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**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**





**FORM
      10-KSB**





x
            ANNUAL
                REPORT UNDER PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF 1934
              FOR
                THE FISCAL YEAR ENDED MAY 31, 2006





OR





o
            TRANSITION
                REPORT PURSUANT TO 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 incorporation or organization)
            (IRS
                Employer Identification No.)





**936A
      Beachland Boulevard Suite 13, Vero Beach, FL 32963**


(Address
      of principal executive offices)





**(772)
      231-7544**


(Issuer’s
      telephone number)





SECURITIES
      REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT: **NONE**





SECURITIES
      REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT:




**Common
      Stock, No Par Value**


(Title
      of
      Class)





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or 15(d) of the Exchange Act.


YES o NO
x





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
o





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant's knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). YES x NO
o




Issuer's
      revenues for its most recent fiscal year: $0




As
      of
      August 3, 2006, 10,119,040 shares of the registrant's Common Stock were
      outstanding. The aggregate market value of the voting common equity held by
      non-affiliates (based on the closing bid price of $0.40 as reported on August
      3,
      2006 by the NASD Over-the-Counter Bulletin Board) was approximately $505,952.




DOCUMENTS
      INCORPORATED BY REFERENCE: None




Transitional
      Small Business Disclosure Format (Check One):




Yes o No
x







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**TABLE
      OF CONTENTS**





Item
                Number and Caption
            PagePART
                IItem
                1. Description of Business
            1Item
                2. Description of Property
            9Item
                3. Legal Proceedings
            9Item
                4. Submission of Matters to a Vote of Security
                Holders
            9PART
                IIItem
                5. Market for Common Equity and Related Stockholder
                Matters
            9Item
                6. Management's Discussion and Analysis or Plan of
                Operations
            11Item
                7. Financial Statements
            16Item
                8. Changes in and Disagreements With Accountants on
                Accounting and Financial Disclosure
            16Item
                8A. Controls and Procedures
            17PART
                IIIItem
                9. Directors, Executive Officers, Promoters and Control
                Persons; Compliance with Section 16(a) of the Exchange
                Act
            17Item
                10. Executive Compensation
            21Item
                11. Security Ownership of Certain Beneficial Owners
                and Management
            22Item
                12. Certain Relationships and Related
                Transactions
            22Item
                13. Exhibits and Reports on Form
                8-K
            24Item
                14. Principal Accountant Fees and
                Services
            25




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**PART
      I**




**ITEM
                1.**
              **DESCRIPTION
                  OF BUSINESS**.




Summary




Cyber
      Merchants Exchange, Inc. (“we”, “us”, “our”, “Cyber” or the “Company”) plans to
      seek a target company with which to merge or to complete a business combination.
      In any transaction, we will be the surviving entity, and our stockholders will
      retain a percentage ownership interest in the post-transaction company. The
      amount of the retained equity ownership by our stockholders will be negotiated
      by our management and the target company. We currently have no relevant
      operating business, revenues from operations or assets.




We
      will
      not restrict our search to any specific business, industry or geographic
      location, and we may participate in a business venture of virtually any kind
      or
      nature. This discussion of our plan for acquiring an operating business is
      purposefully general, and it is not meant to be restrictive of the virtually
      unlimited discretion to search for and enter into potential business
      opportunities. We anticipate that we will be able to participate in only one
      potential business venture because of our nominal assets and limited financial
      resources.





On
      July
      7, 2006, we entered into an Exchange Agreement (“Exchange Agreement”) with KI
      Equity Partners II, LLC (“KI Equity”), Prime Fortune Enterprises Limited, an
      international business company incorporated in the British Virgin Islands
      ("Prime"), and each of the equity owners of Prime (the “Prime Shareholders”)
      pursuant to which we will acquire 100% of the equity interests of Prime in
      a
      reverse merger transaction. This reverse merger transaction is described in
      detail below. There are a number of conditions to the closing of the
      transactions under the Exchange Agreement including, without limitation, the
      completion of a capital raise in a minimum amount of $7,000,000. The parties
      expect the closing of the transactions under the Exchange Agreement and the
      financing to occur on or about August 31, 2006. However, there can be no
      assurances that the exchange transaction or the financing will be completed.
      Accordingly, this report describes our general business and plan of operations
      as well as the specific pending transaction under the Exchange Agreement, which
      may or may not be completed.





During
      the fiscal year ended May 31, 2006, we did not generate any significant
      revenues. We may require additional financing to execute our plan to acquire
      an
      operating company. The accompanying financial statements include a "going
      concern" explanatory paragraph from our independent registered accounting firm.
      Ultimately, our continuation as a going concern is dependent upon the
      establishment of profitable operations. Because the achievement of these plans
      in dependent on future events, namely a business combination with an operating
      company, there can be no assurance that future profitable operations will
      occur.




History
      and Recent Developments




We
      were
      incorporated in July 1996 under the laws of the State of California. In July
      1999, we raised approximately $3.2 million through an initial public offering.
      On June 30, 2000 we raised an additional $6.3 million in a private placement
      offering subscribed by 30 high net-worth Chinese investors. Prior to the
      completion of the reorganization described below, we were an intermediary to
      global suppliers and buyers in the manufacturing, wholesaling and retailing
      apparel business. We are currently listed on the Over-the-Counter Bulletin
      Board
      (“OTC BB”) under the symbol CMXG and are complaint with the reporting
      requirements of the Securities Exchange Act of 1934, as amended.




Effective
      for fiscal year ending in 2005, we changed our fiscal year end from June 30
      to
      May 31. Accordingly, we filed a Form 10-KSB as a transition report for the
      11-month period ended May 31, 2005.




Reorganization




Our
      shareholders of record on March 25, 2005 approved on May 16, 2005 a
      reorganization of the Company (the "Reorganization"). The Reorganization is
      summarized as follows:




·
            We
                transferred of all of our assets and liabilities (the "Transfer")
                to ASAP
                Show Inc., a then




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wholly
      owned subsidiary ("ASAP"), effective May 31, 2005 pursuant to a Transfer and
      Assumption Agreement (“Transfer Agreement”), with ASAP continuing to operate the
      trade show business previously carried on by us;




·
            We
                issued a stock bonus to certain directors and key employees of 120,862
                shares of our common stock, on a post-reverse split basis, effective
                May
                31, 2005 (the “Stock Bonus”);




·
            We
                effected a one for eight and one-half (1-for-8.5) reverse stock split
                of
                our common stock (the "Reverse Split") with special treatment to
                preserve
                round lot stockholders, effective July 18, 2005;




·
            On
                or about August 25, 2005, we distributed 8,626,480 shares of common
                stock
                of ASAP, representing all of the outstanding shares of ASAP, to our
                shareholders of record on August 18, 2005 on a pro rata basis (the
                "Distribution"), with such distributed shares being held by our transfer
                agent as depository agent until such time as the Form 10-SB filed
                by ASAP
                became effective with all comments from the SEC cleared (certificates
                representing such shares were issued by the transfer agent to the
                shareholders on or about March 27, 2006);




·
            We
                entered into an amended and restated Securities Purchase Agreement
                (“SPA”)
                with KI Equity effective as of August 25,
                2005;




·
            On
                September 30, 2005, we completed the sale of 7,104,160 shares of
                our
                common stock to KI Equity for $415,000 (the "Investment"), with the
                net
                proceeds of the Investment being paid to ASAP pursuant to the terms
                of the
                Transfer Agreement.; and




·
            In
                connection with the closing of the Investment, our then current directors
                and officers resigned and Kevin Keating was appointed the sole director
                and officer of the Company.




We
      accounted for the Reorganization as a reverse spinoff in accordance with the
      Emerging Issues Task Force Issue No. (“EITF”) 02-11, “ *Accounting
      for Reverse Spinoffs.* ”
In
      a
      reverse spinoff, the legal spinnee (ASAP) is treated as though it were the
      spinnor for accounting purposes. Reverse spinoff accounting is appropriate
      as
      the treatment of the legal spinnee as the accounting spinnor results in the
      most
      accurate depiction of the substance of the transaction for shareholders and
      other users of the consolidated financials statements. Under this treatment,
      the
      historical financial statements of the Company became the historical financial
      statements of ASAP. In making its determination, the Company considered the
      following indicators, among others: (i) the accounting spinnor (legal spinnee,
      ASAP) is larger than the accounting spinnee (legal spinnor, the Company); (ii)
      the fair value of the accounting spinnor (legal spinnee) is greater than that
      of
      the accounting spinnee (legal spinnor); (iii) the accounting spinnor (legal
      spinnee) retains the senior management of the formerly combined entity; and
      (iv)
      the accounting spinnor (legal spinnee) retains senior management.




Proposed
      Change of Control Transaction





On
      July
      7, 2006, we entered into the Exchange Agreement with KI Equity, Prime and the
      Prime Shareholders. Under the Exchange Agreement, we will, at closing of the
      exchange transaction (“Closing”), acquire all of the outstanding capital stock
      and ownership interests of Prime (the “Interests”) from the Prime Shareholders,
      and the Prime Shareholders will transfer and contribute all of their Interests
      to us. In exchange, we will issue to the Prime Shareholders 1,000,000 shares
      of
      our Series A Convertible Preferred Stock, no par value per share ("Series A
      Preferred Shares"), which shall be convertible into approximately 116,721,360
      shares of our common stock (“Conversion Shares”). Following the Closing of the
      exchange transaction (“Exchange”), Prime will continue as a wholly-owned
      subsidiary of us.





The
      consummation of the Exchange is contingent on a minimum of $7,000,000 (or such
      lesser amount as mutually agreed to by Prime and the placement agent) being
      subscribed for, and funded into escrow, by certain accredited and institutional
      investors (“Investors”) for the purchase of shares of our Series B Convertible
      Preferred Stock (“Series B Preferred Shares”) promptly after the closing of the
      Exchange under terms and conditions approved by our board of directors
      immediately following the Exchange (“Financing”). The closing of the Financing
      will be contingent on the closing of the Exchange, and the Exchange will be
      contingent on the closing of the Financing.


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No
      assurances can be given that the Financing or the Exchange will be completed.
      Further, in the event the Financing is completed, there can be no assurance
      that
      that the gross proceeds will be at least $7,000,000. For purposes of this Annual
      Report, it is assumed that the Financing will be completed with gross proceeds
      of $10,000,000, the maximum amount under the Financing.





The
      issuance of the Series A Preferred Shares to the Prime Shareholders and, upon
      conversion, the shares of our common stock underlying the Series A Preferred
      Shares, is intended to be exempt from registration under the Securities Act
      of
      1933, as amended (the “Securities Act”), pursuant to Regulation S promulgated
      thereunder. The issuance of the Series B Preferred Shares to Investors is
      intended to be exempt from registration under the Securities Act pursuant to
      Section 4(2) thereof and such other available exemptions. As such, the Series
      A
      Preferred Shares and the Series B Preferred Shares, and upon conversion thereof,
      our common stock, may not be offered or sold in the United States unless they
      are registered under the Securities Act, or an exemption from the registration
      requirements of the Securities Act is available. No registration statement
      covering these securities has been or is expected to be filed with the SEC
      or
      with any state securities commission in respect of the Exchange or the
      Financing. However, as a condition to the Financing, it is expected that we
      will
      agree to register for public re-sale the shares of our common stock underlying
      the Series B Preferred Shares issued to the Investors in the Financing. In
      addition, we have agreed to register for public re-sale after the Exchange:
      (i)
      2,000,000 shares of our common stock which are currently outstanding and have
      been granted piggyback registration rights, (ii) 7,104,160 shares of our common
      stock currently held by KI Equity which do not have piggyback registration
      rights, (iii) the Gateway Shares (as defined below), (iv) approximately
      6,484,519 shares
      of our common stock underlying Series A Preferred Shares to be issued to
      Hamptons Investment Group Limited (“HIG”) immediately prior to the closing of
      the Exchange, and (v) 134,100 shares of our common stock issued to Richardson
      & Patel LLP after Closing for legal services rendered to Prime in connection
      with the Exchange and Financing.




Prime
      owns all of the capital stock of Infosmart Group, Limited, a company
      incorporated in the British Virgin Islands (“InfoSmart”). InfoSmart beneficially
      owns 100% of the issued and outstanding capital stock of both: (i) Info Smart
      Technology Limited, a company incorporated under the laws of Hong Kong (“IS
      Technology”); and (ii) Info Smart International Enterprises Limited, a company
      incorporated under the laws of Hong Kong (“IS International”). IS Technology
      owns all of the issued and outstanding capital stock of Infoscience Media
      Limited, a company incorporated under the laws of Hong Kong (“IS Media”). IS
      Media owns 99.42% of the issued and outstanding capital stock of Discobras
      Industria E Comercio de Electro Eletronica Limiteda, a company incorporated
      under the laws of Brazil (“Discobras”). Prime, Infosmart, IS International, IS
      Technology, IS Media and Discobras shall be referred to herein collectively
      as
      "InfoSmart Group." InfoSmart Group is engaged in the business of development,
      manufacturing, marketing and sales of recordable DVD media.




InfoSmart
      Group started in the recordable digital versatile disks (“DVDRs”) manufacturing
      business with the establishment of IS Technology. Founded in Hong Kong in August
      of 2002, IS Technology was the first company in Hong Kong to manufacture DVDRs.
      With the growth in DVDR demand, the initial shareholders of IS Technology took
      in other shareholders to form two other companies, IS International and IS
      Media, to produce DVDRs. These three companies form InfoSmart Group’s main
      operational business. InfoSmart Group currently manufactures 8x and 16x discs,
      and is preparing to launch production of new optical storage media, namely,
      writable high density DVDR discs. InfoSmart Group currently has customers in
      Western Europe and Australia. In an effort to enter the South American market,
      InfoSmart Group is establishing a sales and distribution network and a
      production facility in Brazil through its Discobras subsidiary.




