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, 2003

[ ]  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.)

 4349 BALDWIN AVE., UNIT A, EL MONTE, CA                     91731
 ---------------------------------------                     -----
(Address of principal executive offices)                  (Zip Code)

                     Issuer's telephone number (626)636-2530
                                                ------------

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 October 24, 2003:

                  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, 2003 (unaudited)
         and June 30, 2003 ..................................................3

         Condensed Statements of Operations for the Three Months Ended

         September 30, 2003 and 2002 (unaudited).............................4

         Condensed Statements of Cash Flows for the Three Months Ended

         September 30, 2003 and 2002(unaudited)..............................5

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

     ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR
         PLAN OF OPERATION...................................................9

     ITEM 3. CONTROLS AND PROCEDURES........................................14

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

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

     ITEM 2. CHANGES IN SECURITIES..........................................14

     ITEM 3.  DEFAULTS UPON SENIOR SECURITIES...............................14

     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.........14

     ITEM 5.  OTHER INFORMATION.............................................14

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K..............................14

SIGNATURES..................................................................15

                                       2

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                         CYBER MERCHANTS EXCHANGE, INC.
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                 Sep. 30,        June 30,
                                                                   2003            2003
                                                              -------------   -------------
                                                               (Unaudited)
<S>                                                            <C>             <C>
ASSETS

Current assets:
   Cash                                                        $    175,084    $     65,720
   Certificate of deposit                                           100,000         100,000
   Accounts receivable, net                                         462,138          89,801
   Inventory                                                         73,966         189,365
   Prepaid expenses                                                  79,106          26,372
                                                               ------------    ------------

Total current assets                                                890,294         471,258

Property and equipment, net                                           1,336           6,902
Investments in overseas joint ventures, net                         720,459         729,801
Other assets                                                         11,368          11,368
                                                               ------------    ------------

Total noncurrent assets                                             733,163         748,071
                                                               ------------    ------------
Total assets
                                                               $  1,623,457    $  1,219,329
                                                               ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

   Accounts payable and accrued expenses                       $    612,816    $    273,127
   Deferred revenue                                                  27,009         206,939
                                                               ------------    ------------
   Total Current Liabilities                                        639,825         480,066

Stockholders' 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                                          (12,636,216)    (12,880,585)
                                                               ------------    ------------

Total stockholders' equity                                          983,632         739,263
                                                               ------------    ------------
Total liabilities and stockholders' equity                     $  1,623,457    $  1,219,329
                                                               ============    ============
</TABLE>

            See accompanying notes to condensed financial statements

                                       3

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                         CYBER MERCHANTS EXCHANGE, INC.
                       CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                   Three Months Ended
                                                                      September 30
                                                               --------------------------
                                                                   2003           2002
                                                               -----------    -----------
                                                               (Unaudited)     (Unaudited)
<S>                                                            <C>            <C>
Revenues:
   Transaction sales                                           $   755,215    $   789,020
   Cost of goods sold                                              694,462        711,161
                                                               -----------    -----------
   Net revenues from transaction sales                              60,753         77,859
   Tradeshow revenue                                             1,048,104        408,006
   Subscriber fees                                                   1,020          1,850
                                                               -----------    -----------
Net revenues                                                     1,109,877        487,715

Operating expenses:
   General and administrative expenses                             647,493        570,007
   Payroll and related                                             207,878        181,566
   Depreciation and amortization                                     5,566          7,373
                                                               -----------    -----------

Total operating expenses                                           860,937        758,946
                                                               -----------    -----------

Income (loss) from operations                                      248,940       (271,231)

Other (expense) income:
   Interest income, net of interest expense                          5,571         12,654
   Equity in losses on investments in overseas joint ventures       (9,342)       (69,487)
   Amortization of software sales                                       --         83,333
                                                               -----------    -----------
Total other (expense) income:                                       (3,771)        26,500
                                                               -----------    -----------

Income (loss) before income taxes                                  245,169       (244,731)

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

Net income (loss):                                             $   244,369    $  (245,531)
                                                               ===========    ===========
Net income (loss) available to common stockholders
   Basic                                                       $      0.03    $     (0.03)
   Diluted                                                     $      0.03    $     (0.03)

Weighted-average number of common shares outstanding
   Basic                                                         7,472,673      7,472,673
                                                               -----------    -----------
   Diluted                                                       7,608,273      7,472,673
                                                               -----------    -----------
</TABLE>

