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



                                   FORM 10-QSB

(Mark One)

[X]    Quarterly report under section 13 or 15(d) of the Securities Exchange Act
       of 1934 for the quarterly period ended September 30, 2002
                                              ------------------

[ ]   Transition report under 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.
        ----------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

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

600 S. Lake Ave. , Suite 208, 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
November 13, 2002:
                  7,472,673 Shares of Common Stock (One Class)
                  --------------------------------------------

Transitional Small Business Disclosure Format: Yes    No X
                                                   ---  ---


<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                                TABLE OF CONTENTS
                                -----------------

                                                                           Page

PART I  - FINANCIAL INFORMATION

     ITEM 1.  FINANCIAL STATEMENTS

         Condensed Balance Sheets as of September 30, 2002
         (unaudited) and June 30, 2002 ......................................3

         Condensed Statements of Operations for the Three Months Ended
         September 30, 2002 and 2001 (unaudited).............................4

         Condensed Statements of Cash Flows for the Three Months Ended
         September 30, 2002 and 2001(unaudited)..............................5

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

     ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
         PLAN OF OPERATION...................................................11

      ITEM 3. CONTROLS AND PROCEDURES........................................11

PART II - OTHER INFORMATION..................................................14

     ITEM 1.  LEGAL PROCEEDINGS..............................................14

     ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.......................15

     ITEM 3.  DEFAULTS UPON SENIOR SECURITIES................................15

     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS..........15

     ITEM 5.  OTHER INFORMATION..............................................15

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K...............................15

SIGNATURES...................................................................16



                                       2
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                         PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS
                         CYBER MERCHANTS EXCHANGE, INC.
                            CONDENSED BALANCE SHEETS

<TABLE>
<S>                                                   <C>                   <C>

                                                          June 30,            Sept. 30,
                                                              2002                2002
                                                        ---------------      --------------
                                                                              (Unaudited)
ASSETS

Current assets:
   Cash and cash equivalents                            $      709,791       $     740,501
   Accounts receivable, net                                    150,370             431,940
   Inventory                                                   233,912             367,979
   Convertible note receivable                                 600,000             600,000
   Related party note and  interest receivable                 407,000                   -
   Prepaid expenses                                            173,214                   -
                                                        ---------------      --------------
                                                             2,274,287           2,140,420
Total current assets

Property and equipment, net                                     31,011              23,638
Investments in overseas joint ventures, net                    612,695             626,541
Other assets                                                     7,222               3,804
                                                        ---------------      --------------

Total assets
                                                        $    2,925,215       $   2,794,403
                                                        ===============      ==============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable and accrued expenses
                                                        $      233,687       $     348,406


Shareholders' equity:
   Common stock, no par value;
     40,000,000 shares authorized;
     7,472,673 shares issued and outstanding                 9,995,387           9,995,387
   Additional paid-in capital                                3,624,461           3,624,461
   Accumulated deficit                                     (10,928,320)        (11,173,851)
                                                        ---------------      --------------

Total stockholders' equity                                   2,691,528           2,445,997
                                                        ---------------      --------------

Total liabilities and stockholders' equity              $    2,925,215     $     2,794,403
                                                        ===============      ==============
</TABLE>


                See accompanying notes to condensed financial statements.



                                       3
<PAGE>


                         CYBER MERCHANTS EXCHANGE, INC.
                        CONDENSED STATEMENT OF OPERATIONS

<TABLE>
<S>                                                    <C>                 <C>

                                                                 Three Months Ended
                                                                   September 30,
                                                          ---------------------------------
                                                              2001               2002
                                                          --------------    ---------------

(Unaudited) (Unaudited)
Revenues:
   Transaction sales                                      $     500,273     $      789,020
   Cost of goods sold                                           447,205            711,161
                                                          --------------    ---------------
   Net revenues from transaction sales                           53,068             77,859
   Tradeshow revenue                                                  -            408,006
   Subscriber fees                                                4,010              1,850
                                                          --------------    ---------------