The
      business of InfoSmart Group involves a number of risks and uncertainties that
      could cause the actual results of either company to differ materially from
      those
      estimated by management from time to time. Potential risks and uncertainties,
      include, but are not limited to, such factors as fluctuations in demand for
      InfoSmart’s products, InfoSmart Group’s cost of manufacturing and raw materials,
      conditions and trends in the retail market, additions or departures of key
      personnel, Info Smart Group’s ability to attract and maintain customers and
      strategic business relationships, InfoSmart Group’s ability to develop and/or
      license existing and new technologies for the manufacture of its products,
      the
      impact of competitive products and pricing, growth in target markets, the
      adequacy of InfoSmart Group’s liquidity and financial strength to support its
      growth, and other information that may be detailed from time to time in our
      filings with the SEC should the exchange transaction contemplated by the
      Exchange Agreement be completed.


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The
      Exchange Agreement is included as Exhibit 2.1 to our Current Report on Form
      8-K
      dated July 7, 2006, and filed with the Securities and Exchange Commission (“SEC”
or “Commission”) on July 12, 2006. The Exchange Agreement is the legal document
      that governs the Exchange and the other transactions contemplated by the
      Exchange Agreement. The discussion of the Exchange Agreement set forth herein
      is
      qualified in its entirety by reference to this Exhibit 2.1. Further, we filed
      with the SEC and mailed to our shareholders of record on August 3, 2006 an
      information statement pursuant to Section 14(f) of the Securities Exchange
      Act
      of 1934 (the “Exchange Act”) and Rule 14f-1 promulgated thereunder (“Information
      Statement”) describing the proposed change of control transaction. The foregoing
      documents are hereby incorporated by reference and interested parties are urged
      to review these documents on the SEC web site www.sec.gov .




Subject
      to completion of the Exchange, we will issue 2,850,000 shares of our common
      stock to Worldwide Gateway Co., Ltd. (“Gateway”) immediately prior to the
      Closing for Gateway’s services as a consultant to us in connection with the
      Exchange (“Gateway Shares”).





Under
      the
      terms of the Exchange Agreement, all of the outstanding Interests of Prime
      will
      be exchanged for 1,000,000 Series A Preferred Shares. Each Series A Preferred
      Share will be convertible into 116.721360 shares of our common stock (the
“Conversion Rate”). The Series A Preferred Shares will immediately and
      automatically be converted into shares of our common stock (the “Mandatory
      Conversion”) upon the approval by a majority of our stockholders (voting
      together on an as-converted-to-common-stock basis), following the Exchange,
      of
      an increase in the number of authorized shares of our common stock from
      40,000,000 shares to 300,000,000 shares and a change of our corporate name
      (collectively, the “Corporate Actions”). As a condition to the Closing of the
      Exchange, KI Equity and the Prime Shareholders will enter into a voting
      agreement (“Voting Agreement”) to vote their shares in favor of the Corporate
      Actions.




The
      holders of Series A and Series B Preferred Shares will be entitled to vote
      together with the holders of the common stock, as a single class, upon all
      matters submitted to holders of common stock for a vote. Each
      Series A and Series B Preferred Share will carry a number of votes equal to
      the
      number of shares of common stock issuable upon conversion based on the then
      applicable conversion rate. As such, i mmediately
      following the Exchange, the Prime Shareholders together with the Investors
      (assuming gross proceeds from the Financing of $10,000,000) will own 92.3%
      of
      the total combined voting power of all classes of our outstanding stock entitled
      to vote.




Accordingly,
      upon completion of the Exchange and the Financing (assuming gross proceeds
      from
      the Financing of $10,000,000), the Prime Shareholders (including HIG) will
      own
      1,000,000 Series A Preferred Shares (equivalent to 116,721,360 shares of our
      common stock on an as-converted basis), the Investors will receive Series B
      Preferred Shares convertible into approximately 38,314,177 shares of our common
      stock, and the current Cyber stockholders (including Gateway) will own
      12,969,040 shares of our common stock. Upon the mandatory conversion of the
      Series A Preferred Shares, the Prime Shareholders together with the Investors
      (assuming the Investors elect to convert all of their Series B Preferred Shares)
      will own approximately 92.3% of the total outstanding shares of our common
      stock, and our current stockholders will own approximately 7.7% of the total
      outstanding shares of our common stock.




Effective
      as of the Closing of the Exchange, and subject to applicable regulatory
      requirements, including the preparation, filing and distribution to our
      stockholders of the Information Statement at least ten (10) days prior to
      Closing, our current board of directors and our current sole officer will resign
      such positions and our board will appoint as directors:





·
            Kwok
                Chung, InfoSmart’s current Chief Executive
                Officer


·
            Pauline
                Sze, InfoSmart’s current Chief Financial
                Officer


·
            Andrew
                Chang, a director of InfoSmart


·
            Godwin
                Wong, an independent director designated by KI
                Equity




Additional
      information concerning Kwok Chung, Pauline Sze, Andrew Chang and Godwin Wong
      is
      set forth in the Information Statement.


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Godwin
      Wong is an independent director designated by KI Equity to serve as a director
      for the one year period following Closing (“KI Equity Director”). Kwok Chung,
      Pauline Sze and Andrew Chang (collectively, the “Management Directors”) will
      have the right to appoint three persons as independent directors, however,
      these
      board positions are expected to be filled following the Closing. The Voting
      Agreement will require KI Equity and the Prime Shareholders to vote their Cyber
      shares for the above director designees. Prime has also agreed that, within
      90
      days following the Closing, our board of directors will satisfy the
      independence, audit and compensation committee and other corporate governance
      requirements under the Sarbanes-Oxley Act of 2002 (the "SOX Act"), the rules
      and
      regulations promulgated by the SEC, and the requirements of either NASDAQ or
      American Stock Exchange (“AMEX”) as selected by Cyber, whether or not our common
      stock is listed or quoted, or qualifies for listing or quotation, on such
      national exchanges.





At
      or
      prior to the Closing, we will also enter into a certain financial advisory
      agreement with Keating Securities, LLC (“Keating Securities”), a registered
      broker-dealer, under which Keating Securities will be compensated by us for
      its
      advisory services rendered to us in connection with the Exchange. The
      transaction advisory fee will be $450,000, with the payment thereof being
      subject to the Closing of the Exchange. This fee will be paid in full at the
      Closing of the Exchange.





Completion
      of the transactions contemplated under the Exchange Agreement are subject to
      the
      satisfaction of certain contingencies including, without limitation, the
      delivery of U.S. GAAP audited annual, interim reviewed and pro forma financial
      information of InfoSmart Group (on a consolidated basis) acceptable to us,
      compliance with regulatory requirements, the completion of the Financing, and
      the filing of certificates of determination for the Series A and Series B
      Preferred Shares with and acceptance by the Secretary of State of the State
      of
      California. Consummation of the exchange transaction is also conditioned upon,
      among other things: (i) execution by KI Equity and the Prime Stockholders of
      the
      Voting Agreement; (ii) continued quotation of our common stock on the OTC BB;
      (iii) receipt of all required licenses, permits, certificates and approvals
      by
      the government authorities; (iv) delivery of legal opinions from InfoSmart’s
      British Virgin Islands and Hong Kong legal counsels satisfactory to us, and
      (v)
      execution of an aftermarket support agreement between us and Keating Aftermarket
      Support, LLC (“KAMS”), an affiliate of Keating Investments, LLC, with such terms
      and conditions as mutually acceptable to Prime, us and KAMS.





The
      parties expect the closing of the transactions under the Exchange Agreement
      and
      the Financing to occur on or about August 31, 2006. However, there can be no
      assurances that the exchange transaction or the Financing will be completed.




If
      the
      Exchange closes as contemplated, it will be treated for accounting purposes
      as a
“reverse merger” whereby Prime, the acquired company, will be considered the
      accounting acquirer as it will retain control of the Company after the reverse
      merger.




The
      Exchange Agreement may be terminated as follows: (i) by mutual written consent,
      (ii) by either party if the exchange transaction is not consummated by August
      31, 2006 , (iii) by either party if the exchange transaction is prohibited
      by
      issuance of an order, decree or ruling, and (iv) by either party if the other
      is
      in material breach of any representation, warranty, covenant or agreement.





Kevin
      R.
      Keating is the sole officer and a director of Cyber. Kevin R. Keating is the
      father of Timothy J. Keating, the principal member of Keating Investments,
      LLC.
      Keating Investments, LLC is the managing member of KI Equity, which is the
      majority stockholder of Cyber, Keating Securities, LLC, the registered
      broker-dealer affiliate of Keating Investments, LLC, and Keating Aftermarket
      Support, LLC (“KAMS”). Kevin R. Keating is not affiliated with and has no equity
      interest in Keating Investments, LLC, KI Equity, KAMS or Keating Securities,
      LLC
      and disclaims any beneficial interest in the shares of our common stock owned
      by
      KI Equity. Similarly, Keating Investments, LLC, KI Equity, KAMS and Keating
      Securities, LLC disclaim any beneficial interest in the shares of our common
      stock currently owned by Kevin R. Keating.





Margie
      L.
      Blackwell, Luca Toscani and Jeff L. Andrews are directors of Cyber. Margie
      L.
      Blackwell and Luca Toscani are each members of Keating Investments, LLC, and
      Jeff L. Andrews is a Senior Vice President of Keating Investments,
      LLC.


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Employees





We
      currently do not have any employees. Our sole officer, Kevin R. Keating, serves
      in such capacity without salary or bonus. Upon accepting his position as an
      officer and director on September 30, 2005, we issued shares of our common
      stock
      to Mr. Keating as compensation for services rendered.




We
      have
      entered into a contract with Vero Management, LLC (“Vero”) for managerial and
      administrative services. Vero has not been engaged to provide, and Vero does
      not
      render, legal, accounting, auditing, investment banking or capital formation
      services. Vero is owned and managed by Mr. Keating. We pay Vero $2,500 per
      month
      for services provided to us.




Risk
      Factors




An
      investment in our common stock involves investment risks and the possibility
      of
      the loss of an investor’s entire investment. A prospective investor should
      evaluate all information about us and the risk factors discussed below in
      relation to his financial circumstances before investing in us.





1. *No
      Current Operating Business* .
      We
      currently have no relevant operating business, revenues from operations or
      assets. Our business plan is to seek a merger or business combination with
      an
      operating business. We face all of the risks inherent in the investigation,
      acquisition, or involvement in a new business opportunity. An investor’s
      purchase of any of our securities must be regarded as placing funds at a high
      risk in a new or "start-up" venture with all of the unforeseen costs, expenses,
      problems, and difficulties to which such ventures are subject.




2. *No
      Assurance of Success or Profitability* .
      There
      is no assurance that we will acquire a suitable and favorable business
      opportunity in a reverse merger transaction. In addition, even if we become
      involved in a business opportunity, there is no assurance that the business
      we
      acquire will generate revenues or profits, or that the value of our common
      stock
      will increase as a result of the acquired business opportunity.





3. *Possible
      Business - Not Identified and Highly Risky* .
      Except
      for our pending transaction with Prime which may or may not close, we have
      not
      identified and have no commitments to enter into or acquire a specific business
      opportunity and therefore we can disclose the risks and hazards of a business
      or
      opportunity that we acquire only in a general manner, and cannot disclose the
      risks and hazards of any specific business or other opportunity that we may
      enter into. An investor can expect a potential business opportunity to be quite
      risky. Our acquisition of or participation in a business opportunity could
      result in a total loss to our investors and stockholders if the target business
      is unsuccessful. Further, any investment in us may continue to be highly
      illiquid.





4. *Type
      of Business Acquired* .
      Except
      for our pending transaction with Prime which may or may not close, the type
      of
      business that may be acquired is not identified. Therefore, our investors and
      stockholders have to rely on our management to determine which target business
      to pursue. There are no controlling parameters of the business to be acquired.
      Thus, ultimately an investment will depend on the target business and therefore
      investors in us will be subject to all the risks that would be associated with
      that selected business. Our management may have the right to approve and
      authorize a reverse merger transaction with a target company without obtaining
      the vote of the majority of our stockholders.





5. *Impracticability
      of Exhaustive Investigation* .
      We have
      limited funds and lack full-time management which will likely make it
      impracticable to conduct a complete and exhaustive investigation and analysis
      of
      a business opportunity before we commit our limited capital and other resources
      to acquire a target business. Management decisions, therefore, likely will
      be
      made without detailed feasibility studies, independent analysis, market surveys,
      and the like which, if we had more funds available to us, would be desirable.
      We
      will be particularly dependent in making decisions upon information provided
      by
      the promoter, owner, sponsor, or others associated with the business opportunity
      seeking to be acquired by us.





6. *Lack
      of Diversification.* Because
      of our limited financial resources, it is unlikely that we will be able to
      diversify our acquisitions or operations. The inability to diversify our
      activities into more than one area will subject


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our
      investors and stockholders to economic fluctuations within a particular business
      or industry and therefore increase the risks associated with the investment.
      We
      only intend to acquire a single business opportunity and thus your investment
      will lack diversification.