            See accompanying notes to condensed financial statements

                                       4

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                    September 30
                                                                               ----------------------
                                                                                 2003         2002
                                                                               ---------    ---------
                                                                              (Unaudited) (Unaudited)
<S>                                                                            <C>          <C>
Cash flows from operating activities:
   Net income (loss)                                                           $ 244,369    $(245,531)
   Adjustments to reconcile net income (loss) to net cash
       provided by (used in) operating activities:
     Depreciation and amortization                                                 5,566        7,373
     Amortization of software sales                                                   --      (83,333)
     Equity in losses on investments in overseas joint ventures                    9,342       69,487
     Changes in assets and liabilities:
         Accounts receivable, net                                               (372,337)    (281,570)
         Inventory                                                               115,399     (134,067)
         Prepaid expenses                                                        (52,734)     173,214
         Other assets                                                                 --        3,418
         Accounts payable and accrued expenses                                   339,689      114,719
         Deferred revenue                                                       (179,930)          --
                                                                               ---------    ---------

Net cash provided by (used in) operating activities                              109,364     (376,290)
                                                                               ---------    ---------
Cash flows from investing activities:
   Collection of related party note and interest receivable                           --      407,000
                                                                               ---------    ---------

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

Net increase in cash                                                             109,364       30,710

Cash, beginning of period                                                         65,720      709,791
                                                                               ---------    ---------
Cash, end of period                                                            $ 175,084    $ 740,501
                                                                               =========    =========
Supplemental disclosure of cash flow information:

Cash paid during the period:
      Income Taxes                                                             $     800          800
                                                                               ---------    ---------
</TABLE>

            See accompanying notes to condensed financial statements

                                       5

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                   NOTES TO THE CONDENSED 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

Bais of Presentation

The accompanying  unaudited condensed 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-B. 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, 2003 are not
necessarily  indicative  of the results that may be expected for the year ending
June 30, 2004. For further  information,  refer to the financial  statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended June 30, 2003.

REVENUE RECOGNITION

Net revenues include amounts earned under  transaction  sales,  trade show booth
sales and subscription fees.

Transaction Sales
-----------------

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 factories,  shippers and suppliers.  For financial  reporting
purposes the Company presents the details of gross transaction sales and related
costs of sales in the accompanying statements of operations.

                                       6

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

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.

Subscription Fees
-----------------

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.

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

Recent Accounting Pronouncements

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

Stock Based Compensation

At September 30, 2003, the Company has three stock-based  employee  compensation
plans (the "Plans").  The Company  accounts for the Plans under the  recognition
and measurement principles of APB 25, and related interpretation. No stock-based
compensation  cost is  recognized in net loss.  Stock options  granted under the
Plans have exercise  prices equal to the market value of the  underlying  common
stock on the dates of grant.  The following table  illustrates the effect on net
income and loss per share if the Company had applied the fair value  recognition
provisions of SFAS 123 to stock-based employee compensation.

                                       7
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

<TABLE>
<CAPTION>
                                                                    2003           2002
                                                                -----------    -----------
<S>                                                             <C>            <C>
Net income (loss):
      As reported                                               $   244,369    $  (245,531)
       Deduct: Total stock based employee compensation
               expense determined under fair value based
               Method for all awards                                (19,466)       (10,793)
                                                                -----------    -----------
        Pro forma                                               $   224,903    $  (256,324)
                                                                ===========    ===========
Income (loss) per share, as reported
      Basic                                                     $      0.03    $     (0.03)
      Diluted                                                   $      0.03    $     (0.03)
Income (loss) per share, pro forma
      Basic                                                     $      0.03    $     (0.03)
      Diluted                                                   $      0.03    $     (0.03)
</TABLE>

The  above  pro  forma  effects  of  applying  SFAS  123  are  not   necessarily
representative of the impact on reported net loss for future

In January  2003,  the FASB  issued  Interpretation  No. 46,  "Consolidation  of
Variable Interest Entities" ("FIN 46"). This Interpretation  requires a variable
interest  entity to be consolidated by a company if that company is subject to a
majority of the risk of loss from the variable interest entity's activities,  is
entitled to receive a majority of the entity's residual returns, or both. FIN 46
applies  immediately  to variable  interest  entities  created after January 31,
2003,  and to  variable  interest  entities  in which an  enterprise  obtains an
interest after that date. It is effective  October 9, 2003 to variable  interest
entities in which an  enterprise  holds a variable  interest  that was  acquired
before  February 1, 2003. The Company is evaluating the provisions of FIN 46 and
determined  that the provisions of FIN 46 may require  consolidation  of certain
overseas joint ventures during the quarter ending December 31, 2003.