Net revenue                                                      57,078            487,715
                                                          --------------    ---------------

Operating expenses:
   General and administrative expenses                          372,564            751,573
   Depreciation and amortization                                 17,588              7,373
                                                          --------------    ---------------

Total operating expenses                                        390,152            758,946
                                                          --------------    ---------------

Loss from operations                                           (333,074)          (271,231)

Other income (expenses):
   Interest income, net of interest expense                      45,452             12,654
   Equity in losses on investments in
     overseas joint ventures                                   (151,819)           (69,487)
   Amortization of software sales                                83,333             83,333
   Impairment write-down on investments in ABNet                (21,762)                  -
                                                          --------------    ---------------
Total other income (expenses)                                   (44,796)            26,500

Loss before income taxes                                       (377,870)          (244,731)

Income taxes                                                        800                800
                                                          --------------    ---------------

Net loss                                                  $    (378,670)    $     (245,531)
                                                          ==============    ===============

Basic and diluted net loss available to common
    Stockholders per share                                $       (0.05)    $        (0.03)
                                                          ==============    ===============

Weighted-average number of common shares outstanding          7,583,623          7,472,673
                                                          ==============    ===============
</TABLE>

            See accompanying notes to condensed financial statements.

                                       4
<PAGE>





                         CYBER MERCHANTS EXCHANGE, INC.
                        CONDENSED STATEMENT OF CASH FLOWS


<TABLE>
<S>                                                                 <C>                  <C>
                                                                              Three Months Ended
                                                                                 September 30,
                                                                        --------------------------------
                                                                             2001              2002
                                                                        -------------     --------------

(Unaudited) (Unaudited)
Cash flows from operating activities:
   Net loss                                                             $   (378,670)     $    (245,531)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
     Depreciation and amortization                                            17,588              7,373
     Amortization of software sales                                          (83,333)           (83,333)
     Equity in losses on investments in overseas joint ventures              151,819             69,487
     Impairment write-down on investments in ABNet                            21,762                  -
      Changes in assets and liabilities:
         Accounts receivable                                                (217,933)          (281,570)
         Interest receivable                                                  22,266                  -
         Inventory                                                          (311,976)          (134,067)
         Prepaid expenses                                                          -            173,214
         Other assets                                                        (41,535)             3,418
         Accounts payable and accrued expenses                               428,918            114,719
                                                                        -------------     --------------

Net cash used in operating activities                                       (391,094)          (376,290)
                                                                        -------------     --------------

Cash flows from investing activities:
   Proceeds from maturity of certificates of deposit                         649,909                  -
   Collection of related party note and interest receivable                        -            407,000
   Purchases of property and equipment                                        (2,397)                 -
                                                                        -------------     --------------

Net cash provided by investing activities                                    647,512            407,000
                                                                        -------------     --------------

Cash flows from financing activities:
   Repayments of borrowings under line of credit                            (400,000)                 -
                                                                        -------------     --------------

Net cash used in financing activities                                       (400,000)                 -
                                                                        -------------     --------------

Net (increase) decrease in cash and cash equivalents                        (143,582)            30,710

Cash and cash equivalents, beginning of period                               205,384            709,791
                                                                        -------------     --------------

Cash and cash equivalents, end of period                                $     61,802      $     740,501
                                                                        =============     ==============
Supplemental disclosure of cash flow information:

</TABLE>

Cash Paid during the period:

