U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM  10-QSB

(Mark  One)

[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act
of  1934  for  the  quarterly  period  ended  December  31,  2000.

[ ] Transition  report  pursuant  section 13 or 15(d) of the Securities Exchange
Act  of  1934  for  the  transition  period  from  to

Commission  file  number:  001-15643
                          --------------

                 CYBER MERCHANTS EXCHANGE, INC. D.B.A. C-ME.COM
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

              CALIFORNIA                                 95-4597370
              ----------                                 ----------
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)

          600 S. LAKE AVE., SUITE 405, PASADENA, CA             91106
          -----------------------------------------             -----
          (Address of principal executive offices)            (Zip Code)

                     Issuer's telephone number (626)793-5000
                                               -------------


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

Number  of  shares  outstanding  of the issuer's classes of common equity, as of
December  31,  2000:  7,589,669 shares of Common Stock, no par value (one class)

Transitional  Small  Business  Disclosure  Format:  Yes     No  X
                                                        -       -


                                        1
<PAGE>
                                TABLE OF CONTENTS

PART  I  -  FINANCIAL  INFORMATION . . . . . . . . . . . . . . . . . . . . . . 3

     Item 1.  Financial  Statements . . . . . . . . . . . . . . . . . . . . . .3

          Balance  Sheet  (unaudited) as of December 31 and June 30, 2000 . . .3

          Statement of Operations (unaudited) for three months and six months
          ended  December  31,  2000  and  December 31, 1999 . . . . . . . . . 4

          Statement  of  Cash  Flows  (unaudited)  for  six  months  ended
           December  31,  2000  and  December  31,  1999 . . . . . . . . . . . 5

          Notes  to  Financial  Statements  (unaudited) . . . . . . . . . . . .6

     Item 2.  Management's Discussion and Analysis of Financial Condition
              and  Results  of  Operations . . . . . . . . . . . . . . . . . . 8

PART  II  -  OTHER  INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 13

     Item 1.  Legal  Proceedings . . . . . . . . . . . . . . . . . . . . . . .13

     Item 6.  Exhibits  and  Reports  on  Form  8-K . . . . . . . . . . . . . 13

SIGNATURES . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . 14


                                        2
<PAGE>
<TABLE>
<CAPTION>
                                 PART I - FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS

                                 CYBER MERCHANTS EXCHANGE, INC.
                                         D.B.A. C-ME.COM

                                          BALANCE SHEET


                                                                      June 30,     December 31,
                                                                        2000           2000
                                                                    ------------  --------------
                                                                                   (Unaudited)
<S>                                                                 <C>           <C>
ASSETS
Current assets:
   Cash and cash equivalents                                        $ 1,274,395   $      11,493
   Certificates of deposit                                            3,900,000       4,294,024
   Stock subscription receivable                                      1,481,240               -
   Accounts receivable, net of allowance for doubtful accounts of
     $5,990 and $2,590 as of June 30, 2000 and December 31,
     2000, respectively                                                  54,693           9,417
   Accrued interest receivable                                                           17,716
   Accounts receivable - related parties                                700,000               -
   Prepaid expenses                                                       5,367           4,895
                                                                    ------------  --------------

Total current assets                                                  7,415,695       4,337,545

Furniture, fixtures and equipment, net                                   63,937          90,110

Investments in overseas joint ventures and ABNet, net                   815,427       1,962,234
Other assets                                                              3,619           7,222
                                                                    ------------  --------------

Total assets                                                        $ 8,298,678   $   6,397,111
                                                                    ============  ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accrued expenses                                                 $   691,114   $      44,607
                                                                    ------------  --------------

Total current liabilities                                               691,114          44,607
                                                                    ------------  --------------

Commitments and contingency (Note 6)
Shareholders' equity:
   Common stock, no par value; 40,000,000 shares authorized;
     7,589,669 shares issued and outstanding at June 30, 2000 and
     December 31, 2000                                                8,550,777      10,036,017
   Additional paid-in capital                                         3,332,827       3,575,225
   Common stock subscribed                                            1,481,240               -
   Unearned stock compensation                                       (1,180,196)       (903,721)
   Accumulated deficit                                               (4,577,084)     (6,355,017)
                                                                    ------------  --------------