7. *Possible
      Reliance upon Unaudited Financial Statements* .
      We will
      require audited financial statements from target companies that we propose
      to
      acquire. No assurance can be given, however, that audited financials will be
      available at the closing of the reverse merger transaction. In cases where
      audited financials are unavailable, we will have to rely upon unaudited
      information received from target companies' management that has not been
      verified by outside auditors. We, at the time of acquisition, will be subject
      to
      the reporting provisions of the Securities Exchange Act of 1934, as amended
      (the
      "Exchange Act"), and thus will be required to furnish certain information about
      significant acquisitions, including audited financial statements for any
      business that the shell company acquires. Consequently, acquisition prospects
      that do not have or are unable to obtain the required audited statements may
      not
      be appropriate for acquisition so long as the reporting requirements of the
      Exchange Act are applicable. But, in cases where we have completed a reverse
      merger transaction in reliance on unaudited financial statements and audited
      statements cannot subsequently be obtained, the continued ability of the
      post-transaction company to remain a reporting company and publicly trading
      will
      be in jeopardy and may significantly reduce the value of your investment.




8. *Investment
      Company Regulation* .
      We do
      not intend to become classified as an "investment company" under the Investment
      Company Act of 1940 (the "Investment Act"). We believe that we will not become
      subject to regulation under the Investment Act because (i) we will not be
      engaged in the business of investing or trading in securities, and (ii) any
      acquisition undertaken will result in the target company obtaining a majority
      interest in us. Should there be a requirement to register as an investment
      company, it would cause significant registration and compliance costs. Any
      violation of the Investment Act will subject us to materially adverse
      consequences. Should the SEC find that we are subject to the Investment Act,
      and
      order registration under the Investment Act, we would resist such finding and
      take steps to avoid such registration. Irrespective of whether the SEC or we
      were to prevail in such dispute about whether or not we are an investment
      company, however, the damages and delays would be costly.




9. *Other
      Regulation* .
      Any
      acquisition made by us may be of a business that is subject to regulation or
      licensing by federal, state, or local authorities. Foreign companies may also
      be
      considered, and be subject to similar business regulations as are applicable
      in
      the United States and also may be subject to limitations on ownership by foreign
      persons and entities. Compliance with such regulations and licensing can be
      expected to be a time-consuming, expensive process and may limit our other
      investment opportunities. We intend to pursue potential business opportunities
      in foreign countries, including China, and as such, such opportunities will
      be
      subject to foreign country laws and regulations affecting foreign investment,
      business operations, currency exchange, repatriation of profits, and taxation,
      which will increase the risk of your investment.





10. *Dependence
      upon Management* .
      We will
      be heavily dependent upon the skills, talents, and abilities of our management
      to implement our business plan. Our management may devote limited time to our
      affairs, which may be inadequate for our business, and may delay the acquisition
      of any business opportunity considered. Furthermore, management has little
      experience in seeking, investigating, and acquiring businesses and will depend
      upon its limited business knowledge in making decisions regarding our
      acquisition of a business opportunity. Because investors will not be able to
      evaluate the merits of possible business acquisitions by us, they should
      critically assess the information concerning the management.





11. *Dependence
      upon Outside Advisors* .
      To
      supplement the business experience of management, we may be required to employ
      accountants, technical experts, appraisers, attorneys, or other consultants
      or
      advisors. Some of these outside advisors may be our affiliates or their
      affiliated entities. The selection of any such advisors will be made by our
      management without any input from stockholders.




12. *Conflicts
      of Interest* .
      Our
      management has other business interests to which they will devote primary
      attention. As a result, conflicts of interest may arise that can be resolved
      only through the exercise by them of their judgment as may be consistent with
      their fiduciary duties. Our management will try to resolve conflicts to the
      best
      advantage of all concerned, but there may be times when an acquisition
      opportunity is given to another entity to the


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disadvantage
      of our stockholders and for which there will be no recourse. In connection
      with
      the Exchange described above, we will engage Keating Securities, LLC, an
      affiliate of Keating Investments, LLC, the managing member of our controlling
      stockholder, to act as a financial advisor in connection with the reverse merger
      transaction for which it may earn a cash fee. In addition, pursuant to the
      terms
      of the Exchange Agreement, we will enter into an aftermarket support agreement
      between us and Keating Aftermarket Support, LLC (“KAMS”), an affiliate of
      Keating Investments, LLC, with such terms and conditions as mutually acceptable
      to Prime, us and KAMS.





13. *Need
      for Additional Financing* .
      In all
      likelihood we will need additional funds to take advantage of any available
      acquisition business opportunity. Even if we were to obtain sufficient funds
      to
      acquire an interest in a business opportunity, we may not have sufficient
      capital to fully exploit the opportunity. Our ultimate success will depend
      upon
      our ability to raise additional capital at the time of the acquisition and
      thereafter. When additional capital may be needed, there can be no assurance
      that funds will be available from any source or, if available, that they can
      be
      obtained on acceptable terms.





14. *Borrowing
      Transactions* .
      There
      is a possibility that any acquisition of a business opportunity by us will
      require borrowing against the assets of the business opportunity to be acquired,
      or against the projected future revenues or profits of the business opportunity.
      This leverage could increase our exposure to larger losses. There is no
      assurance that any business opportunity acquired through borrowing and leverage
      will generate sufficient revenues to cover the related debt and
      expenses.





15. *No
      Foreseeable Dividends.* We do
      not intend to pay any dividends. We do not foresee making any cash distributions
      in the manner of a dividend or otherwise.





16. *Loss
      of Control by Present Management and Stockholders.* It is
      likely that any acquisition of an operating company will result in a change
      in
      control of the then current directors, officers and the stockholders. Therefore,
      our management prior to the acquisition will be changed to those of the target
      company and its stockholders, who will then control the combined company. At
      that time, our stockholders will be at investment risk for the decisions about
      the business by persons that they may not know or have any ability to influence
      through a board seat or by the voting mechanism of stockholders.





17. *Dilutive
      Effects of Issuing Additional Common Stock.* In any
      reverse merger transaction, for tax reasons and management reasons, the owners
      of the target company will be issued a large number of shares of common stock
      which will dilute the ownership interest of our current stockholders. In
      addition, at the time of the reverse merger, it will be likely that there will
      be additional authorized but unissued shares that may be later issued by the
      then new management for any purpose without the consent or vote of the
      stockholders. The acquisition issuance and additional issuances that may occur
      will dilute the interests of our stockholders after any reverse merger
      transaction.





18. *Thinly-traded
      Public Market* .
      Our
      securities will be very thinly traded, and the price if traded may not reflect
      the value of the company. Moreover, there may be a reverse split of the shares
      which may not reflect the value of the company either. There can be no assurance
      that there will be an active market for our shares either now or after we
      complete the reverse merger. The market liquidity will be dependant on the
      perception of the operating business and any steps that its management might
      take to bring the company to the awareness of investors. There can be no
      assurance given that there will be any awareness generated. Consequently
      investors may not be able to liquidate their investment or liquidate it at
      a
      price that reflects the value of the business. If a more active market should
      develop, the price may be highly volatile. Because there may be a low price
      for
      our securities, many brokerage firms may not be willing to effect transactions
      in the securities. Even if an investor finds a broker willing to effect a
      transaction in the securities, the combination of brokerage commissions,
      transfer fees, taxes, if any, and any other selling costs may exceed the selling
      price. Further, many lending institutions will not permit the use of such
      securities as collateral for any loans.





19. *Possible
      Rule 144 Sales* .
      The
      majority of our shares currently outstanding are "restricted securities" within
      the meaning of Rule 144 under the Securities Act of 1933, as amended (the
“Act”). As restricted shares, these shares may be resold only pursuant to an
      effective registration statement or under the requirements of Rule
      144


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or
      other
      applicable exemption from registration under the Act and as required under
      applicable state securities laws. Rule 144 provides in essence that a person
      who
      has held restricted securities for a period of one year may, under certain
      conditions, sell every three months, in brokerage transactions, a number of
      shares that does not exceed the greater of 1.0% of a company's outstanding
      common stock or the average weekly trading volume during the four calendar
      weeks
      prior to the sale. There is no limit on the amount of restricted securities
      that
      may be sold by a non-affiliate after the restricted securities have been held
      by
      the owner for a period of two years. Current stockholders who own 10% or more
      of
      our shares will likely be deemed an affiliate until 90 days after a reverse
      merger is completed with a target company. After such 90-day period, and
      assuming said shares have been held for more than two years, these stockholders
      may be able to sell their shares without volume restrictions. A sale under
      Rule
      144 or under any other exemption from the Act, if available, or pursuant to
      subsequent registrations of our shares, may have a depressive effect upon the
      price of our shares in any market that may develop.




**ITEM
              2.**
            **DESCRIPTION
                OF PROPERTY**.




From
      September 30, 2005, we have operated from the offices of Vero. We have a
      management agreement with Vero under which Vero provides us with managerial
      and
      administrative services in exchange for $2,500 per month.





We
      do not
      own any real or personal property nor do we have any plans to acquire any real
      or personal property in the future. We do not own any significant business
      operating assets. We do not maintain any policy of insurance to insure any
      property or business operations.




**ITEM
              3.**
            **LEGAL
                PROCEEDINGS**.




On
      March
      7, 2006, a complaint was filed against us in a Chapter 7 bankruptcy proceeding
      in U.S. Bankruptcy Court in the District of Delaware in the matter captioned In
      Re:
      Factory 2-U Stores, Inc. (“Preference Action”). The complaint seeks to recover from us $91,572 in alleged
      preferential transfers made to us by the debtor during the ninety-day period
      prior to the filing of the debtor’s bankruptcy petition. We intend to defend
      against such preference claim by asserting that such transfers were made in
      the
      ordinary course of business and such other available defenses. We filed our
      answer to the compliant on or about April 20, 2006. To the extent we incur
      any
      losses, costs or damages with respect to the preference claim, including
      attorneys’ fees and related costs, we believe we may recover such losses, costs
      and damages from Frank Yuan and ASAP pursuant to the indemnification provisions
      under the Transfer Agreement and/or the SPA. We have informed Frank Yuan and
      ASAP that we intend to seek indemnification from them with respect to the
      preference claim. Further, we have informed Frank Yuan and ASAP that the $50,000
      reserve originally due to be paid March 30, 2006 under the terms of the Transfer
      Agreement will be retained by us until this preference claim is resolved to
      satisfy any potential indemnity claims.





Except
      as
      set forth above, we are not aware of any pending or threatened legal proceedings
      in which we are involved.




**ITEM
                  4.**
                **SUBMISSION
                    OF MATTERS TO A VOTE OF SECURITY HOLDERS**.




There
      were no matters submitted to a vote of our stockholders during the fiscal year
      ended May 31, 2006.




**PART
      II**




**ITEM
              5.**
            **MARKET
                FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
                ISSUER
                PURCHASES OF EQUITY SECURITIES.**




Our
      common stock is traded from time to time on the over-the-counter market, and
      quotations may be found in NASD’s Over-the-Counter Bulletin Board. Shares of our
      common stock are traded under the symbol “CMXG”.


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Our
      common stock trades only sporadically and has experienced in the past, and
      is
      expected to experience in the future, significant price and volume volatility.
      Our stock is currently available for trading on NASD’s Over-the-Counter Bulletin
      Board. Based on information available to us, the quotations below reflect the
      high and low bid quotation for our stock on the Over-the-Counter Bulletin Board.
      The quotations reflect inter-dealer prices and do not include retail mark-ups,
      mark-downs or commissions. The prices do not necessarily reflect actual
      transactions. All share prices give effect to the Reverse Split which was
      effective July 18, 2005.




June
                1, 2005 to May 31, 2006
            
            High*
            
            Low*First
                Quarter
            
            $1.445
            
            $0.250Second
                Quarter
            
            $0.550
            
            $0.250Third
                Quarter
            
            $0.510
            
            $0.300Fourth
                Quarter
            
            $1.250
            
            $0.300







June
                1, 2004 to May 31, 2005
            
            High*
            
            Low*First
                Quarter
            
            $2.550
            
            $1.700Second
                Quarter
            
            $1.700
            
            $1.105Third
                Quarter
            
            $1.275
            
            $0.935Fourth
                Quarter
            
            $1.275
            
            $1.105





*
            The
                source of the high and low closing sales price information is Commodity
                Systems, Inc. and can be found on Yahoo’s Web-site atwww.finance.yahoo.com.




As
      of May
      31, 2006, we had 10,119,040 shares of our common stock outstanding. There were
      175 holders of record of our common stock at May 31, 2006 and an indeterminate
      number of additional shareholders through nominee or street name accounts with
      brokers. Our transfer agent is U.S. Stock Transfer Corp., Glendale, CA.




We
      have
      neither paid nor declared cash distributions or dividends, and we do not intend
      to pay cash dividends on our common stock in the foreseeable future. We
      currently intend to retain all earnings, if and when generated, to finance
      our
      operations. The declaration of cash dividends in the future will be determined
      by the board of directors based upon our earnings, financial condition, capital
      requirements and other relevant factors.




Penny
      Stock




Our
      securities are subject to the SEC's “penny stock” rules. The penny stock rules
      may affect the ability of owners of our shares to sell them. There may be a
      limited market for penny stocks due to the regulatory burdens on broker-dealers.
      The market among dealers may not be active. Investments in penny stocks often
      are unable to sell stock back to the dealer that sold them the stock. The
      mark-ups or commissions charged by the broker-dealers


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might
      be
      greater than any profit an investor may make. Because of large spreads that
      market makers quote, investors may be unable to sell the stock immediately
      back
      to the dealer at the same price the dealer sold the stock to the investor.





Our
      securities are also subject to the SEC’s rule that imposes special sales
      practice requirements upon broker-dealers that sell such securities to other
      than established customers or accredited investors. For purposes of the rule,
      the phrase “accredited investor” means, in general terms, institutions with
      assets exceeding $5,000,000 or individuals having net worth in excess of
      $1,000,000 or having an annual income that exceeds $200,000 (or that, combined
      with a spouse’s income, exceeds $300,000). For transactions covered by the rule,
      the broker-dealer must make a special suitability determination for the
      purchaser and receive the purchaser’s written agreement to the transaction prior
      to the sale. Consequently, the rule may affect the ability of purchasers of
      our
      securities to buy or sell in any market .