            See accompanying notes to condensed financial statements

                                       5
<PAGE>


                         CYBER MERCHANTS EXCHANGE, INC.
                        NOTES TO THE FINANCIAL STATEMENTS

CERTAIN  STATEMENTS  CONTAINED IN THIS REPORT,  INCLUDING,  WITHOUT  LIMITATION,
STATEMENTS CONTAINING THE WORDS, "BELIEVES," "ANTICIPATES," "EXPECTS," AND OTHER
WORDS OF SIMILAR  IMPORT,  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 CYBER
MERCHANTS  EXCHANGE,  INC. TO BE MATERIALLY  DIFFERENT FROM ANY FUTURE  RESULTS,
PERFORMANCE,  OR  ACHIEVEMENTS  EXPRESSED  OR  IMPLIED  BY SUCH  FORWARD-LOOKING
STATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THE FACTORS DISCUSSED
UNDER THE CAPTION  "COMPANY  RISKS"  ELSEWHERE IN ITEM 1 OF THIS  REPORT.  GIVEN
THESE  UNCERTAINTIES,  READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING  STATEMENTS.   CYBER  MERCHANTS  EXCHANGE,  INC.  DISCLAIMS  ANY
OBLIGATION TO UPDATE ANY SUCH FACTORS OR TO ANNOUNCE PUBLICLY THE RESULTS OF ANY
REVISION  OF  THE  FORWARD-LOOKING   STATEMENTS  CONTAINED  OR  INCORPORATED  BY
REFERENCE HEREIN TO REFLECT FUTURE EVENTS OR DEVELOPMENTS.

NOTE 1 - BASIS OF REPORTING

Basis of Presentation
---------------------

The accompanying unaudited financial statements have been prepared in accordance
with accounting  principles  generally  accepted in the United States of America
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 of the
information and footnotes required by accounting  principles  generally accepted
in the United  States of  America  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  three-month  period ended September 30, 2002 are not
necessarily  indicative  of the results that may be expected for the year ending
June 30, 2003.  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, 2002.

Revenue Recognition
-------------------

Net  revenues  include  amounts  earned  under  product  transaction  sales  and
subscriptions. Product transaction revenues are recorded in accordance with EITF
99-19  "Reporting  Revenue  Gross as a  Principal  versus net as an Agent".  The
Company recognizes net revenues from product transaction sales when title to the
product  passes  to the  customer,  net  of  factoring  fees.  For  all  product
transactions with its customers, the Company acts as a principal, takes title to
all products sold upon shipment,  and bears  inventory risk for return  products
that the Company is not able to return to the supplier, although these risks are
mitigated through  arrangements with factorers,  shippers and suppliers.  Due to
the Company not  bearing  credit  risk,  the Company  records the  corresponding
revenue on a net basis.  However,  for financial  reporting purposes the Company
presents the details of gross  transaction  sales and related  costs of sales in
the accompanying  statements of operations.  The Company also recognizes revenue
from monthly  subscription  fees.  Subscriber fees represent  revenue  generated
through   one-time,   non-refundable   setup  fees  and  monthly  hosting  fees.
Subscription  and  subscriber  fees are recognized as revenue after the services
have been  provided.  The Company  also  recognizes  revenue from the ASAP trade
show.  The ASAP trade show generates  revenue  through  exhibitor  booths sales,
corporate sponsorship, and advertising such revenue is recognized at the time of
the related trade show.

In December 1999, the Security and Exchange  Commission  issued Staff Accounting
Bulletin  101  ("SAB  101"),  "Revenue  Recognition"  which  outlines  the basic

                                       6
<PAGE>

criteria  that  must  be met to  recognize  revenue  and  provide  guidance  for
presentation  of revenue  and for  disclosure  related  to  revenue  recognition
policies in financial  statements  filed with Security and Exchange  Commission.
Management  believes the Company's revenue  recognition  policies conform to SAB
101.

Segments of an Enterprise and Related Information
-------------------------------------------------

The Company has adopted  Statement of  Financial  Accounting  Standards  No. 131
("SFAS  131"),   "Disclosures  About  Segments  of  an  Enterprise  and  Related
Information." SFAS 131 changes the way public companies report information about
segments of their  business in their annual  financial  statements  and requires
them to report selected segment information in their quarterly reports issued to
shareholders.  It also requires  entity-wide  disclosures about the products and
services an entity provides, the material countries in which it holds assets and
reports revenues and its major customers (see Note 3).

