24-Oct-2000
       Annual Statement             3,094,313          Form 5                        14-Feb-2001       15-May-2001

Jeffery Wu
Director and                        Number of         Required      Reportable         Report            Report
10% Stockholder                      Shares           Form Type     Event Date        Due Date         Filing Date
       Stock Acquisition            3,293,100          Form 3       25-Sep-2000      10-Oct-2000       24-Oct-2000
       Option Acquisition              25,000          Form 4       25-Sep-2000      10-Oct-2000       15-May-2001
       Annual Statement             3,318,100          Form 5                        14-Feb-2001       15-May-2001

Liming Yung
Director and                        Number of         Required      Reportable         Report            Report
10% Stockholder                      Shares           Form Type     Event Date        Due Date         Filing Date
       Stock Acquisition            2,167,088          Form 3       25-Sep-2000      10-Oct-2000       24-Oct-2000
       Option Acquisition              25,000          Form 4       25-Sep-2000      10-Oct-2000       15-May-2001
       Annual Statement             2,192,088          Form 5                        14-Feb-2001       15-May-2001

Ahn Tran
Director and                        Number of         Required      Reportable         Report            Report
10% Stockholder                      Shares           Form Type     Event Date        Due Date         Filing Date
       Stock Acquisition              585,000          Form 3       25-Sep-2000      10-Oct-2000       24-Oct-2000
       Option Acquisition              25,000          Form 4       25-Sep-2000      10-Oct-2000       15-May-2001
       Annual Statement               610,000          Form 5                        14-Feb-2001       15-May-2001
</TABLE>

                                                     28
<PAGE>

Item 10. Executive Compensation.

         The following sets forth all forms of compensation we paid our
executive officers during the year ended December 31, 2002. No executive officer
of our company received cash compensation that exceeded $100,000 during the year
ended December 31, 2002.

SUMMARY COMPENSATION TABLE

     1.   We issued 180,000 shares of common stock to Ms. Fonner during the year
          ended December 31, 2000 as compensation under an administrative
          services agreement. In connection therewith, we amortized $81,100 in
          non-cash compensation during the current year and will amortize an
          additional $81,100 in 2001.

     2.   Ms. Fonner agreed to assign 20,000 shares of common stock to Mr. Kraft
          as compensation for his services as our Interim Chief Financial
          Officer during the period ended December 31, 2000. Accordingly,
          $17,800 in non-cash compensation has been allocated to Mr. Kraft and
          the balance has been allocated to Ms. Fonner.

DIRECTOR COMPENSATION

     We do not currently pay any cash fees to our Directors.

DIRECTORS' OPTION PLAN

     On September 22, 2000, certain consenting stockholders ratified the
     adoption of a Directors' Option Plan for the benefit of our non-employee
     directors. The plan provides for the annual grant of an option to purchase
     25,000 shares of our common stock to each member of the Board of Directors
     who is not a full-time employee of our Company. The purpose of the plan is
     to encourage the service of our outside directors and to provide them with
     additional incentive to assist the Company in achieving its growth
     objectives. Options will be granted to our non-employee directors each time
     (i) a new director is appointed to serve as a member of the Board until the
     next annual meeting of the stockholders, (ii) a new director is elected to
     the Board at an annual meeting of the stockholders, and (iii) an existing
     director is re-elected to the Board at an annual meeting of the
     stockholders. Options granted under the plan are subject to forfeiture if
     the holder resigns from the Board or is removed for cause before the date
     of the next annual meeting of the stockholders. Options granted under the
     plan become fully vested on the date of the first annual meeting of the
     stockholders following the date of grant. Options issued under the plan may
     be exercised regardless of whether the individual continues to serve as a
     director. Options granted under the plan are not transferable except by
     will or by operation of law. The total number of shares available for grant
     under the plan is 500,000.

EMPLOYEES' INCENTIVE STOCK PLAN

     On September 22, 2000, certain consenting stockholders ratified the
     adoption of an incentive stock plan for the benefit of our employees. The
     plan will permit 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. Full-time employees of the
     Company and its subsidiaries, including officers and employee directors,
     are eligible to participate in the plan. We believe the plan will give us
     the ability to emphasize equity-based compensation in structuring
     compensation packages for our employees. We also believe that an emphasis
     on equity-based compensation will yield the greatest benefit for our
     shareholders, as employee compensation will be directly dependent on the
     value of our stockholders' investments. As of December 31st, 2002, no
     Incentive Awards have been granted under the plan.