Recent
      Sales of Unregistered Securities.




Effective
      May 31, 2005, we issued 120,862 shares of our common stock (on a post-Reverse
      Split basis) as a stock bonus to certain employees and directors.




On
      September 30, 2005, we issued 7,104,160 shares of common stock to KI Equity
      for
      $415,000, pursuant to the SPA described above.




On
      October 5, 2005, we issued 1,000,000 shares of common stock, in restricted
      form,
      to KI Equity at a purchase price of $0.05 per share, for an aggregate purchase
      price of $50,000 in order to provide funds for our working capital needs. Also
      on October 5, 2005 for services rendered, we issued 250,000 shares of common
      stock to Kevin R. Keating, the Company’s sole officer, and 250,000 shares of
      common stock to a consultant. The stock is valued at an aggregate price of
      $25,000, or $0.05 per share, which is the same per share value of the cash
      purchases of common stock in the transactions mentioned above, which occurred
      contemporaneously. We consider this to be the best estimate of the fair value
      of
      the non-cash transaction.




On
      October 24, 2005, we issued 500,000 shares of common stock to KI Equity at
      a
      purchase price of $0.05 per share for an aggregate price of $25,000 in order
      to
      provide additional funds for our working capital needs..




In
      connection with the above stock issuances, we did not pay any underwriting
      discounts or commissions. None of the sales of securities described or referred
      to above was registered under the Securities Act of 1933, as amended (the
      "Securities Act"). Each of the purchasers fell into one or more of the
      categories that follow: an existing shareholder, a creditor, a current or former
      officer or director, a service provider, or an accredited investor with whom
      we
      or an affiliate of ours had a prior business relationship. As a result, no
      general solicitation or advertising was used in connection with the sales.
      In
      making the sales without registration under the Securities Act, we relied upon
      one or more of the exemptions from registration including those contained in
      Sections 4(2) of the Securities Act and in Regulation D promulgated under the
      Securities Act.




**ITEM
              6.**
            **MANAGEMENT'S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION**.




Forward-Looking
      Statements




The
      following discussion may contain certain forward-looking statements within
      the
      meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
      Securities Exchange Act of 1934. Such statements are intended to be covered
      by
      the safe harbors created by such provisions. These statements include the plans
      and objectives of management for future growth of the Company, including plans
      and objectives related to the consummation of acquisitions and future private
      and public issuances of the Company's equity and debt securities. The
      forward-looking statements included herein are based on current expectations
      that involve numerous risks and uncertainties. Assumptions relating to the
      foregoing involve judgments with respect to, among other things, future
      economic, competitive and market conditions and future business decisions,
      all
      of which are difficult or impossible to predict accurately and many of which
      are
      beyond the control of the Company. Although the Company believes that
      the


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assumptions
      underlying the forward-looking statements are reasonable, any of the assumptions
      could be inaccurate and, therefore, there can be no assurance that the
      forward-looking statements included in this Form 10-KSB will prove to be
      accurate. In light of the significant uncertainties inherent in the
      forward-looking statements included herein, the inclusion of such information
      should not be regarded as a representation by the Company or any other person
      that the objectives and plans of the Company will be achieved.




The
      words
“we,” “us” and “our” refer to the Company. The words or phrases “would be,”
“will allow,” “intends to,” “will likely result,” “are expected to,” “will
      continue,” “is anticipated,” “estimate,” “project,” or similar expressions are
      intended to identify “forward-looking statements.” Actual results could differ
      materially from those projected in the forward looking statements as a result
      of
      a number of risks and uncertainties, including but not limited to: (a) limited
      amount of resources devoted to achieving our business plan; (b) our failure
      to
      implement our business plan within the time period we originally planned to
      accomplish; (c) because we are seeking to merge with an operating business
      which
      has not yet been identified, you will be unable to determine whether we will
      ever become profitable; and (d) other risks that are discussed in this Form
      10-KSB or included in our previous filings with the Securities and Exchange
      Commission.




Plan
      of Operations




**General
      Business Plan**





On
      July
      7, 2006, we entered into an Exchange Agreement KI Equity Partners II, LLC (“KI
      Equity”), Prime Fortune Enterprises Limited, an international business company
      incorporated in the British Virgin Islands ("Prime"), and each of the equity
      owners of Prime (the “Prime Shareholders”) pursuant to which we will acquire
      100% of the equity interests of Prime in a reverse merger transaction. This
      reverse merger transaction is described in detail below. There are a number
      of
      conditions to the closing of the transactions under the Exchange Agreement
      including, without limitation, the completion of a capital raise in a minimum
      amount of $7,000,000. The parties expect the closing of the transactions under
      the Exchange Agreement and the financing to occur on or about August 31, 2006.
      However, there can be no assurances that the exchange transaction or the
      financing will be completed. Accordingly, the following Plan of Operations
      describes our plan of operations which we would pursue if the pending
      transaction under the Exchange Agreement fails to close.





Our
      plan
      of operation is to seek a target company with which to merge or to complete
      a
      business combination. In any transaction, we will be the surviving entity,
      and
      our stockholders will retain a percentage ownership interest in the
      post-transaction company. The amount of the retained equity ownership by our
      stockholders will be negotiated by our management and the target company. We
      may
      also be required to pay cash and/or equity fees to third parties that advise
      us
      in connection with the merger or business combination, commonly refereed to
      as a
      reverse merger. These third party advisors may include certain affiliates of
      ours and their affiliated entities.





Typically
      in connection with the reverse merger transaction involving us and the target
      company, there will be a capital funding event for the target business on a
      combined basis either at the time of the reverse merger or shortly thereafter.
      This may be a private placement by either us or the target company, if the
      funding event is contingent on the closing of the reverse merger. If the funding
      event is after the reverse merger, it will likely be a public offering or
      private placement of our securities. It will often be the case that the
      liquidity opportunity for our existing stockholders will be tied to the ability
      of the old and new investors of the target enterprise to have liquidity in
      the
      market for their financial investment. Therefore, our stockholders may have
      to
      continue to hold their investment or may face competition in being able to
      sell
      their shares in the post-transaction business in the public market, which may
      depress the price for such a volume of securities.





We
      will
      not restrict our search to any specific business, industry or geographic
      location, and we may participate in a business venture of virtually any kind
      or
      nature. This discussion of our plan for acquiring an operating business is
      purposefully general, and it is not meant to be restrictive of the virtually
      unlimited discretion to search for and enter into potential business
      opportunities. We anticipate that we will be able to participate in only one
      potential business venture because of our nominal assets and limited financial
      resources.





We
      may
      seek a business opportunity with entities which have recently commenced
      operations, or that desire to utilize the public marketplace in order to raise
      additional capital in order to expand into new products or markets,
      to


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develop
      a
      new product or service, or for other corporate purposes. We may acquire assets
      and establish wholly owned subsidiaries in various businesses or acquire
      existing businesses as subsidiaries.





We
      expect
      that the selection of a business opportunity will be complex and risky. Due
      to
      general economic conditions, rapid technological advances being made in some
      industries and shortages of available capital, we believe that there are
      numerous potential targets with either sound business ideas or operations
      seeking the benefits of a shell company that has complied with the federal
      reporting requirements for public companies and is publicly trading. Such
      benefits may include facilitating or improving the terms on which additional
      equity financing may be sought, providing liquidity for incentive stock options
      or similar benefits to key employees, providing liquidity (subject to
      restrictions of applicable statutes) for all stockholders and other factors.
      Potentially, available business opportunities may occur in many different
      industries and at various stages of development, all of which will make the
      task
      of comparative investigation and analysis of such business opportunities
      extremely difficult and complex. We have, and will continue to have, limited
      capital with which to provide the owners of business opportunities with any
      significant cash or other assets. We will, however, be able to offer owners
      of
      target candidates the opportunity to acquire a controlling ownership interest
      in
      an issuer who has complied with the reporting requirements under federal
      securities laws without incurring the cost and time required to conduct an
      initial public offering.





The
      analysis of new business opportunities will be undertaken by, or under the
      supervision of, our management who will likely engage outside advisors to assist
      us in this analysis. Some of these outside advisors may be affiliates of ours
      or
      their affiliated entities. We intend to concentrate on identifying preliminary
      prospective business opportunities which may be brought to our attention through
      present associations of our officers and directors, or by our advisors. In
      analyzing prospective business opportunities, we will consider such matters
      as
      (i) available technical, financial and managerial resources; (ii) working
      capital and other financial requirements; (iii) history of operations, if any
      and prospects for the future; (iv) nature of present and expected competition;
      (v) quality, experience and depth of management services; (vi) potential for
      further research, development or exploration; (vii) specific risk factors not
      now foreseeable but that may be anticipated to impact the proposed activities
      of
      the company; (viii) potential for growth or expansion; (ix) potential for
      profit; (x) public recognition and acceptance of products, services or trades;
      (xi) name identification; and (xii) other factors that we consider relevant.
      As
      part of our investigation of the business opportunity, we or our advisors expect
      to meet personally with or interview management and key personnel.





We
      may
      also have to compensate certain advisors, finders and investment banking firms
      for services rendered in connection with the identification of target operating
      companies and the negotiation and completion of the transaction. Due to our
      limited resources, it is expect that all or a portion of this compensation
      will
      be in the form of our common stock or from cash provided by the target company
      or the funding event. Additional issuance of our common stock will have a
      further dilutive effect on the percentage of shares held our stockholders.
      As
      discussed above, Keating Securities, LLC, an affiliate of Keating Investments,
      LLC, the managing member of our controlling stockholder, will also act as a
      financial advisor in connection with the reverse merger transaction and will
      be
      paid a cash and/or equity fee upon the successful closing of the reverse merger.





We
      will
      not acquire or merge with any company for which audited financial statements
      cannot be obtained prior to closing of the proposed transaction.





**Acquisition
      Opportunities**





In
      implementing a structure for a particular business acquisition, we may become
      a
      party to a merger, consolidation, reorganization, joint venture, or licensing
      agreement with another company or entity. We may also acquire stock or assets
      of
      an existing business. Our management may have the right to approve and authorize
      a reverse merger transaction with a target company without obtaining the vote
      of
      the majority of our stockholders. Further, upon consummation of a reverse merger
      transaction, it is probable that our present management and stockholders will
      no
      longer be in control of us. In addition, our management, as part of the terms
      of
      the reverse merger transaction, may resign and may be replaced by new directors
      without a vote of our stockholders. Any and all sales of shares of our common
      stock may only be made in compliance with the securities laws of the United
      States and any applicable state.


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It
      is
      anticipated that certain securities issued by us in connection with the reverse
      merger would be issued in reliance upon exemptions from registration under
      application federal and state securities laws. In some circumstances, as a
      negotiated element of the reverse merger transaction, we will be asked to agree
      to register all or a part of such securities immediately after the transaction
      is consummated or at specified times thereafter. In such a case, we will attempt
      to negotiate the registration of some or all of our current outstanding shares
      which are restricted, but there is no guarantee that this will be accomplished
      or, if accomplished, that the registration rights identical. If such
      registration occurs, it will be undertaken by the surviving entity after it
      has
      successfully consummated a reverse merger and is no longer considered an
      inactive company. The issuance of substantial additional securities by us in
      connection with the reverse merger and their potential sale into any trading
      market which may develop in our securities may have a depressive effect on
      the
      value of our securities in the future. There is no assurance that such a trading
      market will develop.





While
      the
      actual terms of a reverse merger transaction cannot be predicted, it is expected
      that the parties to any business transaction will find it desirable to avoid
      the
      creation of a taxable event and thereby structure the business transaction
      in a
      so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
      Internal Revenue Code (the "Code"). In order to obtain tax-free treatment under
      the Code, it may be necessary for the owners of the acquired business to own
      80
      percent or more of the voting stock of the surviving entity. In such event,
      the
      equity interest retained by our current stockholders would be less than 20
      percent of the issued and outstanding shares of the surviving entity. This
      would
      result in significant dilution in the equity interests of our
      stockholders.





In
      addition to the tax considerations discussed above, it is likely that in any
      reverse merger, and depending upon, among other things, the target company's
      assets and liabilities, the equity interests of our stockholders after the
      transaction will be a small percentage of the post-transaction company. The
      percentage ownership may be subject to significant reduction in the event we
      acquire a target company with significant assets and expectations of
      growth.





We
      will
      participate in a business opportunity only after the negotiation and execution
      of appropriate written agreements. Although the terms of the acquisition
      agreements cannot be predicted, generally such agreements will (i) require
      specific representations and warranties by all of the parties; (ii) specify
      certain events of default and remedies therefor; (iii) detail the terms of
      closing and the conditions which must be satisfied by each of the parties prior
      to and after closing; (iv) outline the manner of bearing costs, including costs
      associated with our attorneys and accountants; (v) set forth indemnification
      provisions; and (vi) include miscellaneous other terms.





As
      stated
      above, we will not acquire or merge with any entity which cannot provide
      independent audited financial statements within a reasonable period of time
      after closing of the proposed transaction. Included in these requirements is
      the
      affirmative duty to file independent audited financial statements as part of
      a
      Current Report on Form 8-K, required to be filed with the SEC upon consummation
      of a merger or acquisition, as well as audited financial statements included
      in
      an Annual Report on Form 10-K (or Form 10-KSB, as applicable). If such audited
      financial statements are not available at closing, or within time parameters
      necessary to insure compliance with the reporting requirements under federal
      securities laws, or if the audited financial statements provided do not conform
      to the representations made by the business to be acquired, we will attempt
      to
      negotiate a provision in the definitive closing documents to void the
      transaction. However, there is no guarantee that we will be successful in
      including such a provision and, in such case, the continued ability of the
      post-transaction company to remain a reporting company and publicly trading
      may
      be in jeopardy.