Recent Accounting Pronouncement
-------------------------------

Recent accounting pronouncements discussed in the Notes to the June 30, 2002 and
2001  financial  statements  filed  previously  with the Securities and Exchange
Commission in Form 10-KSB that were required to be adopted during the year ended
June  30,  2003 did not  have a  significant  impact  on the  Company  financial
statements.

Reclassifications
-----------------

Certain  reclassifications  have been made to the fiscal  2001  presentation  to
conform the current period's presentation.

NOTE 2 - RELATED PARTY NOTE RECEIVABLE

In November  2001, the Company  advanced  $400,000 to a related party for a note
receivable. The note and all accrued interest was paid in full in August 2002.

                                       7
<PAGE>


NOTE 3 - BUSINESS SEGMENTS

Reportable  business  segments for the period ended September 30, 2002 (as there
was only one segment in 2001) are as follows:

Net sales from continuing operations:
      Transaction sales                                         $     77,859
       ASAP Show                                                     408,006
     Other                                                             1,850
                                                                -------------
                                                                     487,715
                                                                =============

Operation profit (loss) from continuing operations:
      Transaction sales                                         $   (310,231)
     ASAP Show                                                        39,255
      Other                                                             (255)
                                                                -------------
                                                                    (271,231)
                                                                =============

Depreciation and amortization - continuing operations:
     Transaction sales                                          $      7,373
      ASAP Show                                                            -
      Other                                                                -
                                                                -------------
                                                                       7,373
                                                                =============

Identifiable assets - continuing operations:
       Transaction sales                                        $  2,794,403
       ASAP Show                                                           -
        Other                                                              -
                                                                -------------
                                                                   2,794,403
                                                                =============

Capital expenditures:
       Transaction sales                                        $          -
       ASAP Show                                                           -
       Other                                                               -
                                                                -------------
                                                                           -
                                                                =============

                                       8
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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  ended  September  30,  2002.  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 in the Risk  Factors
section of the Company's  Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2002.  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

Cyber Merchants  Exchange,  Inc.'s (the "Company" or "C-Me") primary business is
bringing retailers and vendors together through an Internet-based  communication
system, known as the Internet Sourcing Network(TM), that enables them to conduct
negotiations and to  electronically  source,  purchase and sell merchandise on a
global basis. Using its proprietary software, the Company maintains a secure yet
open electronic  network that allows retailers to manage on-line  communications
and transactions with their vendors.  This front-end  communications and trading
process is generally referred to in the retail industry as "sourcing".  In order
for buy-sell transactions to be initiated,  negotiated,  and consummated between
retailers and their vendors,  high volumes of product and transaction  data must
be exchanged.  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 the  sourcing  and  transaction  function  easier and less
time-consuming and costly.

C-Me has adopted a  buyer-centric  business  focus by creating  its  proprietary
Internet Sourcing  Network(TM)  ("ISN"),  which consists of specialized  private
extranets for  retailers  that  centralizes  the  merchandise  review and search
process.  Its current large retail  partners  include  Burlington  Coat Factory,
Factory 2-U Stores, and Bermo  Enterprises.  C-Me has built or is in the process
of building  each of these  retailers  their own private ISN. C-Me also provides
services  through its ISN to other  retailers,  including  Value City Department
Stores, Ross Stores and 99 cents only Stores.

In January  2001,  the Company began to focus and continues to focus on sourcing
overseas  goods for small  retailers and off-price  retailers such as Value City
Department Stores,  Ross Stores,  Factory 2-U Stores, and others who do not have
their own import  departments.  The Company is using email to show the overseas'
stock lots,  or close out,  merchandise  in a standard  format,  and then C-Me's
sales staff personally presents pre-qualified goods to the retailer who responds
to the Company's email  marketing.  The Company's  management team believes that
having  both an  efficient  and  easy-to-use  electronic  trading  system  and a
national  sales force in place will  significantly  contribute  to the Company's
ability to successfully compete in the marketplace.