                                       29
<PAGE>

Item 11. Security Ownership of Certain Beneficial Owners and Management.

     The following describes as of December 31st, 2002, the beneficial ownership
of our outstanding common stock of:

     o    Each person known to us who beneficially owns more than 5% of the
          common stock

     o    Each of our Directors

     o    Each of our executive officers

     o    All of our executive officers and directors as a group


                                            Amount and
                                            Nature of
Name and Address                            Beneficial                 Percent
of Beneficial Owner                         Ownership                  of Class
================================================================================
Yifan He (1)                                3,094,313                  22.54%
Jeffery Wu (1)(3)(4)                        3,318,100                  24.13%
Liming Yung (1)(3)(5)                       2,112,088                  15.36%
Ahn Tran (1)(3)(7)                            610,000                   4.44%
Sally A. Fonner (2)(3)(7)                     253,115                   1.84%
Executive Officers and Directors
as a Group (5 persons)                      9,387,616                  68.31%

         (1) 41-60 Main Street, Suite 210, Flushing, Queens, New York 11355.

         (2) 1268 Bayshore Blvd., Dunedin, Florida 34698

         (3) Options to purchase 25,000 shares of common stock at a price of $6
         per share were issued to each of our four non-employee directors on
         September 25, 2000. The option granted to Ms. Fonner became exercisable
         on March 15, 2001 when she resigned from the board of directors to
         accommodate the appointment of Mr. Iglesias. The remaining 75,000
         directors' options became exercisable on the date of the annual
         meeting.

         (4) Includes 2,843,100 shares owned by Mr. Wu, 450,000 shares owned by
         Mr. Wu as custodian for his minor child, and 25,000 shares underlying
         options that Mr. Wu received pursuant to the Directors' Option Plan.

         (5) Includes 1,074,588 shares owned by Mr. Yung's wife Michelle Yung,
         1,012,500 shares owned by Michelle Yung as custodian for their minor
         children, and 25,000 shares underlying options that Mr. Yung received
         pursuant to the Directors' Option Plan.

         (6) Includes 585,000 shares owned by Mr. Tran and 25,000 shares
         underlying options that Mr. Tran received pursuant to the Directors'
         Option Plan.

         (7) Includes 228,115 shares owned by Ms. Fonner and 25,000 shares
         underlying presently exercisable options that Ms. Fonner received
         pursuant to the Directors' Option Plan.

         Except as otherwise noted, each of these principal stockholders has
         sole voting and investment power for the shares each owns. We know of
         no arrangements that will result in a change in control of our Company.

                                       30
<PAGE>

Item 12. Certain Relationships and Related Transactions.

     Our Board of Directors has adopted a policy that all of our affairs will be
conducted by standards applicable to publicly-held corporations and that we will
not enter into any transactions or loans between us and our officers, directors
and 5% shareholders, unless the terms are no less favorable than we could obtain
from independent, third parties, and that these types of transactions must be
approved by our disinterested directors. Subsequent Transactions

     In July 2000, Yifan.com entered into an agreement with its legal counsel
that provided for the issuance of 360,000 shares of New Common, valued at $0.89
per share, as compensation for legal services to be rendered on behalf of our
company during the first year after the closing of the Yifan Transaction. The
agreement specified the services to be performed by such counsel and provided
for partial reimbursement of any fees that our company is required to pay to
other law firms during its term. We recognized non-cash compensation expense of
$160,200 in connection with this agreement in the year ended December 31, 2000
and recognized the $160,200 balance during the first two quarters of 2001.

Item 13. Exhibits and Reports on Form 8-K.

Exhibits

     None.

Reports on Form 8-K

     None.

                                       31
<PAGE>

                                   SIGNATURES

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

May 15, 2003
                                            Yifan Communications, Inc.


                                            By: /s/ Yifan He
                                               ----------------------------
                                            Yifan He, Principal Executive
                                            Officer, Principal Financial
                                            Officer, Principal Accounting
                                            Officer and Director



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



                                            By: /s/ Yifan He
                                               ----------------------------
                                            Yifan He, Director
                                            Dated: May 15, 2003


                                            By: /s/ Jeffery Wu
                                               ----------------------------
                                            Jeffery Wu, Director
                                            Dated: May 15, 2003


                                            By: /s/ Liming Yung
                                               ----------------------------
                                            Liming Yung, Director
                                            Dated: May 15, 2003


                                            By: /s/ Ahn Tran
                                               ----------------------------
                                            Ahn Tran, Director
                                            Dated: May 15, 2003

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