**Competition**





We
      are an
      insignificant participant among the firms which engage in the reverse merger
      of
      shell companies into an operating business. There are many established venture
      capital and financial concerns that have significantly greater financial and
      personnel resources and technical expertise than we have. In view of our limited
      financial resources and limited management availability, we will continue to
      be
      at a significant competitive disadvantage compared to our competitors. As a
      result, we may not be able to find suitable target companies with which to
      complete a reverse merger transaction.


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            Statements**




Results
      of Operations




**For
      Period beginning August 25, 2005 (Inception) through May 31,
      2006**





We
      accounted for the Reorganization as a reverse spinoff in accordance with the
      Emerging Issues Task Force Issue No. (“EITF”) 02-11, “ *Accounting
      for Reverse Spinoffs.* ”
In
      a
      reverse spinoff, the legal spinnee (ASAP) is treated as though it were the
      spinnor for accounting purposes. Reverse spinoff accounting is appropriate
      as
      the treatment of the legal spinnee as the accounting spinnor results in the
      most
      accurate depiction of the substance of the transaction for shareholders and
      other users of the consolidated financials statements. Under this treatment,
      our
      historical financial statements (for the period prior to the August 25, 2005
      spinoff) became the historical financial statements of ASAP. Our financial
      statements included in this annual report reflected our activity and accounts
      for the period beginning August 25, 2005 through May 31, 2006.




We
      generated a net loss of $88,830 for the period from August 25, 2005
      (“Inception”) through May 31, 2006. From Inception through May 31, 2006, we had
      non-cash compensation of $25,000 related to shares of our common stock issued
      for services and general and administrative expenses of $63,830 related
      primarily to professional and consulting fees and expenses to maintain our
      status as a reporting company.





Liquidity
      and Capital Resources




A
      summary
      of the our operating and financing activities for the period form Inception
      to
      May 31, 2006 is as follows:




Cash
                flows from:Operating
                activities
            
            $
            (61,330
            )Financing
                activities
            
            $
            125,000





On
      September 30, 2005, we issued 7,104,160 shares of our common stock to KI Equity
      for $415,000, pursuant to the SPA described above. Pursuant to the Transfer
      Agreement, we recorded a reduction in stockholders’ equity of $415,000 due to
      ASAP as a reduction of the purchase consideration under the Transfer Agreement.
      We have paid $365,000 to ASAP for the purchase consideration reduction, and
      we
      retained $50,000 for potential indemnity claims which has been classified as
      due
      to former affiliate in our financial statements.




**** On
      October 5, 2005, we issued 1,000,000 shares of common stock, in restricted
      form,
      to KI Equity at a purchase price of $0.05 per share, for an aggregate purchase
      price of $50,000 in order to provide funds for our working capital needs. Also
      on October 5, 2005 for services rendered, we issued 250,000 shares of common
      stock to Kevin R. Keating, the Company’s sole officer, and 250,000 shares of
      common stock to a consultant. The stock is valued at an aggregate price of
      $25,000, or $0.05 per share, which is the same per share value of the cash
      purchases of common stock in the transactions mentioned above, which occurred
      contemporaneously. We consider this to be the best estimate of the fair value
      of
      the non-cash transaction.




On
      October 24, 2005, we issued 500,000 shares of common stock to KI Equity at
      a
      purchase price of $0.05 per share for an aggregate price of $25,000 in order
      to
      provide funds for our working capital needs.




At
      May
      31, 2006, we had current assets, in the form of cash, totaling $63,670. We
      had
      current liabilities consisting of accounts payable of $2,500 and amounts due
      to
      ASAP, our former affiliate, of $50,000 to cover potential indemnity claims.





Going
      Concern




We
      currently have no source of operating revenue, and have only limited working
      capital with which to pursue our business plan, which contemplates the
      completion of a business combination with an operating company. The amount
      of
      capital required to sustain operations until the successful completion of a
      business combination is subject to future events and uncertainties. It may
      be
      necessary for us to secure additional working capital through loans
      or


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            Statements**


sales
      of
      common stock, and there can be no assurance that such funding will be available
      in the future. These conditions raise substantial doubt about our ability to
      continue as a going concern.




Critical
      Accounting Policies




Use
      of
      Estimates





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities as of the date
      of the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.





Measurement
      of non-cash compensation




We
      value
      non-cash equity transactions in relation to contemporaneous cash sales of
      equivalent equity securities.




Deferred
      Taxes





We
      utilize the asset and liability approach to accounting and reporting for income
      taxes. Deferred income tax assets and liabilities are computed annually for
      differences between the financial statements and tax basis of assets and
      liabilities that will result in taxable or deductible amounts in the future
      based on enacted tax laws and rates applicable to the periods in which the
      differences are expected to affect taxable income. Valuation allowances are
      established when necessary to reduce deferred tax assets to the amount expected
      to be realized. Income tax expense or benefit is the tax payable or refundable
      for the period plus or minus the change during the period in deferred tax assets
      and liabilities.




**ITEM
              7.**
            **FINANCIAL
                STATEMENTS**.




The
      following financial statements required by this item are filed herewith
      following the signature page to this report:




**Page**Report
                of Independent Registered Public Accounting Firm
            F-1Balance
                Sheet as of May 31, 2006
            F-2Statement
                of Operations for the period from August 25, 2005 (Inception) through
                May
                31, 2006
            F-3Statement
                of Stockholders' Equity for the period from August 25, 2005 (Inception)
                through May 31, 2006
            F-4Statement
                of Cash Flows for the period from August 25, 2005 (Inception) through
                May
                31, 2006
            F-5Notes
                to Financial Statements
            F-6-16




**ITEM
                8.**
              **CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                  DISCLOSURE**




There
      were no disagreements with Corbin & Company, whether or not resolved, on any
      matter of accounting principles or practices, financial statement disclosure,
      or
      auditing scope or procedure, which, if not resolved to the satisfaction of
      Corbin & Company, would have caused it to make reference to the subject
      matter of the disagreement(s) in connection with its report.


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**ITEM
              8A.**
            **CONTROLS
                AND PROCEDURES**




As
      of the
      end of the period covered by this report, we conducted an evaluation, under
      the
      supervision and with the participation of the Chief Executive Officer and Chief
      Financial Officer, of our disclosure controls and procedures (as defined in
      Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended
      (“Exchange Act”). Based on this evaluation, the Chief Executive Officer and
      Chief Financial Officer concluded that our disclosure controls and procedures
      are effective to ensure that information required to be disclosed by us in
      reports that we file or submit under the Exchange Act is recorded, processed,
      summarized and reported within the time periods specified in SEC rules and
      forms. There was no change in our internal control over financial reporting
      during our most recently completed fiscal quarter that has materially affected,
      or is reasonably likely to materially affect, our internal control over
      financial reporting.




**PART
      III**




**ITEM
              9.**
            **DIRECTORS
                AND EXECUTIVE OFFICERS OF THE REGISTRANT**




Effective
      as of the closing of the SPA, on September 30, 2005, our then current officers
      and directors resigned, and Kevin R. Keating became our sole director, CEO,
      President, CFO, Treasurer and Secretary. On October 5, 2005, Kevin R. Keating
      appointed Margie L. Blackwell, Luca Toscani and Jeff L. Andrews to our board
      of
      directors to fill certain vacancies.





The
      following table sets forth the names, positions and ages of our executive
      officers and directors. All directors serve until the next annual meeting of
      stockholders or until their successors are elected and qualified. Officers
      are
      elected by the board of directors and their terms of office are, except to
      the
      extent governed by employment contract, at the discretion of the board of
      directors. There is no family relationship between any director, executive
      officer or person nominated or chosen by us to become a director or executive
      officer.




**Name**
            
            **Age**
            
            **Position**
            
            **Term**Kevin
                R. Keating (1)
            
            66
            
            CEO,
                President, CFO, Treasurer, Secretary and Director
            
            1
                YearMargie
                L. Blackwell (2)
            
            50
            
            Director
            
            1
                YearLuca
                Toscani (2)
            
            35
            
            Director
            
            1
                YearJeff
                L. Andrews (2)
            
            36
            
            Director
            
            1
                Year





(1)
            Became
                CEO, President, Secretary, CFO, Treasurer, and a director effective
                September 30, 2005.


(2)
            Became
                a director effective October 5, 2005.




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**Kevin
      R. Keating** ,
      CEO,
      President, Secretary, CFO, Treasurer and a director of Cyber, is an investment
      executive and for the past twelve years has been the Branch Manager of the
      Vero
      Beach, Florida, office of Brookstreet Securities Corporation. Brookstreet is
      a
      full-service, national network of independent investment professionals. Mr.
      Keating services the investment needs of private clients with special emphasis
      on equities. For more than 40 years, he has been engaged in various aspects
      of
      the investment brokerage business. Mr. Keating began his Wall Street career
      with
      the First Boston Company in New York in 1965. From 1967 through 1974, he was
      employed by several institutional research boutiques where he functioned as
      Vice
      President Institutional Equity Sales. From 1974 until 1982, Mr. Keating was
      the
      President and Chief Executive Officer of Douglas Stewart, Inc., a New York
      Stock
      Exchange member firm. Since 1982, he has been associated with a variety of
      firms
      as a registered representative servicing the needs of individual investors.
      Mr.
      Keating is also the manager and sole member of Vero Management, LLC, which
      has a
      management agreement with Cyber.




**Margie
      L. Blackwell** ,
      a
      director of Cyber, is a member of Keating Investments, LLC, and has been with
      Keating Securities, LLC, an NASD member firm, for six years. She is a Registered
      Principal having completed her Series 7, 24 and 63 examinations. From 1993
      to
      1999 she was a financial assistant to various non-public companies. Prior to
      that, she worked with the Chairman of the Board of Tele-Communications, Inc.
      ("TCI"), for eleven years. She first served in the capacity of Executive
      Assistant and was later promoted to Plan Manager of TCI's Employee Stock
      Purchase Plan. She was responsible for management of the Stock Plan, a 401(k)
      qualified plan that invested primarily in TCI stock. In addition, Ms. Blackwell
      served on the TCI Employee Stock Purchase Plan Committee as Plan
      Secretary.





**Luca
      Toscani** ,
      a
      director of Cyber, is a member of Keating Investments, LLC, and has been with
      Keating Securities, LLC, an NASD member firm, for six years. He is a Registered
      Representative having successfully completed his Series 7 and 66 examinations.
      Mr. Toscani was formerly hedge fund manager with Medici Capital Management,
      London. He began his career as an arbitrage trader at Bear Stearns International
      Ltd. (London) after graduating in 1995 *summa
      cum laude* from the
      Venice University, Italy with a degree in Economics and Business. Mr. Toscani
      spent one year each of scholarship at Warwick University and University College,
      both in the United Kingdom.





**Jeff
      L. Andrews** ,
      a
      director of Cyber, is a Senior Vice President of Keating Investments, LLC,
      and
      has been with Keating Securities, LLC, an NASD member firm, for three years.
      He
      is a Registered Representative, having completed his Series 7, 24, and 66
      examinations. He was formerly a Financial Advisor with UBS Financial Services
      (PaineWebber), Denver. Mr. Andrews started his career
      in media, managing a Summit County, Colorado television affiliate of Resort
      Sports Network and the Copley Theatre at The New England in Boston. He is
      currently a board member of 9Kids Who Care at KUSA-TV and the University of
      Denver's Bridge Project, providing educational services for Denver's
      underprivileged youths. Mr. Andrews is a 1994 graduate of Tufts University
      with
      a B.A. in English and Political Science.





Audit
      Committee and Audit Committee Financial Expert




Cyber
      is
      not a "listed company" under SEC rules and is therefore not required to have
      an
      audit committee comprised of independent directors. Cyber does not currently
      have an audit committee, however, for certain purposes of the rules and
      regulations of the SEC, Cyber's board of directors is deemed to be its audit
      committee. Cyber's board of directors has determined that its members do not
      include a person who is an "audit committee financial expert" within the meaning
      of the rules and regulations of the SEC. The board of directors has determined
      that each of its members is able to read and understand fundamental financial
      statements and has substantial business experience that results in that member's
      financial sophistication. Accordingly, the board of directors believes that
      each
      of its members have the sufficient knowledge and experience necessary to fulfill
      the duties and obligations that an audit committee would have.





No
      Code of Ethics




A
      code of
      ethics relates to written standards that are reasonably designed to deter
      wrongdoing and to promote:




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            Statements**


·
            Honest
                and ethical conduct, including the ethical handling of actual or
                apparent
                conflicts of interest between personal and professional
                relationships;




·
            Full,
                fair, accurate, timely and understandable disclosure in reports and
                documents that are filed with, or submitted to, the SEC and in other
                public communications made by an
                issuer;




·
            Compliance
                with applicable governmental laws, rules and
                regulations;




·
            The
                prompt internal reporting of violations of the code to an appropriate
                person or persons identified in the code;
                and




·
            Accountability
                for adherence to the code.




Cyber
      has
      not adopted a code of ethics that applies to the Chief Executive Officer and
      Chief Financial Officer because it has no meaningful operations. Cyber does
      not
      believe that a formal written code of ethics is necessary at this time.




Conflicts
      of Interest




Certain
      conflicts of interest existed at May 31, 2006 and may continue to exist between
      Cyber and its officers and directors due to the fact that each has other
      business interests to which they devote their primary attention. Each officer
      and director may continue to do so notwithstanding the fact that management
      time
      should be devoted to the business of Cyber.