Total shareholders' equity                                            7,607,564       6,352,505
                                                                    ------------  --------------

Total liabilities and shareholders' equity                          $ 8,298,678   $   6,397,111
                                                                    ============  ==============
</TABLE>

                 See accompanying notes to financial statements.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                         CYBER MERCHANTS EXCHANGE, INC.
                                                D.B.A. C-ME.COM

                                            STATEMENT OF OPERATIONS

                                            Three Months Ended         Six Months Ended
                                               December 31,              December 31,
                                         -------------------------  ------------------------
                                            1999         2000         1999        2000
                                         -----------  ------------  ----------  ------------
                                          Unaudited    Unaudited   Unaudited    Unaudited
<S>                                      <C>          <C>           <C>         <C>
Revenues:
   Subscribers' fees                     $   31,525        33,150      41,675        46,050
                                         -----------  ------------  ----------  ------------

Operating costs and expenses:
   Cost of revenue                           29,139       130,855      52,591       200,387
   General and administrative expenses      252,761       571,139     374,383       992,758
   Stock-based compensation                       -       259,849           -       518,873
                                         -----------  ------------  ----------  ------------

   Operating losses                        (250,375)     (928,693)   (385,299)   (1,665,968)
                                         -----------  ------------  ----------  ------------

Other income (expenses):
   Interest income, net                      29,491        85,494      47,624       161,876
   Other expenses                            (5,974)      (17,980)     (5,974)      (19,433)
   Loss on investment in overseas joint
     ventures and ABNet                           -      (192,514)          -      (253,193)
                                         -----------  ------------  ----------  ------------

Loss before income taxes                   (226,858)   (1,053,693)   (343,649)   (1,776,718)

Income taxes                                   (800)         (800)       (800)       (1,214)
                                         -----------  ------------  ----------  ------------

Net loss                                 $ (227,658)  $(1,054,493)  $(344,449)  $(1,777,932)
                                         ===========  ============  ==========  ============

Basic and diluted net loss per share     $    (0.04)  $     (0.14)  $   (0.06)  $     (0.23)
                                         ===========  ============  ==========  ============

Weighted-average number of common
    shares outstanding                    6,161,173     7,589,669   6,161,173     7,589,669
                                         ===========  ============  ==========  ============
</TABLE>

                 See accompanying notes to financial statements.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                         CYBER MERCHANTS EXCHANGE, INC.
                                 D.B.A. C-ME.COM

                            STATEMENTS OF CASH FLOWS
                 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT

                                                                     Six Months Ended
                                                                        December 31,
                                                                 --------------------------
                                                                     1999          2000
                                                                 ------------  ------------
                                                                 (Unaudited)   (Unaudited)
<S>                                                              <C>           <C>
Cash flows from operating activities:
   Net loss                                                      $  (344,449)  $(1,777,932)
   Adjustments to reconcile net loss to net cash used in
     operating activities:
      Depreciation and amortization                                   16,601        23,382
      Stock compensation expense                                                   518,872
      Loss on investments                                                          253,193
      Changes in current assets and liabilities:
         Accounts receivable                                         (21,555)      407,560
         Prepaid expenses                                                              472
         Other assets                                                               (3,603)
         Accrued expenses                                           (212,070)     (646,507)
         Deferred Revenue                                             (3,510)
                                                                 ------------  ------------

Net cash used in operating activities                               (564,983)   (1,224,563)
                                                                 ------------  ------------

Cash flows from investing activities:
   Purchase of office equipment                                      (35,549)      (49,555)
   Proceeds from maturity of certificates of deposit               1,400,200      (394,024)
   Increase in deposits and others                                   (32,476)
   Investment in GP.com                                                         (1,000,000)
   Investment in E-SEA                                                            (400,000)
   Return of investment due to sales of software                                   320,000
                                                                 ------------  ------------

Net cash provided by (used in) investing activities                1,332,175    (1,523,579)
                                                                 ------------  ------------

Cash flows from financing activities:
   Proceeds from stock subscribed and exercise of stock options      100,984     1,485,240
                                                                 ------------  ------------

Net cash provided by financing activities                            100,984     1,485,240
                                                                 ------------  ------------

Net increase (decrease) in cash and cash equivalents                 868,176    (1,262,902)

Cash and cash equivalents, beginning of year                         595,265     1,274,395
                                                                 ------------  ------------

Cash and cash equivalents, end of year                           $ 1,463,441   $    11,493
                                                                 ============  ============
</TABLE>

                 See accompanying notes to financial statements.