                                       9
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

Also in January 2001, C-Me announced a tri-party  financial platform in alliance
with  CIT  Commercial  Services  and  Bank  SinoPac  in  Taiwan.  The  agreement
eliminates  the need for  letters  of credit by  allowing  exporters  in foreign
countries  (currently  exporters  in  Taiwan,  Hong  Kong and  Vietnam)  to ship
merchandise to U.S. retailers with pre-approved  credit lines established by CIT
Commercial  Services.  Letters of credit have  historically been the predominant
means of payment for cross border trading,  but are rapidly being  supplanted by
more creative and flexible  financing  mechanisms  such as tri-party  agreements
that assure less risk for both exporters and  retailers.  The Company has a U.S.
patent pending for this financing method.

In addition to its online e-commerce  trading  business,  during September 2001,
C-Me launched a new venture  called the Apparel  Sourcing  Association  Pavilion
Trade  Show  ("ASAP  Show").   ASAP  Show  is  an  international   sourcing  and
manufacturing trade show that brings leading manufacturers from around the world
to one venue to greet, meet and sell to buyers. ASAP Show is a natural extension
of C-Me's core business on-line model. In the past six years, C-Me has created a
comprehensive  base of  manufacturers  from  around  the world.  Through  C-Me's
network of global  offices,  the  Company  anticipates  that many  international
manufacturers will exhibit at the ASAP Show twice a year in Las Vegas, Nevada.

C-Me continues to expand internationally.  As of September 30, 2002, the Company
has  formed  joint  ventures  in Taiwan,  China,  Thailand,  Hong  Kong,  Korea,
Bangladesh,  and the  Philippines.  C-Me's strategy is to partner with reputable
local  companies in countries  throughout the world to expand its  international
network. Through these joint ventures,  localized  merchandise-sourcing  offices
are established.  In addition to these joint ventures,  C-Me has sourcing agents
in Turkey,  Pakistan,  Vietnam,  Bangladesh,  Sri Lanka, and Indonesia.  Through
these sourcing agents,  C-Me's retail partners are expected to be able to source
international  merchandise  directly  and the  Company is expected to be able to
attract leading  manufacturers to attend its ASAP Show. The Company believes its
business   model   will  be   successful   by   providing   a   direct,   global
merchandise-sourcing  channel for  retailers  to enable  them to increase  their
vendor base and the Company's network.

Accumulated Losses
------------------

The Company has incurred  significant  losses since its  inception and may never
generate or sustain a profit.  For the first quarter  ended  September 30, 2002,
the Company  reported a net loss of $245,531.  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.

RESULTS OF OPERATION

Three Months Ended September 30, 2002 and 2001
----------------------------------------------

Revenue
-------

Net gross revenues on transaction sales for the quarter ended September 30, 2002
were  $789,020,  an increase of $288,747 or 58% compared to the same period last
year. The Company expects the volume of gross sales  transactions  and the gross
profit  margin  percentage  to maintain and grow, as it continues to utilize its


                                       10
<PAGE>
                         CYBER MERCHANTS EXCHANGE, INC.

overseas sourcing network and its external sales force.

Subscriber fees decreased  $2,160 or 54% to 1,850 in the quarter ended September
30, 2002 from $4,010 in the prior year, due to the shift in focus on the revenue
received  from the users of the  Company's  VTS, ISN and Web design  services to
transaction sales and revenue generated through the ASAP Show.

The gross profit from transaction sales for the quarter ended September 30, 2002
was  $77,859 an increase  of  $24,791,  or 47%  compared to the same period last
year.

The ASAP Show division  gross  revenue for the quarter ended  September 30, 2002
was  $408,006 an  increase of $408,006 or 100%  compared to the same period last
year.

Operating Costs and Expenses
----------------------------

General and administrative  expenses increased by $397,009, or 102%, to $751,573
for the three months ended  September  30, 2002, as compared to $372,564 for the
same period last year.  The increase in general and  administrative  expenses is
primarily  due to the increase in the ASAP Show  expense.  The ASAP Show expense
increased by $346,026 to $368,751 for the three months ended  September 30, 2002
as compared to $22,725 for the same period last year.