BASIC AND DILUTED EARNINGS PER COMMON SHARE

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted earnings per common share computations:

                                                   2003          2002
                                               -----------   -----------
Numerator for basic and diluted earnings per
 share:
     Net income (loss)                         $   244,369   $  (245,531)
                                               -----------   -----------
Denominator  for basic and diluted  earnings
 per share:
     Weighted average shares (basic)             7,472,673     7,472,673
     Common stock equivalents                      135,600            --
                                               -----------   -----------
         Weighted average shares (dilutive)      7,608,273     7,472,673
Net income available to common  shareholders
 per common share:
     Basic                                     $      0.03   $     (0.03)
                                               ===========   ===========
     Diluted                                   $      0.03   $     (0.03)
                                               ===========   ===========

                                       8
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

INVENTORY

Inventory consists entirely of ready-to-wear garments and is stated at the lower
of standard cost or market.  Cost is determined on a weighted average basis that
approximates the first-in,  first-out method. Market is determined by comparison
with recent purchases or net realizable value.

Such net  realizable  value is based on  management's  forecast for sales of the
Company's  inventory  in the ensuing  years.  The  industry in which the Company
operates is characterized  by style and fashion  changes,  should demand for the
Company's  inventory  prove  to be  significantly  less  than  anticipated,  the
ultimate  realizable value of the Company's  inventories  could be substantially
less than the amount shown on the accompanying balance sheet.

STOCKHOLDERS' EQUITY

In  September  2003,  the Company  granted  options to purchase an  aggregate of
640,000  shares of restricted  common stock,  at an exercise  price of $0.20 per
share  (the  fair  market  value of the  Company's  common  stock on the date of
grant),  to various  employees  and  directors of the Company.  The options vest
through August 2006, and are exercisable through September 2013.

NOTE 2 - BUSINESS SEGMENTS

Reportable  business  segments for the period ended  September 30, 2003 and 2002
are as follows:

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

<TABLE>
<CAPTION>
                                                             2003           2002
                                                         -----------    -----------
<S>                                                      <C>            <C>
Net sales from continuing operations:
      Transaction sales                                  $    60,753    $    77,859
      ASAP Show                                            1,048,104        408,006
      Other                                                    1,020          1,850
                                                         -----------    -----------
                                                         $ 1,109,877    $   487,715
                                                         ===========    ===========
Operation profit (loss) from continuing operations:
      Transaction sales                                  $  (115,062)   $  (310,231)
      ASAP Show                                              364,152         39,255
      Other                                                     (150)          (255)
                                                         -----------    -----------
                                                         $   248,940    $  (271,231)
                                                         ===========    ===========
Depreciation and amortization - continuing operations:
      Transaction sales                                  $     5,566    $     7,373
      ASAP Show                                                   --             --
      Other                                                       --             --
                                                         -----------    -----------
                                                         $     5,566    $     7,373
                                                         ===========    ===========
Identifiable assets - continuing operations:
      Transaction sales                                  $ 1,623,457
      ASAP Show                                                   --
      Other                                                       --
                                                         -----------
                                                         $ 1,623,457
                                                         ===========
</TABLE>

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,  2003.  This  quarterly  report  contains  certain
forward-looking  statements  and the Company's  future  operating  results could
differ materially from those

                                       9
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

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,  2003.  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

Background

Cyber  Merchants   Exchange  ("C-Me"  or  the  "Company")  is  an  international
electronic trading;  financing,  logistics and trade show organizer  corporation
that is initially targeting the apparel industry.  C-Me has set the standard for
apparel  global  electronic  trading  and built  the  model  for  other  leading
industries  by adhering to a simple  formula for  success.  The  following  four
interlocking  services make the company unique: 1) ASAP Global Sourcing Show - a
trade show for U.S.  buyers to meet  hundreds of ready-made  garment  exhibitors
under one roof - held  twice a year in Las  Vegas,  NV. 2) C-Me  builds  private
extranets,  or Internet Sourcing Networks ("ISN"), for its retail partners.  The
ISN matches and pushes  merchandise to the appropriate  buyers computer desktop.
3) C-Me's Global Financial  Platform ("GFP":  Patent Pending) allows U.S. buyers
to purchase overseas  merchandise without the need of issuing a Letter of Credit
("L/C"). 4) Logistics warehouse,  shipping, and billing service for the overseas
manufacturers. The company presently has representatives located in 25 countries
throughout  Asia,  Africa,  and  the  Middle  East to  facilitate  international
transactions.