                                        5
<PAGE>
NOTE  1  -  ORGANIZATION  AND  BUSINESS

Cyber  Merchants Exchange, Inc. d.b.a. C-ME.com (the "Company" or "C-ME.com") is
a business-to-business e-commerce company serving the worldwide retail industry.
C-ME.com,  a  California  corporation,  was  formed  in  July  1996.

The  Company provides its customers with an Internet-based communications system
that enables retailers and vendors to conduct negotiations and to electronically
facilitate  the  sourcing,  and the purchase and sale of merchandise on a global
basis.  Using  C-ME.com's  proprietary  software, the Company maintains a secure
yet  open  electronic  network  that  enables  retailers  to  conduct  on-line
communications  and  transactions  with  their  vendors.  The  front-end
communications  and  trading  process  is  generally  referred  to in the retail
industry  as  "sourcing."  High  volumes  of  product  and  transaction data are
exchanged between retailers and their vendors in order for buy-sell transactions
to  be  initiated,  negotiated  and consummated.  This critical sourcing process
typically  requires  a  substantial  amount  of time and attention from both the
retail merchandise buyer and the salesperson of a vendor.  The Company's related
software  products  and  services  are  designed  to make this sourcing function
substantially  more  effective  and  efficient.

C-ME's  value lies in its intermediary abilities; specifically in its ability to
create  an  information  pipeline for the retail industry.  The Company believes
its  virtual  pipeline  can  eliminate  cost, redundancy, and system integration
barriers  now  faced  by  retailers,  and  expedite  the  flow of usable product
information  to  retailer  from  vendors who will benefit from its low cost, low
technology,  real  time feedback communication system. By providing the retailer
with  direct  access  to  foreign  vendors, the Company can support its existing
retail  partnerships  and  attract new retailers to join.  C-ME's strategy is to
set-up joint ventures.  Each joint venture will set up multiple sourcing offices
within their region to market vendors and international manufacturers that would
like  to  sell  directly  to  large  U.S.  retailers  to join and utilize C-ME's
Internet  Sourcing  Networks  (ISN's).  By  establishing  localized  merchandise
sourcing  offices,  C-ME.com  is  fulfilling its mission of being the retailers'
global  sourcing  solution  by  making  international  commerce  convenient  and
feasible for many manufacturers who know how to make quality products but do not
have  technological  knowledge or Internet access.  Currently, Taiwan has opened
three  local offices, China has five, and the Philippines and Thailand each have
one office.  In addition, C-ME.com has independent sourcing agents in Hong Kong,
Korea, Indonesia, Singapore and Turkey.  C-ME.com plans to expand its operations
to  Central  and  South  America  and  Europe.

NOTE  2  -  BASIS  OF  PRESENTATION

The  accompanying unaudited consolidated financial statements have been prepared
in  accordance  with  generally  accepted  accounting  principles  for  interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation  S-X.  Accordingly,  they  do  not  include  all  the information and
footnotes  required  by  generally  accepted  accounting principles for complete
financial statements.  In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for fair presentation have
been  included.  Operating  results for the six months period ended December 31,
2000  are not necessarily indicative of the results that may be expected for the
year  ending  June 30, 2001.  For further information, refer to the consolidated
financial  statements  and  footnotes  thereto  included in the Company's annual
report  on  Form  10-KSB  for  the  year  ended  June  30,  2000.


                                        6
<PAGE>
NOTE  3  -  RELATED  PARTY  TRANSACTIONS

During  the  quarter  ended  September  30,  2000, the Company received proceeds
of  $700,000  from  GP.com  and  E-SEA  for the sales of software to these joint
ventures.  In  addition,  during  September  2000,  the  Company  advanced
approximately  $34,000  to  GP.com.  Subsequent to the end of the first quarter,
the  Company  received  the full reimbursement from GP.com.   During the quarter
ended  December  31,  2000  the  C-ME  joint  venture  with Japan was cancelled.

