SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF EARLIEST REPORTED EVENT - July 28, 2000
Yifan Communications, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 000-23672 34-1692323
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification Number)
1612 NORTH OSCEOLA
CLEARWATER, FLORIDA 33755
(Address of Registrant's principal executive offices)
(727) 443-3434
(Registrant's telephone number, including area code)
(727) 443-5240
(Registrant's facsimile number, including area code)
SMART GAMES INTERACTIVE, INC.
(Former name or former address, if changed since last report)
INTRODUCTORY NOTE TO CURRENT REPORT
THIS CURRENT REPORT ON FORM 8-K PROVIDES INFORMATION RESPECTING THREE
RECENT CORPORATE EVENTS:
o A NAME CHANGE THAT BECAME EFFECTIVE JULY 28, 2000;
o A REVERSE SPLIT AND CHANGE IN AUTHORIZED CAPITAL STOCK THAT WILL
BECOME EFFECTIVE SEPTEMBER 30, 2000; AND
o A MATERIAL ACQUISITION THAT CLOSED JULY 30, 2000.
THE ISSUER HAS NOT HAD SUFFICIENT TIME TO PREPARE A COMPLETE CURRENT REPORT
ON FORM 8-K WITH RESPECT TO ITS RECENT ACQUISITION AND IS ONLY PROVIDING SUMMARY
INFORMATION IN THIS CURRENT REPORT. A MORE DETAILED CURRENT REPORT RELATING TO
THE ACQUISITION, INCLUDING AUDITED FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED
AND PRO FORMA FINANCIAL STATEMENTS OF THE COMBINED ENTITIES WILL BE FILED WITHIN
15 DAYS IN ACCORDANCE WITH THE RULES OF THE COMMISSION.
Item 5.
OTHER EVENTS
Name Change
On July 21, 2000, Smart Games Interactive, Inc. (the "Issuer") filed a
"Certificate of Ownership and Merger" with the Secretary of State of the State
of Delaware that merged the Issuer's wholly-owned subsidiary Yifan
Communications, Inc. into the Issuer. This Certificate of Ownership and Merger
provided that from and after the effective date of the merger, the name of the
merged companies would be Yifan Communications, Inc. The merger and name change
became effective at 12:01 a.m. on July 28, 2000 and the Issuer's common stock
will begin trading on the OTC Bulletin Board under its new symbol "YFNC" on July
31, 2000.
The merger of the Issuer and its wholly-owned subsidiary was effected for
the purpose of changing the Issuer's name in connection with a business
combination transaction described elsewhere herein. No substantive changes were
made in the rights of stockholders in connection with the merger. Accordingly,
each stockholder of record will be entitled to one vote for each share held at
each meeting of the stockholders in respect to any matter on which stockholders
have the right to vote. Stockholders have no cumulative voting rights, nor will
they have any preemptive rights. Stockholders will be entitled to receive, when
and as declared by the Issuer's Board of Directors, out of legally available
earnings and surplus, any dividends payable either in cash, in property or in
shares of the capital stock of the Issuer. Stockholders will not be asked to
return their stock certificates for replacement with new certificates bearing
the Issuer's new name.
Amendment of Certificate of Incorporation
Adoption of Amendment. On July 27, 2000, two corporations that
collectively own 18,500,000 shares, or approximately 57%, of the issued and
outstanding $0.0002 par value common stock of the Issuer (the "Old Common")
executed written consents to a proposed amendment to the Issuer's Certificate of
Incorporation (the "Amendment"). The Amendment was a negotiated element of a
business combination transaction described elsewhere in this Current Report on
Form 8-K and will not take effect until September 30, 2000. The Amendment was
filed with the Secretary of State of the State of Delaware on July 27, 2000.
When the Amendment becomes effective on September 30, 2000, it will (a)
implement a 1 for 40 reverse split of the Issuer's Old Common and (b) increase
the authorized capitalization of the Issuer to 100,000,000 shares of $0.008 par
value common stock ("New Common") and 10,000,000 shares of $0.008 par value
preferred stock ("New Preferred"). The operative text of the Amendment is set
forth below:
ARTICLE IV
CAPITAL STOCK
4.1 Reverse Split of Outstanding Common Stock. Effective at 12:01 a.m. EST
on September 30, 2000, and without any further action by the holders of the
Common Stock of the Corporation, the THIRTY TWO MILLION, FIVE HUNDRED
THOUSAND (32,500,000) issued and outstanding shares of the Corporation's
$0.0002 par value common stock ("Old Common"), together with any additional
shares of the Corporation's Old Common that are or may be issued prior to
the effective time set forth above, shall be consolidated or "reverse
split" in the ratio of one (1) share of $0.008 par value common stock ("New
Common") for every forty (40) shares of Old Common currently held by a
stockholder so that the total issued and outstanding capital stock of the
Corporation shall consist of EIGHT HUNDRED TWELVE THOUSAND FIVE HUNDRED
(812,500) shares, more or less, as adjusted for any additional issuances of
Old Common prior to the effective time set forth above. No fractional
shares of New Common shall be issued in connection with the reverse split.