Services

ASAP Global Sourcing Show
-------------------------
There's  definitely no shortage of trade shows in the United States. The Apparel
Sourcing  Association  Pavilion  ("Global  Sourcing  Show"  or "ASAP  Show")  is
bringing a totally new concept to the trade show industry,  with many exhibitors
following such concept.  The Global  Sourcing Show is not an easy task. But C-Me
has the  perfect  opportunity  to make it  successful  because of the  Company's
global presence and marketing  teams.  In addition,  garment and textile exports
are the primary export product for developing countries. Currently, there are no
trade  shows for the  producing  countries  to  exhibit  in the  U.S.A.  to gain
container load orders until the ASAP show was launched. Because of the September
11th  tragedies,  the ASAP Show is even more  crucial for buyers and  attendees.
Most people are now reluctant to travel overseas than ever before. The ASAP Show
is the perfect event for buyers and overseas  manufacturers  to meet and conduct
business under one roof during the world's largest apparel trade week.

The ASAP show segment derives revenue principally from the sale of exhibit space
and conference  attendance fees generated at its events. In 2003,  approximately
95% of our trade  shows and  conferences  revenue  was from the sale of  exhibit
space. Events are generally held on a semi-annual basis in Las


                                       10
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

Vegas,  Nevada.  At many of our trade  shows,  a  portion  of  exhibit  space is
reserved and partial payment is received as much as 90 days in advance. The sale
of exhibit space is generally  impacted by the on-going  quality and quantity of
attendance,  venue selection and  availability,  industry life cycle and general
market  conditions.  Revenue and related direct event expenses are recognized in
the month in which the event is held.  Cash is  collected in advance of an event
and is recorded on our balance sheet as deferred revenue.

Costs  incurred  by the ASAP show  segment  include  facility  rent,  outsourced
services such as  registration,  booth set-up,  electrical  services,  security,
decorator  and  attendee and  exhibitor  promotion.  Staff  salaries and related
payroll expenses are treated as monthly period expenses.  All other direct costs
are expensed in the month the event occurs.

Electronic Commerce, A New Wave of International Trade
------------------------------------------------------
C-Me has utilized the  convenient and powerful  Internet to communicate  between
buyers and sellers internationally.  The ISN was built with the buyer in mind to
make it user friendly to gain global apparel information.  C-Me has successfully
represented,  Fruit of the Loom,  Kellwood,  Factory 2-U Stores, Value City, and
others  to be their  buyer's  agent.  The ASAP Show  helps  promote  C-Me's  ISN
transaction model to these buyers. In addition,  the Company sometimes acts as a
principal  to  purchase   merchandise  for  presale  orders.  The  Company  also
represents some reputable  overseas  manufacturers with  non-refundable  monthly
retainer payments as their U.S. sales agents.

Global Financial Platform
-------------------------
C-Me developed a patent-pending  global financial platform,  levied with CIT - a
factoring accounts  receivable  guarantee service.  This process allows overseas
sellers to gain cash  advances  through  their local bank and eliminate the need
for  Letters  of  Credit  to sell  international  merchandise.  The  benefit  of
eliminating  Letters  of Credit to  purchase  international  merchandise  is the
ultimate dream for U.S. buyers.

Logistics, Warehouse, Shipping and Invoice Services
---------------------------------------------------
Logistics,  warehousing, shipping and billing service services are also provided
for the overseas manufacturers.

REVENUE MODEL

The ASAP Show

Currently, the ASAP Show charges $58 per square foot to exhibitors. The cost per
square foot is considered  costly in the U.S.  trade show  industry.  The reason
ASAP exhibitors are willing to pay this high price is because C-Me's  management
always partners with overseas governments to subsidize 50-100% of the exhibition
costs.  C-Me's unique marketing  concepts,  services,  educational  seminars and
relationships set the company apart from competitors.

E-commerce Transactions

The Company charges a minimum of 5-10% commission when  representing U.S. buyers
who wish to utilize C-Me as their  buying agent to source their goods  overseas.
C-Me can also act as the principle to

                                       11
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

purchase  the  pre-sold  merchandise  with a minimum  profit  margin of 20%. The
demands for C-Me's sourcing abilities by the U.S. apparel buyers have arrived at
stages where C-Me must pick and choose whom they want to represent.