Certain
      conflicts of interest may exist between Cyber and its management, and conflicts
      may develop in the future. Cyber has not established policies or procedures
      for
      the resolution of current or potential conflicts of interest between Cyber,
      its
      officers and directors or affiliated entities. There can be no assurance that
      management will resolve all conflicts of interest in favor of Cyber, and
      conflicts of interest may arise that can be resolved only through the exercise
      by management their best judgment as may be consistent with their fiduciary
      duties. Management will try to resolve conflicts to the best advantage of all
      concerned, but there may be times when an acquisition opportunity is given
      to
      another entity to the disadvantage of Cyber’s stockholders and for which there
      will be no recourse. As part of the Exchange, Cyber will engage Keating
      Securities, LLC, an affiliate of Keating Investments, LLC, the managing member
      of Cyber’s controlling stockholder, to act as a financial advisor in connection
      with the Exchange for which it will earn a $450,000 advisory fee upon the
      Closing. Margie L. Blackwell and Luca Toscani are each members of Keating
      Investments, LLC, and Jeff L. Andrews is a Vice President of Keating
      Investments, LLC.




Board
      Meetings; Nominating and Compensation Committees




The
      Board
      of Directors held five special meetings of directors during the fiscal year
      ended May 31, 2006. In addition, the board of directors took a number of actions
      by written consent of all of the directors. Directors may be paid their
      expenses, if any, of attendance at such meeting of the Board of Directors,
      and
      may be paid a fixed sum for attendance at each meeting of the Board of Directors
      or a stated salary as Director. No such payment shall preclude any Director
      from
      serving Cyber in any other capacity and receiving compensation therefore except
      as otherwise provided under applicable law. Except as set forth below, no
      compensation has been paid to the Directors. The Board of Directors may
      designate from among its members an executive committee and one or more other
      committees. No such committees are currently appointed or in place.





Cyber
      is
      not a "listed company" under SEC rules and is therefore not required to have
      a
      compensation committee or a nominating committee. Cyber does not currently
      have
      a compensation committee. Kevin R. Keating is Cyber’s sole officer acting as
      President, Secretary and Treasurer. Cyber has no employees, and any compensation
      for directors and officers must be approved by the Board of
      Directors.


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            Statements**


Cyber
      neither has a nominating committee for persons to be proposed as directors
      for
      election to the Board of Directors nor a formal method of communicating nominees
      from shareholders. Cyber does not have any restrictions on shareholder
      nominations under its certificate of incorporation or by-laws. The only
      restrictions are those applicable generally under California law and the federal
      proxy rules. Currently, the entire Board of Directors decides on nominees,
      on
      the recommendation of one or more members of the Board of Directors. None of
      the
      members of the Board of Directors are "independent." The Board of Directors
      will
      consider suggestions from individual shareholders, subject to evaluation of
      the
      person's merits. Stockholders may communicate nominee suggestions directly
      to
      any of the Board members, accompanied by biographical details and a statement
      of
      support for the nominees. The suggested nominee must also provide a statement
      of
      consent to being considered for nomination. Although there are no formal
      criteria for nominees, Cyber’s Board of Directors believes that persons should
      be actively engaged in business endeavors, have a financial background, and
      be
      familiar with acquisition strategies and money management.





Because
      the management and one of the directors of Cyber are the same person, the Board
      of Directors has determined not to adopt a formal methodology for communications
      from shareholders on the belief that any communication would be brought to
      the
      Board's attention by virtue of the co-extensive capacities served by Kevin
      R.
      Keating.





Cyber
      does not have a policy regarding the attendance of board members at the annual
      meeting of shareholders. At the last annual meeting of shareholders held May
      16,
      2005, one member of the board was in attendance.




Section
      16(a) Beneficial Ownership Reporting




Section
      16(a) of the Exchange Act requires that directors, executive officers and
      persons who own more than 10% of the outstanding common stock of certain
      reporting companies file initial reports of ownership and reports of changes
      in
      ownership in such common stock with the SEC. Officers, directors and
      stockholders who own more than 10% of the outstanding common stock of certain
      reporting companies are required by the SEC to furnish such companies with
      copies of all Section 16(a) reports they file. We are not required to comply
      with Section 16(a). Accordingly, stock ownership information contained in this
      report is based on what is known to us.


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            Statements**




**ITEM
              10.**
            **EXECUTIVE
                COMPENSATION**




The
      following Executive Compensation Chart highlights the compensation for our
      executive officers. No other executive officers received salary and bonus in
      excess of $100,000 for the prior three fiscal years.





Long
                Term CompensationAnnual
                Compensation
            
            Awards
            
            PayoutsNameand
              PrincipalPosition
            
            Year
            
            Salary
                ($)
            
            Bonus
                ($)
            
            Other
              Annual
                Compensation ($)
            
            Restricted
              Stock
                Award(s)
              ($)
            
            Securities
              Underlying
                Options/
              SARs
                (#) (2)
            
            LTIP
              Payouts
                ($)
            
            All
                Other
              Compensation
              ($)Frank
                Yuan (former CEO) (4)
            
            
            2006
              2005
              2004
            
            $
              $
              $
            0
              137,500
              150,000
            
            $
              $
              $
            0
              0
              0
            
            $
              $
              $
            0
              0
              0
            
            N/A
              $42,943(1)
              N/A
            
            N/AN/A185,000(2)
            
            
            N/A
              N/A
              N/A
            
            
            N/A
              N/A
              N/AKevin
                R. Keating (CEO, President, Secretary, CFO and Treasurer)
                (5)
            
            
            2006
              2005
              2004
            
            $
              $
              $
            0
              0
              0
            
            $
              $
              $
            0
              0
              0
            
            $
              $
              $
            0
              0
              0
            
            
            N/A
              N/A
              N/A
            
            
            N/A
              N/A
              N/A
            
            
            N/A
              N/A
              N/A
            
            $
            12,500
                (3)
              N/A
              N/A





(1)
            Value
                of stock bonus consisting of 38,862 shares of our common
                stock.


(2)
            Consists
                of grants of stock options under our 2001 Stock Option Plan. All
                the stock
                options were cancelled during fiscal
                2005.


(3)
            On
                October 5, 2005, we issued 250,000 shares of our common stock to
                Kevin R.
                Keating, our sole officer and a director, for services rendered to
                us
                valued at $12,500, or $0.05 per share.


(4)
            Frank
                Yuan resigned as our CEO effective September 30,
                2005.


(5)
            Kevin
                R. Keating was appointed our CEO, President, Secretary, CFO, Treasurer,
                and a director effective September 30,
                2005.




We
      have
      compensated our directors with stock options for their service as directors.
      Prior stock options granted and vested under our 1996, 1999 and 2001 Stock
      Option Plans were cancelled during fiscal 2005. The value of the stock bonus
      issued to our directors effective May 31, 2005 approximated
      $93,000.




Except
      as
      set forth above, there was no other compensation paid to Frank Yuan, Kevin
      R.
      Keating or any other director of Cyber during the fiscal year ended May 31,
      2006. There were no option grants to Frank Yuan, Kevin R. Keating or any other
      director of Cyber during the fiscal year ended May 31, 2006.




Pursuant
      to an action by our board on August 24, 2005, we cancelled all outstanding
      stock
      options granted under our 1996, 1999 and 2001 Stock Option Plans (“Option
      Plans”) and further terminated each of Option Plans. Certain option holders
      agreed to the cancellation of their options, and Frank Yuan agreed to assume
      all
      obligations of Cyber with respect to options to purchase 36,025 shares of our
      common stock held by certain employees and consultants who did not agree to
      cancel their options.


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            Statements**




**ITEM
              11.**
            **SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT**




We
      have
      set forth in the following table certain information regarding our common stock
      beneficially owned on August 3, 2006 for (i) each shareholder we know to be
      the
      beneficial owner of 5% or more of our outstanding common stock, (ii) each of
      our
      executive officers and directors, and (iii) all executive officers and directors
      as a group. In general, a person is deemed to be a "beneficial owner" of a
      security if that person has or shares the power to vote or direct the voting
      of
      such security, or the power to dispose or to direct the disposition of such
      security. A person is also deemed to be a beneficial owner of any securities
      of
      which the person has the right to acquire beneficial ownership within 60 days.
      To the best of our knowledge, all persons named have sole voting and investment
      power with respect to such shares, except as otherwise noted. Except as
      disclosed in this report, there are not any pending or anticipated arrangements
      that may cause a change in control of the Company. At August 3, 2006, 10,119,040
      shares of our common stock were outstanding.




Name
            Number
                of Shares BeneficiallyOwned
            Percent
                of ShareKevin
                R. Keating
              936A
                Beachland Boulevard, Suite 13
              Vero
                Beach, Florida 32963
            250,000
                (1)
            2.5%KI
                Equity Partners II, LLC
              c/o
                Timothy J. Keating, Manager
              5251
                DTC Parkway, Suite 1090
              Greenwood
                Village, Colorado 80111
            8,604,160
                (2)
            85.0%All
                Executive Officers and Directors as a group
            250,000
            2.5%







(1)
            Kevin
                R. Keating is not affiliated with and has no equity interest in KI
                Equity
                Partners II, LLC (“KI Equity”) and disclaims any beneficial interest in
                the shares of our common stock owned by KI Equity.
                .


(2)
            Timothy
                J. Keating is the Manager of KI Equity and in such capacity has voting
                and
                investment power over the shares held by KI Equity. KI Equity is
                not owned
                by or affiliated with Kevin R. Keating and disclaims any beneficial
                interest in the shares of our common stock owned by Kevin R.
                Keating.




**ITEM
              12.**
            **CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS**




Cyber
      had
      a revolving $500,000 line of credit with Frank Yuan and his spouse, Vicky Yuan.
      The line of credit bears interest at 8% per annum and expires on February 2006.
      The line of credit has been terminated and Cyber’s obligations thereunder were
      assumed by ASAP.




Pursuant
      to certain Stock Option Assumption Agreement entered into between Cyber and
      Frank Yuan as of May 31, 2005 (“Option Assumption Agreement”), Frank Yuan, the
      former CEO of Cyber agreed to assume all obligations of Cyber with respect
      to
      options to purchase 36,025 shares of Cyber Common Stock held by certain
      employees and consultants. In connection with the Option Assumption Agreement,
      Yuan delivered a certificate representing 36,025 shares of Cyber Common Stock,
      which shares may be cancelled to the extent Yuan fails to deliver shares to
      such
      holders upon exercise.




Pursuant
      to the SPA by and among KI Equity, Cyber and Frank Yuan (“Yuan”) dated August
      25, 2005, Yuan has agreed to indemnify KI Equity and Cyber for certain claims
      and liabilities arising prior to the closing of the SPA for a limited
      time.


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            Statements**


Pursuant
      to the Transfer Agreement by and among Cyber, Yuan and ASAP, a then wholly
      owned
      subsidiary of Cyber, Cyber transferred all of its Assets (as defined therein)
      to
      ASAP and ASAP assumed all of Cyber’s liabilities (“Assumed Liabilities”). Under
      the Transfer Agreement, ASAP and Yuan agreed to indemnify Cyber for any claims
      and liabilities relating to the Assumed Liabilities. Further, pursuant to the
      Transfer Agreement, an indemnity reserve for $50,000 (“Indemnity Escrow”) was
      established to satisfy any claims that may arise for indemnity under the SPA
      or
      the Transfer Agreement. Cyber has retained the Indemnity Escrow beyond the
      six
      month period after the closing of the SPA pending the resolution of the
      Preference Action discussed below.




On
      March
      7, 2006, a complaint was filed against Cyber in a Chapter 7 bankruptcy
      proceeding in U.S. Bankruptcy Court in the District of Delaware in the matter
      captioned In
      Re:
      Factory 2-U Stores, Inc. (“Preference Action”). The complaint seeks to recover from Cyber $91,572 in
      alleged preferential transfers made to Cyber by the debtor during the ninety-day
      period prior to the filing of the debtor’s bankruptcy petition. Cyber intends to
      defend against such preference claim by asserting that such transfers were
      made
      in the ordinary course of business and such other available defenses. Cyber
      filed its answer to the compliant on or about April 20, 2006. To the extent
      Cyber incurs any losses, costs or damages with respect to the preference claim,
      including attorneys’ fees and related costs, Cyber believes it may recover such
      losses, costs and damages from Frank Yuan and ASAP pursuant to the
      indemnification provisions under the Assumption Agreement and/or Amended SPA.
      Cyber has informed Frank Yuan and ASAP that it intends to seek indemnification
      from them with respect to the preference claim. Further, the Company has
      informed Frank Yuan and ASAP that the $50,000 reserve originally due to be
      paid
      March 30, 2006 under the terms of the Assumption Agreement will be retained
      by
      Cyber until this preference claim is resolved to satisfy any potential indemnity
      claims.




Effective
      October 5, 2005, Cyber entered into a contract with Vero Management, L.L.C.
      (“Vero”) for managerial and administrative services, which contract was amended
      effective November 1, 2005. Vero has not been engaged to provide, and Vero
      does
      not render, legal, accounting, auditing, investment banking or capital formation
      services. Kevin R. Keating, a director of Cyber, is the manager of Vero. The
      term of the contract is for one year, but the contract may be terminated at
      any
      time. In consideration of the services provided, Vero was paid $1,000 for the
      month of October 2005 and $2,500 each month thereafter in which services are
      rendered. During the fiscal year ended May 31, 2006, Vero was paid a total
      of
      $18,500.