In the event that the foregoing reverse split would result in the issuance
of a fractional share of New Common to any stockholder, the Corporation
shall pay the Stockholder entitled thereto an amount in cash equal to the
fair market value of such fractional shares, determined as of the close of
business on September 29, 2000.
4.2 Authorized Capital. From and after 12:01 a.m. EST on September 30,
2000, the Corporation shall be authorized to issue a total of One Hundred
Ten Million (110,000,000) shares of capital stock which shall be subdivided
into classes as follows:
(a) One Hundred Million (100,000,000) shares of the Corporation's capital
stock shall be denominated as Common Stock, have a par value of
$0.008 per share, and have the rights, powers and preferences set
forth in this paragraph. The Holders of Common Stock shall share
ratably, with all other classes of common equity, in any dividends
that may, from time to time, be declared by the Board of Directors.
No dividends may be paid with respect to the Corporation's Common
Stock, however, until dividend distributions to the holders of
Preferred Stock, if any, have been paid in accordance with the
certificate or certificates of designation relating to such Preferred
Stock. The holders of Common Stock shall share ratably, with all
other classes of common equity, in any assets of the Corporation that
are available for distribution to the holders of common equity
securities of the Corporation upon the dissolution or liquidation of
the Corporation. The holders of Common Stock shall be entitled to
cast one vote per share on all matters that are submitted for a vote
of the stockholders.
(b) Ten Million (10,000,000) shares of the Corporation's authorized
capital stock shall be denominated as Preferred Stock, par value of
$0.008 per share. Shares of Preferred Stock may be issued from time
to time in one or more series as the Board of Directors, by
resolution or resolutions, may from time to time determine, each of
said series to be distinctively designated. The voting powers,
preferences and relative, participating, optional and other special
rights, and the qualifications, limitations or restrictions thereof,
if any, of each such series of Preferred Stock may differ from those
of any and all other series of Preferred Stock at any time
outstanding, and the Board of Directors is hereby expressly granted
authority to fix or alter, by resolution or resolutions, the
designation, number, voting powers, preferences and relative,
participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof, of each such
series of Preferred Stock.
Reason for Amendment. At December 31, 1999, the Issuer had no material
assets, no active management and no ongoing operations, and its liabilities
exceeded its total assets by approximately $700,000. Nevertheless, it was
believed that it might be possible to recover some value for the stockholders
through the implementation of a plan whereby the Issuer would be restructured as
a "public shell" for the purpose of effecting a business combination transaction
with a suitable privately-held company. In a Current Report on Form 8-K dated
April 17, 2000, (the "April 8-K") the Issuer disclosed the terms of a related
series of transactions whereby
o Tobem Investments Limited, a Cayman Islands corporation, purchased
15,000,000 shares, or approximately 54%, of the Issuer's Old Common
for $75,000 in cash.
o The Board of Directors appointed Tobem's nominee, Ms. Sally A. Fonner,
to serve as the sole member of the Issuer's Board of Directors during
the restructuring period.
o The Issuer executed a Project Management Agreement that authorized
Capston Network Company, a Delaware corporation owned by Ms. Fonner,
to negotiate compromise agreements with the Issuer's creditors,
negotiate the terms of a business combination agreement between the
Issuer and a suitable privately-held company and take such other
action as may be necessary to restructure the Issuer's affairs.
The April 8-K also disclosed that if Capston was able to negotiate
settlement agreements with the Issuer's creditors and negotiate a suitable
business combination agreement, it would probably be necessary for the Issuer to
effect a reverse split of at least 1 for 40 and authorize the issuance of
additional shares to facilitate the business combination and the go-forward
activities of the combined entities.
Since the date of the April 8-K, Capston has been actively managing the
Issuer's affairs and negotiating settlement agreements with the Issuer's
creditors. In connection with these activities, Capston has spent the entire
$75,000 contributed by Tobem, and contributed an additional $35,000 in cash from
its own funds. In accordance with the terms of the Project Management Agreement,
the additional contributions from Capston have been accounted for as a cash
purchase of 3,500,000 shares of Old Common by Capston at a price of $0.01 per
share.