NOTE  4  -  INVESTMENT  IN  ABNET

On  February  10,  2000,  the  Company invested $1 million in Abest Tech Company
(ABNet)  for  1,500,000  shares  of ABNet's Common Stock, which represents a 15%
equity  interest  in  ABNet.  The Company accounts for this investment under the
cost  method. During the quarter ended December 31, 2000, the Company wrote down
aproximately  $100,000  of  their  investment  in  ABNet to reflect an estimated
impairment  of  its  original  investment.

NOTE  5  -  TRANSACTION  IN  SHAREHOLDERS'  EQUITY

In  May 2000 the Company conducted a private placement to issue 1,255,900 shares
of  its  common stock at $4.878 per share.   The fund raising was closed at June
30, 2000 with net proceeds of $5,186,959, netting issuance expenses of $939,377.
Among  the  net proceeds of $5,186,959, $1,475,240 was receivedon July 30, 2000.
During  the  six-month  period  ended  December  31,  2000, the Company received
proceeds  of  $10,000  from  options  exercised.

During  the  three-month  period ended September 30, 2000, the Company granted a
total  of 335,596 options under the 1999 Option Plan to employees, officers, and
non-employees.   The  exercise  prices  of  options  granted vary and range from
$4.878 to $6.080.   The Company applies APB Opinion No. 25 "Accounting for Stock
Issued  to  Employees"  and  related interpretations in accounting for its stock
option plans.   As a result, the Company recognized a total compensation expense
of  $239,615  which all related to employees.  Based on their respective vesting
terms this amount will be amortized over two years with $119,540 being amortized
the  first  year  and  $120,076  being  amortized  the  second  year.

During  the  three-month  period  ended December 31, 2000, the Company granted a
total  of  17,420 options under the 1999 Option Plan to employees, officers, and
non-employees.  The  exercise  prices  of  options  granted  vary and range from
$4.910  to $5.190.  The Company applies APB Opinion No. 25 "Accounting for Stock
Issued  to  Employees"  and  related interpretations in accounting for its stock
option  plans.  As a result, the Company recognized a total compensation expense
of  $2,782  amortized  over  3  years,  which  related  to  employees  and
non-employees.  During  the  quarter  ended  December  31,  2000,  the  Company
recognized $259,849  in  stock  based  compensation  expense.

NOTE  6  -  COMMITMENTS  AND  CONTINGENCY

As  disclosed  in  the  Company's Form 10-KSB, dated June 30, 2000, and filed on
September  29, 2000, the Company was named as a co-defendant, along with BCF, in
a  lawsuit  brought by Stanley Rosner, an individual in an action in the Supreme
Court  of  the  State  of New York, Nassau County.  To date, the Company has not
received  notice  of  the  proposed  transfer  of  venue  and  has not filed its
responsive  papers  or  otherwise  moved  against  the  complaint.


                                        7
<PAGE>
ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
             RESULTS  OF  OPERATIONS

The following discussion of the financial condition and results of operations of
the  Company should be read in conjunction with the financial statements and the
related  notes thereto included elsewhere in this quarterly report for the three
months  and  six months ended December 31, 2000.  This quarterly report contains
certain  forward-looking  statements  and the Company's future operating results
could  differ  materially  from  those  discussed  herein.  Certain  statements
contained  in  this Report, including, without limitation, statements containing
the  words  "believes,"  "anticipates,"  "expects"  and  the  like,  constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as  amended.  Such  forward-looking  statements involve known and unknown risks,
uncertainties  and other factors which may cause the actual results, performance
or  achievements  of  the  Company  to  be  materially different from any future
results,  performance  or  achievements  expressed  or  implied  by  such
forward-looking statements.  These factors are discussed in more detail below in
the  section  entitled  "Risk  Factors", and are discussed in more detail in the
Risk  Factors  section  of  the  Company's  Annual Report on Form 10-KSB for the
fiscal  year  ended  June  30,  2000.  Given  these  uncertainties,  readers are
cautioned  not  to place undue reliance on such forward-looking statements.  The
Company  disclaims  any  obligation  to  update  any such factors or to announce
publicly  the  results  of  any  revisions  of  the  forward-looking  statements
contained  or  incorporated  by  reference  herein  to  reflect future events or
developments.