Global Financial Platform

CIT charges 1.5% of the invoice value as their non-recourse  factoring fee while
C-Me charges 0.5%.  The overseas  bank charges  interest for their cash advances
made to the  seller.  The  potential  of  eliminating  the  Letter  of Credit to
purchase overseas merchandise business represents billions of dollars per year.

Logistics, Warehousing, Shipping and Billing

The Company  charges  standard public  warehouse  chares for freight in and out,
warehouse storage,  shipping and billing charges for its exhibitors and overseas
manufacturers.

RESULTS OF OPERATION

Three Months Ended September 30, 2003 and 2002

Revenue

Net gross revenues on transaction sales for the three months ended September 30,
2003 were  $755,215,  a decrease of $33,805 or 4%  compared to $789,020  for the
same  period  last fiscal  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 overseas sourcing network and its external sales force.

The gross profit from transaction sales for the three months ended September 30,
2003 was $60,753 a decrease of $17,106,  or 22% compared to $77,859 for the same
period  last  fiscal  year.  The gross  profit  margin is  approximately  9% for
transaction sales.

The ASAP Show division  gross  revenue for the three months ended  September 30,
2003 was  $1,048,104,  an increase of $640,098 or 157%  compared to $408,006 for
the same period last fiscal year. This increase was due to an increase in number
of  exhibitors  to  approximately   200  for  ASAP  show  in  August  2003  from
approximately 100 for the same show in August 2002.

Subscriber  fees for the three months ended  September  30, 2003 were $1,020,  a
decrease of $830 or 45% compared to $1,850 for the same period last fiscal 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.

Operating Costs and Expenses

Operating  expenses  increased  by  $101,991,  or 13%, to $860,937 for the three
months ended  September  30,  2003,  as compared to $758,946 for the same period
last fiscal year.  The increase in  operating  expenses is primarily  due to the
increase  in the ASAP  Show  and its  related  costs.  The  ASAP  Show


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                         CYBER MERCHANTS EXCHANGE, INC.

expenses  increased by $315,201 to $683,952 for the three months ended September
30, 2003 as compared to $368,751 for the same period last fiscal year.

Net Profit

The  Company  recorded  a net  income of  $244,369  for the three  months  ended
September 30, 2003, an increase of $489,900 in profit, as compared to a net loss
of $245,531  for the same period last  fiscal  year.  The  increase in profit is
mainly due to an increase of profit from the ASAP show of $324,897,  a reduction
on equity  losses on  investments  in overseas  joint  ventures  of  $60,145,  a
reduction on operating loss from transaction  sales of $195,169 and less $83,333
of amortization on software sales.

LIQUIDITY AND CAPITAL RESOURCES

The Company's net working capital  increased from a deficit of $8,808 as of June
30, 2003 to $250,469 as of September 30, 2003,  primarily due to cash  generated
from operations of approximately  $109,000 and deferred  revenue  recognition of
approximately $180,000.  During the current fiscal year, the Company had average
monthly general and administrative expenses of approximately $110,000 (excluding
ASAP Show  production  expenses)  as  compared to $127,000 in the same period of
last fiscal year. The Company will keep implementing its  cost-minimizing  plan,
which includes,  reduction of professional  consulting fees,  investor relations
and marketing costs.

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 instruments or
equity securities, to augment future growth of the business.

The  forecast  of the  period  of time  through  which the  Company's  financial
resources  will be  adequate  to support  its  operations  is a  forward-looking
statement that involves risks and  uncertainties.  The Company's  actual funding
requirements may differ materially as a result of a number of factors, including
unknown  expenses  associated  with  the cost of  continuing  to  implement  the
Company's  international  electronic  trading  business and ASAP Show  business.
There can be no assurance  that  financing  adequate to carry out the  Company's
business plan will be available on terms acceptable to the Company, or at all.

The Company has no commitments to make capital  expenditures for the fiscal year
ending  June 30,  2003.  Over the next two to five years,  the Company  plans to
utilize a combination of internally  generated funds from operations,  potential
debt and equity financing to fund its long-term growth.

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.


                                       13
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

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 September 30, 2003, 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 September 30, 2003,
the  date  of the  conclusion  of the  evaluation  of  disclosure  controls  and
procedures.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

None

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


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<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

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:    11/12/2003                     /s/ Frank S. Yuan
 -----------------------------          -------------------------
                                        Frank S. Yuan, Chairman,
                                        Chief Executive Officer


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