Kevin
      R.
      Keating is the sole officer and a director of Cyber. Kevin R. Keating is the
      father of Timothy J. Keating, the principal member of Keating Investments,
      LLC.
      Keating Investments, LLC is the managing member of KI Equity, which is the
      majority stockholder of Cyber, Keating Securities, LLC, the registered
      broker-dealer affiliate of Keating Investments, LLC, and KAMS. Kevin R. Keating
      is not affiliated with and has no equity interest in Keating Investments, LLC,
      KI Equity, KAMS or Keating Securities, LLC and disclaims any beneficial interest
      in the shares of Cyber’s common stock owned by KI Equity. Similarly, Keating
      Investments, LLC, KI Equity, KAMS and Keating Securities, LLC disclaim any
      beneficial interest in the shares of Cyber’s common stock currently owned by
      Kevin R. Keating.




Margie
      L.
      Blackwell, Luca Toscani and Jeff L. Andrews are directors of Cyber. Margie
      L.
      Blackwell and Luca Toscani are each members of Keating Investments, LLC, and
      Jeff L. Andrews is a Senior Vice President of Keating Investments,
      LLC.




At
      or
      prior to the Closing, pursuant to the terms of the Exchange Agreement, Cyber
      will enter into a certain financial advisory agreement with Keating Securities,
      LLC (“Keating Securities”), a registered broker-dealer, under which Keating
      Securities will be compensated by Cyber for its advisory services rendered
      to
      Cyber in connection with the Exchange. The transaction advisory fee will be
      $450,000. This fee shall be paid upon the Closing of the Exchange.




At
      or
      prior to the Closing, pursuant to the terms of the Exchange Agreement, Cyber
      will enter into an aftermarket support agreement between Cyber and Keating
      Aftermarket Support, LLC (“KAMS”), with such terms and conditions as mutually
      acceptable to Prime, Cyber and KAMS.




Other
      than the above transactions or otherwise set forth in this report or in any
      reports filed by Cyber with the SEC, Cyber has not entered into any material
      transactions with any director, executive officer, and nominee for


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            Statements**


director,
      beneficial owner of five percent or more of its common stock, or family members
      of such persons. Cyber is not a subsidiary of any company.





**ITEM
              13.**
            **EXHIBITS
                AND REPORTS ON FORM 8-K**




(a)
            Exhibits.




**Exhibit**
              **Number**
            
            **Description**2.1
            
            Amended
                and Restated Securities Purchase Agreement, dated August 25, 2005
                (5)2.2
            
            Transfer
                and Assumption Agreement dated as of May 31, 2005 (5)2.3
            
            Exchange
                Agreement dated July 7, 2006 (6)3.1
            
            Articles
                of Incorporation (1)3.2
            
            Bylaws
                (1)4.1
            
            Lock-Up
                Agreement (2)4.2
            
            Specimen
                Stock Certificate for Shares of Common Stock of the Company
                (4)4.3
            
            Warrant
                expiring October 15, 2002 issued by the Company to Burlington Coat
                Factory
                Warehouse Corporation on October 15, 1997 (1)4.4
            
            Warrant
                expiring February 10, 2004 issued by the Company to Imperial Bank
                on
                February 10, 1999 (4)4.5
            
            Warrant
                expiring May 25, 2005 issued by the Company to Factory 2-U on May
                25, 2000
                (3)10.1
            
            Lease
                of registrant's facilities (1)10.2
            
            Participation
                Agreement with Burlington Coat Factory Warehouse Corporation
                (1)10.3
            
            Contract
                with Family Bargain Corporation (1)10.4
            
            1996
                World Wide Magic Net, Inc. Stock Option Plan (1)10.5
            
            1999
                Stock Option Plan (4)10.6
            
            2001
                Stock Option Plan (4)10.7
            
            Software
                Sales Agreement to Global Purchasing Dotcom (4)10.8
            
            Software
                Sales Agreement to eSEA Co., LTD (4)10.9
            
            Software
                Sales Agreement to C-Me Taiwan (4)10.10
            
            Joint
                Venture Agreement with Good Support International, Limited
                (4)10.11
            
            Joint
                Venture Agreement with Vickem Patana Co., Ltd. (4)10.12
            
            Joint
                Venture Agreement with Abest Tech Company, Ltd. (4)10.13
            
            Factory
                2-U Stores, Inc. - Joint Marketing and Cooperation Agreement
                (4)31
            
            Certification
                pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
                herewith)32
            
            Certification
                of Chief Executive Officer and Chief Financial Officer of the Company,
                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
                906 of
                the Sarbanes-Oxley Act of 2002 (filed herewith)





(1)
            Filed
                on May 6, 1999 as an exhibit to the Company’s Registration Statement on
                Form SB-2 (File No. 333-60487), as amended, and incorporated herein
                by
                reference.


(2)
            Filed
                on January 27, 2000 as an exhibit to a report by the Company on a
                Form 8-A
                and incorporated hereinby
                reference.


(3)
            Filed
                on July 18, 2000 as an exhibit to a report by the Company on a Form
                8-K
                dated June 30, 2000 and incorporated herein by
                reference.


(4)
            Filed
                on September 29, 2000 as an exhibit to the Company’s report on Form 10-KSB
                for the fiscal yearended
                June 30, 2000 and incorporated herein by
                reference.


(5)
            Filed
                on August 26, 2005 as an exhibit to a report by the Company on a
                Form 8-K
                dated August 25, 2005 and incorporated herein by
                reference.


(6)
            Filed
                on July 12, 2006 as an exhibit to a report by the Company on a Form
                8-K
                dated July 7, 2006 and incorporated herein by
                reference.




(b)
            Reports
                on Form 8-K




The
      Company filed a current report dated July 7, 2006 with the SEC on July 12,
      2006
      announcing the execution of the Exchange Agreement dated July 7, 2006.


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            Statements**




**ITEM
              14.**
            **PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES**




(1)
            AUDIT
                FEES




The
      aggregate fees billed for the period from August 25, 2005 (Inception) to May
      31,
      2006 for professional services rendered by the principal accountant for the
      audit of the Company's annual financial statements and review of financial
      statements included in the Company's Form 10-KSB (17 CFR 249.308a) or 10-QSB
      (17
      CFR 249.308b) or services that are normally provided by the accountant in
      connection with statutory and regulatory filings or engagements for such period
      were $22,550.




(2)
            AUDIT-RELATED
                FEES




There
      were no fees billed for the period from August 25, 2005 (Inception) to May
      31,
      2006 for assurance and related services by the principal accountant that are
      reasonably related to the performance of the audit or review of the Company's
      financial statements.




(3)
            TAX
                FEES




There
      were no fees billed for the period from August 25, 2005 (Inception) to May
      31,
      2006 for professional services rendered by the principal accountant for tax
      compliance, tax advice, and tax planning.




(4)
            ALL
                OTHER FEES




There
      were no other fees billed for the period from August 25, 2005 (Inception) to
      May
      31, 2006 for products and services provided by the principal accountant, other
      than the services reported above.




PRE-APPROVAL
      POLICIES AND PROCEDURES




Before
      the accountant is engaged by the Company to render audit or non-audit services,
      the engagement is approved by the Company's the board of directors acting as
      the
      audit committee.


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            Statements**




SIGNATURES




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




**CYBER
              MERCHANTS EXCHANGE, INC.**Date: August
              11, 2006
            By:
            /s/ Kevin
              R.
              KeatingName:  
                Kevin R. Keating
              Title:    
                President and Chief Executive
                Officer




In
      accordance with the requirements of the Securities Exchange Act of 1934, this
      report has been signed by the following persons on behalf of the registrant
      and
      in the capacities and on August 11, 2006.




Signatures
              
              Title/s/
                  Kevin R. Keating
              
              President
                  (Principal Executive Officer), Treasurer, SecretaryKevin
                R.
                Keating
              
              (Principal
                Financial and Accounting Officer) and Director/s/
                  Margie L. Blackwell
              
              DirectorMargie
                L.
                Blackwell/s/
                  Luca Toscani
              
              DirectorLuca
                Toscani/s/
                  Jeff L. Andrews
              
              DirectorJeff
                L.
                Andrews


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            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Enterprise)**




**FINANCIAL
      STATEMENTS**




**May
      31, 2006**




**Back
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            to Financial
            Statements**




INDEX
      TO FINANCIAL STATEMENTS


**Report
                of Independent Registered Public Accounting
                Firm**
            F-1**Balance
                Sheet**-
                As of May 31, 2006
            F-2**Statement
                of Operations**-For
                the Period from August 25, 2005 (Date of Inception)through
                May 31, 2006
            F-3**Statement
                of Stockholders’ Equity**-
                For the Period from August 25, 2005 (Date of Inception) through May
                31,
                2006
            F-4**Statement
                of Cash Flows**-
                For the Period from August 25, 2005 (Date of Inception)through
                May 31, 2006
            F-5**Notes
                to Financial Statements**
            F-6




**Back
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            to Financial
            Statements**





**Report
      of Independent Registered Public Accounting
      Firm**






To
      The
      Board of Directors


Cyber
      Merchants Exchange, Inc.




We
      have
      audited the accompanying balance sheet of Cyber Merchants Exchange, Inc. (the
      “Company”) as of May 31, 2006, and the related statements of operations,
      stockholders’ equity, and cash flows for the period from August 25, 2005
      (Inception) through May 31, 2006. These financial statements are the
      responsibility of the Company’s management. Our responsibility is to express an
      opinion on these financial statements based on our audit.




We
      conducted our audit in accordance with Standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perform, an audit on its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit includes examining,
      on a test basis, evidence supporting the amounts and disclosures in the
      financial statements. An audit also includes assessing the accounting principles
      used and significant estimates made by management, as well as evaluating the
      overall financial statement presentation. We believe that our audit provides
      a
      reasonable basis for our opinion.




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Cyber Merchants Exchange, Inc.
      as
      of May 31, 2006, and the results of its operations and its cash flows for the
      period from August 25, 2005 (Inception) through May 31, 2006 in conformity
      with
      accounting principles generally accepted in the United States of
      America.




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 5 to the financial
      statements, the Company has no current operations. This, among other factors,
      raises substantial doubt about the Company’s ability to continue as a going
      concern. Management’s plans in regard to these matters are also described in
      Note 5. The financial statements do not include any adjustments relating to
      the
      recoverability and classification of asset carrying amounts or the amount and
      classification of liabilities that might result should the Company be unable
      to
      continue as a going concern.






/s/
        Corbin & Company, LLP
 **Corbin
        & Company, LLP**
  Irvine,
        California
 July
        17,
        2006
 F-1
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              to Table of Contents**
 **Index
              to Financial
              Statements**
  **CYBER
        MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Enterprise)**


**BALANCE
      SHEET**




**May
                31,**
              **2006**ASSETSCurrent
                assets:Cash
            
            $
            63,670Total
                current assets
            
            
            63,670Total
                assets
            
            $
            63,670LIABILITIES
                AND STOCKHOLDERS' EQUITYCurrent
                liabilities:Accounts
                payable
            
            $
            2,500Due
                to former affiliate
            
            
            50,000Total
                current liabilities
            
            
            52,500Commitments
                and contingenciesStockholders'
                equity:Common
                stock, no par value; 40,000,000 shares authorized, 10,119,040 shares
                issued and outstanding
            
            
            100,000Deficit
                accumulated during development stage
            
            
            (88,830
            )Total
                stockholders' equity
            
            
            11,170Total
                liabilities and stockholders' equity
            
            $
            63,670


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


F-2
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            to Table of Contents**
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            to Financial
            Statements**


**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**STATEMENT
      OF OPERATIONS**




Period
                fromAugust
                25, 2005 (“Inception”)through
                May 31, 2006Revenue
            
            $
            —Operating
                expenses:Non-cash
                compensation
            
            
            25,000Other
                general and administrative expenses
            
            
            63,830Total
                operating expenses
            
            
            (88,830
            )Net
                loss
            
            $
            (88,830
            )Net
                loss per share:basic
                and diluted
            
            $
            (0.01
            )Weighted
                average number of shares outstanding, basic and diluted
            
            
            8,874,417


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


F-3
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            to Financial
            Statements**


**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**STATEMENT
      OF STOCKHOLDERS’ EQUITY**


**FOR
      THE PERIOD FROM AUGUST 25, 2005 (INCEPTION) THROUGH MAY 31,
      2006**




DeficitAccumulatedDuring
                the
            
            TotalCommon
                Stock
            
            Development
            
            Stockholders’Shares
            
            Amount
            
            Stage
            
            EquityBalance,
                August 25, 2005
            
            
            1,014,880
            
            $
            —
            
            $
            —
            
            $
            —Stock
                issued for cash at $0.06 per share, September 30, 2005
            
            
            7,104,160
            
            
            415,000
            
            
            —
            
            
            415,000Distribution
                to former affiliate
            
            
            —
            
            
            (415,000
            )
            
            —
            
            
            (415,000
            )Stock
                issued for cash at $0.05 per share, October 5, 2005
            
            
            1,000,000
            
            
            50,000
            
            
            —
            
            
            50,000Stock
                issued for services at $0.05 per share, October 5, 2005
            
            
            500,000
            
            
            25,000
            
            
            —
            
            
            25,000Stock
                issued for cash at $0.05 per share, October 24, 2005
            
            
            500,000
            
            
            25,000
            
            
            —
            
            
            25,000Net
                loss
            
            
            —
            
            
            —
            
            
            (88,830
            )
            
            (88,830
            )Balance**,**May 31, 2006
            
            
            10,119,040
            
            $
            100,000
            
            $
            (88,830
            )
            $
            11,170


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


F-4
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            to Financial
            Statements**


**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**STATEMENT
      OF CASH FLOWS**




Period
                  fromAugust
                  25, 2005 (“Inception”)through
                  May 31, 2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (88,830
              )Adjustments
                  to reconcile net loss to net cash used in operating
                  activities:Stock
                  issued for services
              
              
              25,000Changes
                  in:Accounts
                  payable
              
              
              2,500Net
                  cash used in operating activities
              
              
              (61,330
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from issuance of common stock
              
              
              490,000Cash
                  disbursed to former affiliate
              
              
              (365,000
              )Net
                  cash provided by financing activities
              
              
              125,000Net
                  increase in cash
              
              
              63,670Cash,
                  beginning of period
              
              
              —Cash,
                  end of period
              
              $
              63,670NON-CASH
                  INVESTING AND FINANCING ACTIVITIES:Amount
                  owed to former affiliate
              
              $
              50,000


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


F-5
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            to Financial
            Statements**


**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS**


**May
      31, 2006**






**NOTE
      1 - ORGANIZATION AND REORGANIZATION**




ORGANIZATION





Cyber
      Merchants Exchange, Inc. (“the Company”) was incorporated in July 1996, under
      the laws of the State of California. However, based on the nature of the
      Company’s reorganization, as discussed below, for accounting purposes operations
      are presented beginning August 25, 2005 (“Inception”). The Company is a
      development stage company.