STATUS  OF  OPERATIONS

The  Company's  current  business  model  focuses  on  the  retailer and forming
strategic  retail  relationships.  In  addition,  the  Company  is  aggressively
pursuing  the  establishment  of  international  sourcing  offices.  This
international  expansion  will  help  complement  the  strategic  retailer
relationships  that  the Company anticipates attracting through the execution of
its  business  model.  The  Company  plans to utilize the marketing power of its
retail  partners  to  attract  vendors  worldwide.

The  Company  believes that by providing retailers with direct access to foreign
manufacturers,  it  can support its existing retail partnerships and attract new
retail  partners.  The  Company's  goal  is to aggregate manufacturers to create
efficiencies  for  both foreign manufacturers and U.S. retailers.  The Company's
strategy  is  to  partner  with  companies  in  other  countries  that  have the
connections,  capital  and  ability to form joint ventures.  These joint venture
corporations  will open multiple merchandise sourcing offices in many countries,
beginning  in  the  Pacific  Rim's  major  manufacturing  centers.  The  local
merchandise  sourcing  offices  will  be  used  to  market the Company's ISNs to
manufacturers  that  want  to  sell  directly  to  U.S.  retailers.

ACCUMULATED  LOSSES

From  its inception in 1996 through December 31, 2000, the Company has generated
an  accumulated  deficit  of  $6,355,017.  Since  its inception, the Company has
incurred  substantial  costs to develop its technology; to create, introduce and
enhance  its  sourcing  solution;  to  establish  marketing  and  distribution
relationships;  to recruit and train a sales and marketing group and to build an
administrative  organization.  The  Company's  prospects  must  be considered in
light  of  its  operating  history,  and of the risks, expenses and difficulties
frequently  encountered  by  companies  in  their  early  stage  of  operations
particularly  companies  in  new,  unproved  and  rapidly evolving markets.  The
limited  operating history of the Company makes the prediction of future results
of  operations  difficult or impossible and therefore, there can be no assurance
that  the  Company  will  grow  or  that  it  will be able to achieve or sustain
profitability.  The  Company's  success depends to a significant degree upon the


                                        8
<PAGE>
Company's  ability to raise additional capital, and upon continued contributions
of  key  management,  sales,  marketing,  and finance personnel, certain of whom
would  be  difficult  to  replace.  The  loss  of the services of any of the key
personnel  or  the inability to attract or retain qualified management and other
personnel  in  the  future, or delays in hiring required personnel, could have a
material  adverse  effect  on  the  Company's  business,  operating  results  or
financial  condition.  Also,  the  Company's  success is highly dependent on its
ability to execute in a timely manner its new sales and marketing plan, of which
no  assurance  can  be  made.


FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATION

THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1999

REVENUE

Total  operating  revenues for three months ended December 31, 2000 increased to
$33,150, increasing by $1,625 from $31,525, a 5.2% increase, for the same period
last  year  with  revenue  consisting  of  subscribers'  fees.  The  increase in
operating  revenue  was  due  to  the  increased number of subscribers to C-ME's
services.

The  Company  anticipates  generating  revenues  from  fees paid by domestic and
global  vendors who subscribe to the ISN, and transaction fees to be paid by the
retailers  on  overseas  purchases  through  the  Company's  operating  system.

OPERATING  COSTS  AND  EXPENSES

The  cost  of  revenue increased $101,716 to $130,855 for the three months ended
December  31,  2000,  compared  to $29,139 for the same period last year, a 449%
increase.  The increase in the cost of revenue is attributable to an increase in
the  cost  of additional technical personnel to service customers as well as the
increased  costs of developing and servicing the Company's proprietary software.

General  and  administrative  expenses increased by $318,378 to $571,139 for the
three month ended December 31, 2000, as compared to $252,761 for the same period
last  year, a 226% increase. The increase in general and administrative expenses
is  primarily  due  to  the increase in professional consulting expense, payroll
expense,  and  marketing  expense.

The  Company  recognized  stock  compensation  expense  of  $259,849  for  the
three-month ended December 31, 2000.   Of the $259,849, $2,782 came from options
granted  in  the  second quarter of fiscal year 2001, the remaining $257,067 was
due  to amortization of unearned stock compensation recognized in prior periods.