After giving effect to the sale of 15,000,000 shares of Old Common to
Tobem, the issuance of an additional 3,500,000 shares of Old Common to Capston
for an additional $35,000 in cash and the issuance of 1,351,756 shares of Old
Common to the Issuer's former legal counsel in settlement of claims for unpaid
fees, the Issuer has a total of 32,500,000 shares of Old Common issued and
outstanding on the date of this Current Report.
Capston has recently negotiated the terms of a business combination
transaction that requires the Issuer to issue more shares of stock than would
have been permissible under the Issuer's Certificate of Incorporation. The
agreements relating to the transaction also require the Issuer to implement a 1
for 40 reverse split of the Old Common. The Amendment was adopted by the Issuer
for the primary purpose of facilitating the prompt closing of this agreement.
No Right to Vote, Dissent or Exercise Appraisal Rights. The Amendment was
proposed by the Issuer's Board of Directors, approved by the written consent of
the holders of a majority of the Issuer's outstanding shares and filed in the
office of the Delaware Secretary of State on July 28, 2000. Under the General
Corporation Law of Delaware, the stockholders of the Issuer who were not
afforded an opportunity to consent or otherwise vote with respect to the
Amendment have no right to dissent or require a vote of all the Issuer's
stockholders. Moreover, the business combination transaction has been structured
as a reverse takeover transaction and the stockholders will have no right to
vote with respect to the approval of the transaction or the terms thereof. The
provisions of the General Corporation Law of Delaware that grant stockholders
appraisal rights in connection with certain merger transactions will not be
applicable to the business combination.
Legal Status of Amendment. The Amendment has been proposed, approved and
filed in accordance with the requirements of the General Corporation Law of
Delaware. While a Delaware corporation may withdraw a filed amendment prior to
its effective date if such withdrawal is approved by the requisite stockholder
vote, it is the opinion of legal counsel that the execution and closing of the
proposed business combination transaction will effectively foreclose this
option. Accordingly, the Issuer does not intend to alter the terms of the
Amendment, although it may elect to change the effective date thereof.
Effectiveness of Amendment. Under Section 14(c) of the Securities Exchange
Act of 1934, the Amendment cannot become effective until 20 days after the
Issuer mails to all of its stockholders an "Information Statement Pursuant to
Section 14(c) of the Securities Exchange Act of 1934" that provides the detailed
information on the Issuer and the Amendment. Within 15 days, the Issuer intends
to file a Current Report on Form 8-K that describes the acquisition and within 5
days thereafter, the Issuer intends to file an Information Statement that
provides the information required to Section 14(c) of the Securities Exchange
Act of 1934. When the Issuer has responded to any comments from the SEC's staff
and is legally authorized to mail the Information Statement to its stockholders,
the Issuer intends to take such additional action as may be necessary to change
the effective date of the Amendment to the date which is 20 days after the
mailing date of the Information Statement.
Acquisition of Yifan, Inc.
Overview of Acquisition Terms. On July 30, 2000, Issuer entered into a
reorganization agreement with Yifan, Inc., a New York corporation ("Yifan"), and
all of its stockholders. In connection with this Agreement, (a) the Issuer has
effected the name change described elsewhere herein, (b) the Issuer has filed
the Amendment described elsewhere herein which will reduce its issued and
outstanding common stock to 812,500 shares of New Common and increase its
authorized capital, (c) the stockholders of Yifan have contributed all of their
interest in Yifan to the Issuer solely in exchange for the right to receive
11,755,688 shares of New Common on the effective date of the Amendment, (d) the
Issuer has agreed to issue 176,335 shares of New Common to certain finders who
assisted in the negotiation of the Yifan transaction; and (c) Capston has agreed
to transfer an additional 88,168 shares of New Common to such finders.
Taking all of the foregoing into account, and after giving effect to the
acquisition, there will be approximately 12,744,523 shares of New Common issued
and outstanding on September 30, 2000, the effective date of the Amendment. No
shares of Preferred Stock will be issued and outstanding.
Overview of Future Business Activities. Yifan, Inc. is a specialized
Chinese Language Internet communications, e-commerce and software development
company that offers:
o online news, information, entertainment and community services to
Chinese communities in the United States and Asia;
o business to business ("B2B") and business to consumer ("B2C")
e-commerce software solutions for wholesale and retail enterprises
serving Chinese communities worldwide; and
o other proprietary Chinese language Internet software solutions.
In May 1997, Yifan He, a Chinese computer science student at SUNY
Stonybrook, established an Internet portal site called "Yifan.com." This site
was written entirely in Simplified Chinese, the standard written language in the
Peoples Republic of China (the "PRC"), and focused on the needs of ethnic
Chinese living in the northeastern United States. Concurrently, Mr. He
established "E-omninet," a free service that gives registered users access to a
number of special online features including a file manager, address book,
bookmarks, solar and lunar calendars, event reminders, POP3 e-mail and web
hosting. E-Omninet permits a registered user to record and access personal and
business information from any location, and if desired, share that information
with others.