No non-cash stock  compensation  expenses were  recognized  for the  three-month
ended September 30, 2002.

Net Loss
--------

The Company recorded a net loss of $245,531 for the three months ended September
30, 2002, a $133,139 decrease in net loss, as compared to a net loss of $378,670
for the same  period  last year.  The  decrease  in net loss is mainly due to an
increase of net  revenues  from  transaction  sales by  $24,791,  an increase of
profit  from the ASAP  Show of  $39,255  and a  reduction  on  equity  losses on
investments  in  overseas  joint  ventures  of  $82,332.  Loss  per  share as of
September  30, 2002 was $0.03 as compared to $0.05 as of September  30, 2001 due
to a  decrease  in net loss and in the  number of  outstanding  shares of common
stock.

LIQUIDITY AND CAPITAL RESOURCES

The Company's net working capital  decreased from $2,040,600 as of June 30, 2002
to $1,792,014 as of September 30, 2002, primarily due to cash used in operations
of $376,290.  During the current year, the Company had average  monthly  general
and  administrative  expenses of  approximately  $127,000  (excluding  ASAP Show
related  expenses) as compared to $124,000 in the same period of last year.  The
Company  will  keep  implementing  its  cost-minimizing   plan,  which  includes
reduction of its staff,  professional  consulting fees,  investor  relations and
marketing  costs.  With working capital of  approximately $2 million and average
monthly expenses of approximately  $127,000,  together with average monthly ASAP
Show expense of  approximately  $60,000,  coupled with growing net revenue,  the
Company  believes its  operations  can breakeven or become  profitable by fiscal
year end 2003.

The Company  believes it has  sufficient  cash to operate its business  over the
next 12 months. Depending on market acceptance of the Company's current business
model,  the Company may raise  additional  funds,  either in debt or equity,  to
augment future growth of the business.


                                       11
<PAGE>
                         CYBER MERCHANTS EXCHANGE, INC.

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

EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATE

The Company's current joint ventures are located in countries outside the United
States.  The  functional  currency  for  each  foreign  operation  is the  local
currency.  The carrying value of the Company's investments in the Pacific Rim 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.

ITEM 3.   EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The  management of the Company  including  Mr. Frank S. Yuan as Chief  Executive
Officer and as Chief Financial  Officer have evaluated the Company's  disclosure
controls and procedures. Under rules promulgated by the SEC, disclosure controls
and procedures are defined as those  "controls or other  procedures of an issuer
that are  designed to ensure that  information  required to be  disclosed by the
issuer  in the  reports  filed or  submitted  by it under  the  Exchange  Act is
recorded, processed,  summarized and reported, within the time periods specified
in the  Commission's  rules and forms." Based on the evaluation of the Company's
disclosure  controls and  procedures,  it was determined  that such controls and
procedures  were  effective as of October 7, 2002, the date of the conclusion of
the evaluation.

Further,  there were no significant changes in the internal controls or in other
factors that could  significantly  affect these  controls after October 7, 2002,
the  date  of the  conclusion  of the  evaluation  of  disclosure  controls  and
procedures.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The  Company  and Frank S. Yuan  ("Yuan")  filed a lawsuit  against  Yoram Dahan
("Dahan")  in the  Superior  Court of the  State of  California,  County  of Los
Angeles,  Central District (Case No. BC274550) on May 4, 2002. The claims by the
Company  against Dahan arose out of certain  activities  undertaken by him as an
employee of the Company  while  serving as the director of business  development
and President of the ASAP Show, a division of the Company.  The Company alleges,
among other things, that Dahan failed to fulfill his contractual  obligations as
an employee  and breached  his  fiduciary  duties to the company for a number of
reasons,  including by acting to usurp ownership  rights to the ASAP Show and by
attempting to operate the trade show  independently  from the Company.  Further,
Yuan and the Company charged in the lawsuit that Dahan defamed both Yuan and the
Company.