NET  LOSS

The  Company  recorded  a  net  loss  of  $1,054,493  for the three months ended
December 31, 2000, a $826,835 increase in net loss, as compared to a net loss of
$227,658  for  the  same  period  last  year.  The  increase  in  net  loss  is
attributable  to a $1,625 increase in revenue compared to a $828,460 increase in
operating costs and other expenses.   Loss per share as of December 31, 2000 was
$0.14  as  compared  to  $0.04 as of December 31, 1999 due to an increase in net
loss  and  increase  in  the  number  of  outstanding  shares  of  common stock.


                                        9
<PAGE>
SIX  MONTHS  ENDED  DECEMBER  31, 2000 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1999

REVENUE

Total  operating  revenues  for  six months ended December 31, 2000 increased to
$46,050,  increasing  by  $4,375  from  $41,675,  a 10.5% increase, for the same
period  last year with revenue consisting of subscribers' fees.  The increase in
operating  revenue  was  due  to  the  increased number of subscribers to C-ME's
services.

The  Company  anticipates  generating  revenues  from  fees paid by domestic and
global  vendors who subscribe to the ISN, and transaction fees to be paid by the
retailers  on  overseas  purchases  through  the  Company's  operating  system.

OPERATING  COSTS  AND  EXPENSES

The  cost  of  revenue  increased  $147,796 to $200,387 for the six months ended
December  31,  2000,  compared  to $52,591 for the same period last year, a 381%
increase.  The increase in the cost of revenue is attributable to an increase in
the  cost  of additional technical personnel to service customers as well as the
increased  costs of developing and servicing the Company's proprietary software.

General  and  administrative  expenses increased by $618,375 to $992,758 for the
six  months ended December 31, 2000, as compared to $374,383 for the same period
last  year, a 265% increase. The increase in general and administrative expenses
is  primarily  due  to  the increase in professional consulting expense, payroll
expense,  and  marketing  expense.

The Company recognized stock compensation expense of $518,873 for the six months
ended December 31, 2000.   Of the $518,873, $60,594 came from options granted in
the  first  six  months  of  fiscal year 2001, the remaining $458,279 was due to
amortization  of unearned stock compensation recognized in the fiscal year ended
June  30,  2000.

NET  LOSS

The  Company recorded a net loss of $1,777,932 for the six months ended December
31,  2000,  a  $1,433,483  increase  in  net  loss, as compared to a net loss of
$344,449  for  the  same  period  last  year.  The  increase  in  net  loss  is
attributable  to  a $4,375 increase in revenue compared to a $1,437,858 increase
in  operating costs and other expenses.   Loss per share as of December 31, 2000
was $0.23 as compared to $0.06 as of December 31, 1999 due to an increase in net
loss  and  increase  in  the  number  of  outstanding  shares  of  common stock.

LIQUIDITY  AND  CAPITAL  RESOURCES

The  Company's  cash  balances and certificates of deposit decreased by $868,878
from  $5,174,395  as  of  the 12 months ended June 30, 2000, to $4,305,517 as of
December  31,  2000.  This decrease in cash balances and certificates of deposit
is  primarily  due  to  the  Company's  expansion  and  losses  from operations.


                                       10
<PAGE>
Management  estimates  the monthly cash "burn rate" to be approximately $210,000
per month.  The Company believes it has sufficient cash resources to operate its
business  over  the  next  twelve months.  Depending on market acceptance of the
Company's current business model, the Company may raise additional funds, either
debt  or  equity,  to  augment  future  growth  of  the  business.

On  January  12,  2000,  the  Company  entered  into an agreement with a bank to
establish  a  $600,000  revolving  line  of  credit  agreement  with  the  bank.
Borrowings  are  secured  by a $700,000 time certificate of deposit at the bank.
The  line  of  credit  will  expire  on  January  2, 2001.  The Company has this
revolving  credit  line  available  for general working capital purposes.  As of
December 31, 2000, the Company had no borrowing under this facility.  Subsequent
to  December 31, 2000, the revolving line of credit was extended to February 16,
2001.  The  Company  is  in the process of negotiating a new credit facility.

Management  believes  that current cash balances and cash flows from operations,
if any, will be sufficient to meet present growth strategies and related working
capital  and  capital  expenditure  requirements for twenty months.  The current
business  plan  proposes  significant increases in spending when compared to the
historical  expenditures.  Management  may  decide  to  raise additional capital
through the issuance of additional debt or equity securities, prior to achieving
positive  cash  flows  from  operations.