Since 1997, the portal established by Mr. He has grown, adapted and changed
significantly as it developed from a hobby to an established Internet portal
that operates under four principal domain names "yifan.com," "yifan.net,"
"yifannet.com" and "gotofind.com." Yifan presently serves approximately 100,000
registered users and generates approximately 1 million page impressions per day
from its principal Internet portal sites.
While rapid growth is to be expected in Internet related businesses, the
key feature that differentiates Yifan, Inc. is that is has experienced
substantial growth with virtually no advertising or promotion, other than word
of mouth. Where other Internet companies have relied on expensive advertising
and promotion to attract a broad user base, Yifan, Inc. has relied exclusively
on the features of a "Community" that will be critical to its' long-term success
- - responsiveness to the needs of a carefully targeted audience and reliance on
user feedback and contributions.
In 1998, Mr. He began to seek outside financing to enhance the yifan.com
site, expand the scope of his service to the Chinese community and create
proprietary Chinese language software products that will make the Internet more
accessible to the one-quarter of the world's population that reads and writes
Chinese. After obtaining financial and business assistance from several leading
members of the Chinese community in the New York Metropolitan area, Mr. He
embarked on an ambitious software development project that has resulted in
several proprietary software products:
o Search Engine - provides the fastest Chinese language search of any
engine on the Internet;
o Web Crawler - uses both Simplified Chinese and Traditional Chinese to
search and categorize Chinese language web pages;
o Translation Utility - converts between Simplified Chinese and
Traditional Chinese characters on the fly while a page is downloading;
o Content Provider Shell ("CPS") - provides all of the core programming
modules needed by users who want to establish a wide variety of
Chinese language "content" sites;
o E-commerce Shell ("ECS") - provides all of the core programming
modules needed by users who want to establish a wide variety of B2B
and B2C e-commerce sites;
o Tollgate Utility - allows a user to download encrypted copies of
copyrighted books and other documents that can only be read on the
computer that downloaded the document, thereby protecting the
copyright owners;
o Distance Learning Products - facilitate the development of
Internet-based education programs for users of Chinese descent; and
o Chinese language chat room software.
At the date of this Current Report on Form 8-K, Yifan, Inc. also provides a
variety of value-added business services designed to enhance the Internet
presence of its' clients, including store hosting and management, and Web site
tools and services. Yifan, Inc. is not engaged in the business of building,
maintaining or operating specific websites on a contract basis, because it
believes such fee for service activities are not likely to generate recurring
revenues comparable to those experienced by software developers. Rather, it is
focusing its' efforts on the software tools and business systems that will be
essential as the Internet becomes an important feature of the landscape in the
PRC and other Chinese speaking countries.
At the date of this Current Report on Form 8-K, the combined companies have
a net worth of less than $500,000 and the Old Common has a net tangible book
value of less than $.001 per share.
Anticipated Future Filings. As a result of the business combination
transaction, the Issuer will be required to make several additional filings with
the SEC. The nature of the required filings and the anticipated dates thereof
are discussed in the following paragraphs:
o Within 5 days, the Issuer intends to file with the SEC and promptly
distribute to its stockholders an "Information Statement Pursuant to
Section 14(f) of the Securities Exchange Act of 1934" which discloses
that effective on the 10th day after the mailing thereof, four
individuals selected by Yifan will be appointed to the Board of
Directors;
o Within 15 days, the Issuer intends to file with the SEC a Current
Report on Form 8-K that provides detailed information on the business
combination transaction, including audited historical financial
information on Yifan and unaudited pro forma financial information on
the combined companies;
o Within 20 days, the Issuer intends to file with the SEC an
"Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934" that provides the detailed disclosure on the
Amendment and the Yifan transaction required by the Rules of the SEC;
o When the Issuer has responded to any comments from the SEC's staff and
is legally authorized to mail to its stockholders the "Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act of
1934," the Issuer intends to take such additional action as may be
necessary to change the effective date of the Amendment to the date
which is 20 days after the mailing date of the Information Statement;
ITEM 7.
Financial Statements and Exhibits
(c) Exhibits.
3.1 Certificate of Ownership and Merger merging Yifan Communications, Inc.
into Smart Games Interactive Inc. dated July 21, 2000
3.2 Amendment to the Certificate of Incorporation of Yifan Communications,
Inc. dated July 27, 2000
99.1 Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
YIFAN COMMUNICATIONS, INC.
July 31, 2000
By: /s/
---------------------------
Sally A. Fonner, Sole Director