In  response  to the  lawsuit  filed  by Yuan  and the  Company,  Dahan  filed a
Cross-Complaint  against the Company and Yuan on June 26, 2002 in the same court
(Case No.  BC274550)  alleging breach of contract,  fraud,  misappropriation  of
confidential  information,  intentional  interference with prospective  economic
advantage,  and breach of implied  covenant of good faith and fair dealing,  all
related to the ASAP Show. Dahan claims that he owns a certain  percentage of the
ASAP  Show  and  that  he is owed  certain  amounts  of  commissions  and  other
compensation  for work  performed by him.  The  Cross-Complaint  seeks  monetary
damages,  including a share of any profits that the Company might  generate from
the ASAP Show, and further seeks punitive damages for allegedly  fraudulent acts
by the Company in misappropriating the ASAP Show contract rights.


                                       12
<PAGE>
                         CYBER MERCHANTS EXCHANGE, INC.

The Company  intends to pursue its  Complaint  for damages  against Dahan and to
vigorously  defend the  Cross-Complaint  brought by Dahan.  The Company believes
that it is not  obligated  to make any  payments  to Dahan  and has  meritorious
defenses to all of Dahan's allegations. However, if the Company does not prevail
and the Court awards the percentage  ownership rights to the ASAP Show or awards
any significant damage award to Dahan,  including  punitive damages,  this would
have a material adverse effect upon the Company.

Except as described above, the knowledge of the Company's executive officers and
directors,  the Company is not a party to any legal proceeding or litigation and
none of its  property  is the  subject  of a pending  legal  proceeding  and its
executive  officers and directors  know of no other  threatened or  contemplated
legal proceedings or litigation.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS'

None.

ITEM 5.  OTHER INFORMATION

None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

None.

(b) Reports on 8-K

None
                                   SIGNATURES

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


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

Date:    11/15/2002             /s/ Frank S. Yuan
-----------------------------   ------------------------------------------------
                                Frank S. Yuan, Chairman, Chief Executive Officer


                                       13
<PAGE>
                         CYBER MERCHANTS EXCHANGE, INC.

                    Certification of Chief Executive Officer
                        Pursuant to Section 302(a) of the
                           Sarbanes-Oxley Act of 2002

I, Frank S. Yuan, certify that:

1. I have  reviewed  this  quarterly  report  on Form  10-Q of  Cyber  Merchants
Exchange Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  November 15, 2002                   /s/ Frank S. Yuan
                                           Chairman and Chief Executive Officer

                                       14
<PAGE>
                         CYBER MERCHANTS EXCHANGE, INC.

                    Certification of Chief Executive Officer
                        Pursuant to Section 302(a) of the
                           Sarbanes-Oxley Act of 2002

I, Frank S. Yuan, certify that:

1. I have  reviewed  this  quarterly  report  on Form  10-Q of  Cyber  Merchants
Exchange Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weaknesses in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  November 15, 2002  /s/ Frank S. Yuan
                          Chief Financial Officer (Principal Accounting Officer)


                                       15
<PAGE>
                         CYBER MERCHANTS EXCHANGE, INC.
                                                                  Exhibit 99.1

      CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
                                   PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I,  Frank S. Yuan,  certify,  pursuant  to 18 U.S.C.  Section  1350,  as adopted
pursuant to Section 906 of the  Sarbanes-Oxley  Act of 2002,  that the Quarterly
Report of Cyber Merchants  Exchange,  Incorporation  on Form 10-Q for the fiscal
quarter ended September 30, 2002 fully complies with the requirements of Section
13(a) or  15(d)  of the  Securities  Exchange  Act of 1934 and that  information
contained in such Quarterly  Report on Form 10-Q fairly presents in all material
respects the financial  condition  and results of operations of Cyber  Merchants
Exchange Inc.


                                                By:      /s/ Frank S. Yuan

                                                Name:    Frank S. Yuan
                                                Title:   Chairman, CEO and CFO



                                       16