In  July  2000,  the  Company invested $1,000,000 into Global Purchasing Dotcom,
Inc. (GP.com) for a 50% equity interest and $400,000 into E-SouthEast Asia, Inc.
(E-SEA)  for  a  40%  equity  interest.

The  Company  plans  to utilize a combination of internally generated funds from
operations,  potential  debt  and/or  equity  financings to fund its longer-term
growth  over  a  period  of  two  to  five  years.  The  availability  of future
financings  will  depend  on  market  conditions.

The  forecast  of  the  period  of  time  through  which the Company's financial
resources  will be adequate to support operations is a forward-looking statement
that  involves  risks  and  uncertainties.  The  actual funding requirements may
differ  materially  from this as a result of a number of factors including plans
to fully support the ISN and the Company's investments in systems infrastructure
and  staffing.

EFFECT  OF  FLUCTUATIONS  IN  FOREIGN  EXCHANGE  RATES

The Company's current joint ventures are located in countries outside the United
States.  The  functional  currency  for  this  foreign  operation  is  the local
currency.  The  carrying value of the Company's investments in Taiwan is subject
to  the  risk of foreign currency fluctuations.  Any dividends received from the
Company's  international joint ventures will also be subject to foreign exchange
risk.


RISK  FACTORS

     THE  COMPANY  HAS NOT  PRODUCED A PROFIT AND CANNOT BE CERTAIN THAT IT WILL
     PRODUCE A  PROFIT.

The  Company  is  not  profitable  and  continues to produce a net loss.  If the
Company  does  achieve  profitability,  it cannot be certain that it will remain
profitable  nor  that  profits  will  increase  in  the  future. The Company has
incurred  significant  losses  since  its  inception  and  may never generate or
sustain  a  profit.  For  the  six  months  ended December 31, 2000, the Company
reported a net loss of $1,777,932.  The Company devotes significant resources to
developing,  enhancing,  selling  and  marketing its products and services. As a
result,  the  Company  will  need  to  generate significant revenues to maintain
profitability.  The  Company  may not continue its historical growth or generate
sufficient  revenues  to  sustain  or  increase  profitability on a quarterly or
annual  basis  in  the  future.


                                       11
<PAGE>
     DUE  TO  MARKET  CONDITIONS  OVER  THE PAST SEVERAL MONTHS, THE COMPANY WAS
     UNABLE EXPAND  ITS  SOURCING  NETWORK  AS  PLANNED  AND,  AS A RESULT, MUST
     RELY ON ITS  EXISTING  INTERNET  SOURCING  NETWORK  TO  GENERATE  OPERATING
     REVENUE.

Due  to  market  conditions,  the Company has been unable to expand its Internet
Sourcing  Network  as  planned.  The  Company had planned to expand its Internet
Sourcing  Network  into  areas beyond those it currently has established through
joint  ventures in Asia. The Company must now focus its resources and operations
on  its  existing  Internet  Sourcing  Network  in  order  to generate operating
revenue.

     THE  INTERNET  SOURCING  NETWORK  HAS  NOT  GENERATED  ANY  REVENUE.

The  Company  expects  to  depend  primarily  on  revenue  from  the  complete
implementation  of  its  domestic  and international Internet Sourcing Networks.
The  Internet  Sourcing  Network  has  not generated any revenue and there is no
guarantee  that it will generate revenue in the future.  If the Company does not
generate  revenue  from  its  existing Internet Sourcing Network, it will have a
material  adverse  effect  on  its  business  operations.

     THE  COMPANY  MAY  REQUIRE  ADDITIONAL  EQUITY  FINANCING, WHICH MAY NOT BE
     AVAILABLE AND  MAY  DILUTE  THE  OWNERSHIP  INTERESTS  OF  INVESTORS.

The  Company's  ultimate  success will depend on its ability to raise additional
capital.  No  commitments  to  provide  additional  funds  have  been  made  by
management  or  other  shareholders.  The  Company  has  not  investigated  the
availability,  source  or  terms that might govern the acquisition of additional
financing.  When  additional capital is needed, there is no assurance that funds
will be available from any source or, if available, that they can be obtained on
terms  acceptable  to  the  Company.  If not available, the Company's operations
would  be  severely  limited,  and  it would be unable to implement its business
plan.  If  equity  financing  is  used  to raise additional working capital, the
ownership  interests  of  existing  shareholders  may  be  diluted.

     THE  COMPANY'S  OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY.

As  a result of the Company's limited operating history and the rapidly changing
nature  of  the markets in which it competes, the Company's quarterly and annual
revenues  and  operating  results are likely to fluctuate from period to period.
For  this  reason,  you  should  not rely on period-to-period comparisons of the
Company's  financial  results  as  indications of future results.  The Company's
future  operating  results  could  fall  below the expectations of public market
analysts  or  investors  and significantly reduce the market price of its common
stock.  Fluctuations in the Company's operating results will likely increase the
volatility  of  its  stock  price.

     THE  COMPANY'S  DEPENDENCE  ON  ALLIANCES  WITH  BUSINESSES AND GOVERNMENTS
     OUTSIDE OF THE  UNITED  STATES  INVOLVES  RISKS.

The  Company  depends  on  its  ability  to  establish  and  maintain successful
alliances  with businesses and governments located outside of the United States.
If  the  Company is unable to establish and maintain such alliances, it will not
be  able to implement the business plan in its current configuration, which will
affect  both  its revenue stream and profit potential.  In addition, the Company
faces  political sovereign risks of conducting international business, including
risks  of  changing  economic  conditions  in  the Pacific Rim, which may have a
material adverse effect on its ability to provide global merchandise sourcing to
its  retail  partners.


                                       12
<PAGE>
     THE  COMPANY DOES NOT ANTICIPATE PAYING DIVIDENDS TO COMMON SHAREHOLDERS IN
     THE FORESEEABLE  FUTURE,  WHICH MAKES INVESTMENT IN THE COMPANY SPECULATIVE
     OR RISKY

The  Company  has not paid dividends on its common stock and does not anticipate
paying  dividends  on  its  common stock in the foreseeable future. The Board of
Directors  has  sole  authority  to  declare  dividends payable to the Company's
shareholders.  The  fact  that  the  Company  has  not  and does not plan to pay
dividends  indicates  that  the  Company  must use all of its funds generated by
operations for reinvestment in its operating activities and also emphasizes that
the  Company  may not continue as a going concern.  Investors also must evaluate
an  investment  in the Company solely on the basis of anticipated capital gains.


                           PART II - OTHER INFORMATION

ITEM  1.   LEGAL  PROCEEDINGS

As  disclosed  in  the  Company's Form 10-KSB, dated June 30, 2000, and filed on
September  29, 2000, the Company was named as a co-defendant, along with BCF, in
a  lawsuit  brought by Stanley Rosner, an individual in an action in the Supreme
Court  of  the  State  of New York, Nassau County.  To date, the Company has not
received  notice  of  the  proposed  transfer  of  venue  and  has not filed its
responsive  papers  or  otherwise  moved  against  the  complaint.

ITEM  6.   EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  EXHIBITS

EXHIBIT
NUMBER    DESCRIPTION
------    -----------

10.1      Tri-Party Assignment Agreement Between CIT, Commercial Services, Inc.,
          Bank SinoPac and Cyber Merchants Exchange dated November 16, 2000.


(b)  REPORT  ON  FORM  8-K

None.


                                       13
<PAGE>
SIGNATURES

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


                                CYBER MERCHANTS EXCHANGE, INC., d.b.a. C-ME.com
                                -----------------------------------------------
                                                  (Registrant)


    2/14/01                           /s/  Frank  S.  Yuan
---------------                 ------------------------------------------------
                                Frank S. Yuan, Chairman, Chief Executive Officer


    2/14/01                           /s/  John  F.  Busey
---------------                 ------------------------------------------------
                                John  F.  Busey,  President  and  Acting  Chief
                                Financial Officer


                                       14
<PAGE>
                                  EXHIBIT INDEX

EXHIBIT
NUMBER    DESCRIPTION
------    -----------

10.1      Tri-Party Assignment Agreement Between CIT, Commercial Services, Inc.,
          Bank SinoPac and Cyber Merchants Exchange dated November 16, 2000.


<PAGE>