The
      Company has no substantive operations at May 31, 2006 and the historical
      operations of the Company are presented for the period from Inception. See
      Accounting Treatment section, below.




REORGANIZATION




The
      Company’s shareholders approved a reorganization of the Company on May 16, 2005,
      summarized as follows:




1.
            The
                Company transferred of all of its assets and liabilities (the "Transfer")
                to ASAP Show Inc., a wholly owned subsidiary of the Company ("ASAP"),
                effective May 31, 2005 pursuant to a Transfer and Assumption Agreement
                ("Transfer Agreement");




2.
            The
                Company effected a one for eight and one-half (1-for-8.5) reverse
                stock
                split of the Company stock (the "Reverse Split") with special treatment
                to
                preserve round lot stockholders, effective July 18,
                2005;




3.
            On
                August 25, 2005, the Company distributed 8,626,480 shares of common
                stock
                of ASAP, representing all of the outstanding shares of ASAP, to the
                Company's shareholders of record on August 18, 2005 on a pro rata
                basis
                (the "Distribution"); and




4.
            On
                September 30, 2005, the Company issued 7,104,160 shares of common
                stock to
                KI Equity Partners II, LLC (“KI Equity”) for $415,000, (the “Investment”)
                pursuant to a Securities Purchase Agreement (“SPA”) dated November 19,
                2004, and amended August 25, 2005.




The
      details of the reorganization transactions above are as follows:




F-6
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            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE
      1 - ORGANIZATION AND REORGANIZATION (continued)**




REORGANIZATION
      (continued)




Securities
      Purchase Agreement




On
      November 19, 2004, the Company entered into a SPA with Keating Reverse Merger
      Fund, LLC ("KRM Fund") and Frank Yuan, the then current Chairman of the Board
      and Chief Executive Officer of the Company ("Yuan") providing for the investment
      by KRM Fund of $425,000 in the Company in exchange for 7,000,000 shares of
      the
      Company’s common stock. The SPA was amended and restated effective August 25,
      2005 to, among other things, change the Investment to $415,000, change the
      number of shares to be purchased to 7,104,160, and substitute KI Equity for
      KRM
      Fund. The Investment by KI Equity was payable to ASAP as a reduction in the
      purchase consideration paid by ASAP under the Transfer Agreement. To the extent
      certain liabilities assumed by ASAP remained unpaid at closing, the funds were
      to be used to satisfy such liabilities with any remaining funds being available
      to ASAP for working capital to grow its trade show business. The Reorganization
      will allow the shareholders of the Company to participate in the growth of
      the
      trade show business through the spin-off of ASAP, which owns and operates the
      trade show business (see below). Following the Reorganization and spin off
      of
      ASAP, the Company is majority owned by KI Equity and will seek a business
      combination with an operating company (see Note 8).




Reverse
      Split




The
      Company had 8,500,000 shares outstanding at May 31, 2005. The Company effected
      the one-for-eight and one-half share Reverse Split on a record date of July
      18,
      2005. The Reverse Split allows for special treatment of certain shareholders
      to
      preserve round lot (100 shares or more) shareholders, which the Company believes
      will make it more attractive for a subsequent combination with an operating
      company. Under the terms of the Reverse Split, shareholders holding between
      100
      and 850 shares received 100 shares after the Reverse Split. The Reverse Split
      did not affect shareholders holding less than 100 common shares. No special
      treatment was given to shareholders holding more than 850 shares; however,
      they
      received a full common share for any fractional share interest created by the
      Reverse Split. Upon giving effect to the Reverse Split, the Company had
      1,014,880 shares outstanding.


F-7
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            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE
      1 - ORGANIZATION AND REORGANIZATION (continued)**




REORGANIZATION
      (continued)




ASAP
      Show Inc.




The
      Company formed ASAP on December 1, 2004. ASAP was a wholly owned subsidiary
      of
      the Company prior to the Distribution (see below). The officers and directors
      of
      ASAP were the same as the officers and directors of the Company, at that time.




As
      a
      condition of the Investment, the Company and ASAP entered into the Transfer
      Agreement effective May 31, 2005 whereby all of the assets of the Company were
      transferred to ASAP and all liabilities, obligations and contracts of the
      Company (known and unknown, fixed or contingent or otherwise) were assumed
      by
      ASAP ("Assumed Liabilities"). As part of the Transfer Agreement, the Company
      agreed to pay ASAP $415,000 after the Closing of the Investment as a reduction
      of the purchase consideration paid by ASAP under the Transfer Agreement. All
      third party consents to the assumption of the Company’s contracts by ASAP were
      obtained prior to closing of the SPA and the Investment. ASAP and Frank Yuan
      have agreed to indemnify and hold the Company harmless from any loss, costs
      or
      damages incurred by the Company with respect to the Assumed Liabilities
      ("Indemnity Claims") (see Note 7). As a condition of the Investment, the Company
      had no liabilities, obligations, debts, contracts or agreements of any kind
      or
      nature at closing.




Distribution




On
      August
      25, 2005, the Company distributed the 8,626,480 shares of ASAP to the Company’s
      shareholders of record on August 18, 2005 on a pro-rata basis (see
      below).




On
      October 3, 2005, ASAP filed a Form 10-SB with the Securities and Exchange
      Commission (the "SEC") to register the shares of ASAP’s common stock under
      Section 12(g) of the Securities Exchange Act of 1934, as amended ("Exchange
      Act"), which will subject ASAP to the reporting requirements of the Exchange
      Act. The Distribution was made to U. S. Stock Transfer Corporation as depository
      agent for ASAP's shareholders. The depository agent held the ASAP shares until
      the Form 10-SB became effective. At that time, the certificates representing
      ASAP shares were disbursed by the depository agent to ASAP's
      shareholders.




The
      distribution was taxable to the Company's shareholders.


F-8
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            to Financial
            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE
      1 - ORGANIZATION AND REORGANIZATION (continued)**




REORGANIZATION
      (continued)




Investment




The
      closing of the transactions contemplated by the SPA and the Investment were
      subject to the completion of the Distribution. Pursuant to the Investment,
      the
      Company issued 7,104,160 shares of common stock to KI Equity for $415,000.
      The
      proceeds of the Investment (subject to a $50,000 reserve discussed below) were
      paid to ASAP as a reduction in the purchase consideration paid by ASAP under
      the
      Transfer Agreement and, pursuant to the accounting treatment set forth below,
      such payment has been treated as a reduction of stockholders’ equity. The
      Company retained $50,000 of the above payment in reserve for a period of six
      months following the closing of the SPA to satisfy any Indemnity Claims and
      has
      included this balance as due to former affiliate in the accompanying balance
      sheet. The Company has informed ASAP that the $50,000 reserve originally due
      March 30, 2006 will be retained by the Company until the preference claim is
      resolved (see Note 7). The closing of the SPA and the Investment occurred on
      September 30, 2005.




Accounting
      Treatment




The
      Company has accounted for the Reorganization as a reverse spinoff in accordance
      with the Emerging Issues Task Force Issue No. ("EITF") 02-11, " *Accounting
      For Reverse Spinoffs.”* In a
      reverse spinoff, the legal spinnee (ASAP) is treated as though it were the
      spinnor for accounting purposes. Reverse spinoff accounting is appropriate
      as
      the treatment of the legal spinnee as the accounting spinnor results in the
      most
      accurate depiction of the substance of the transaction for shareholders and
      other users of the financial statements. Under this treatment, the historical
      financial statements of the Company will be the historical financial statements
      of ASAP. In making its determination, the Company considered the following
      indicators, among others:




·
            The
                accounting spinnor (legal spinee, ASAP) is larger than the accounting
                spinnee (legal spinnor, the
                Company);




·
            The
                fair value of the accounting spinnor (legal spinnee) is greater than
                that
                of the accounting spinnee (legal spinnor);
                and




·
            The
                accounting spinnor (legal spinnee) retains the senior management
                of the
                formerly combined entity




F-9
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            Statements**





**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**




Use
      of
      Estimates




The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities as of the date
      of the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates.




Cash
      and Cash Equivalents




Cash
      and
      cash equivalents, if any, include all highly liquid debt instruments with an
      original maturity of three months or less at the date of purchase.




Measurement
      of non-cash compensation




The
      Company values non-cash equity transactions in relation to contemporaneous
      cash
      sales of equivalent equity securities.




Indemnities




The
      Company indemnifies its directors, officers, employees and agents to the maximum
      extent permitted under the laws of the State of California.




Net
      Income (Loss) Per Share




Basic
      earnings per share (EPS) is calculated by dividing the income or loss available
      to common shareholders by the weighted average number of common shares
      outstanding for the period. Diluted EPS reflects the potential dilution that
      could occur if securities or other contracts to issue common stock were
      exercised or converted into common stock. The Company currently has no dilutive
      securities and as such, basic and diluted loss per share are the same for
      the period from August 25, 2005 (inception) through May 31, 2006.




Income
      Taxes




The
      Company accounts for income taxes in accordance with the Statement of Financial
      Accounting Standards No. 109, “Accounting for Income Taxes,” which requires the
      recognition of deferred tax liabilities and assets at currently enacted tax
      rates for the expected future tax consequences of events that have been included
      in the financial statements or tax returns. A valuation allowance is recognized
      to reduce the net deferred tax asset to an amount that is more likely than
      not
      to be realized. The tax provision shown on the accompanying statement of
      operations is zero since the deferred tax asset generated from the net operating
      loss is offset in its entirety by a valuation allowance. State minimum taxes
      are
      expensed as incurred.


F-10
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            to Financial
            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)**




Stock
      Based Compensation




As
      of May
      31, 2006, the Company has not entered into any share-based
      payment arrangements with its employees.




In
      December 2004, the Financial Accounting Standards Board
      ("FASB") issued No. 123 (revised 2004), *Share-Based
      Payment* ("SFAS
      No. 123(R)"), which is a revision of SFAS No. 123. SFAS No.123(R) supersedes
      Accounting Principles Board opinion (“APB”) No. 25 and amends SFAS No.
      95 ,  *Statement
      of Cash Flows.* SFAS No.
      123(R) requires all share-based payments to employees, including grants of
      employee stock options, to be recognized in the income statement based on their
      fair values. Pro forma disclosure is no longer an alternative. The provisions
      of
      this statement were effective for the Company as of June 1,
      2006.




SFAS
      No.
      123(R) requires companies to recognize in the statement of operation the
      grant-date fair value of stock options and other options and other equity-based
      compensation issued to employees. SFAS No. 123(R) also establishes accounting
      requirements for measuring, recognizing and reporting share-based compensation,
      including income tax considerations. The Company will adopt SFAS No. 123(R)
      using the modified prospective application in June 2006. Under the modified
      prospective application, the cost of new awards and awards modified, repurchased
      or cancelled after the required effective date and the portion of awards for
      which the requisite service has not been rendered (unvested awards) that are
      outstanding as of the required effective date will be recognized as the
      requisite service is rendered on or after the required effective date. The
      compensation cost for that portion of awards shall be based on the grant-date
      fair value of those awards as calculated for either recognition of pro forma
      disclosures under SFAS No. 123.




The
      adoption of SFAS No.123(R)’s fair value method will have a negative impact on
      the Company’s results of operations if the Company grants share-based payments
      to its employees in the future, although it will have no impact on its overall
      financial position. The impact of adopting SFAS No.123(R) cannot be predicted
      at
      this time because it will depend on levels of share-based payments granted
      in
      the future. SFAS No. 123(R) also requires the benefits of tax deductions in
      excess of recognized compensation cost to be reported as a financing cash flow,
      rather than as an operating cash flow as required under current accounting
      literature. The requirement will reduce net operating cash flows and increase
      net financing cash flows in periods of adoption.


F-11
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            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      FINANCIAL STATEMENTS (continued)**






**NOTE
      3 - STOCKHOLDERS’ EQUITY**




On
      September 30, 2005, the Company issued 7,104,160 shares of common stock to
      KI
      Equity for $415,000, pursuant to the SPA described above in Note 1. Pursuant
      to
      the Transfer Agreement, the Company recorded a reduction in stockholders’ equity
      for $415,000 due to ASAP as a reduction of the purchase consideration under
      the
      Transfer Agreement.




On
      October 5, 2005, the Company issued 1,000,000 shares of common stock, in
      restricted form, to KI Equity at a purchase price of $0.05 per share, for an
      aggregate purchase price of $50,000 in order to provide funds for the Company’s
      working capital needs. Also on October 5, 2005 for services rendered, the
      Company issued 250,000 shares of common stock to Kevin R. Keating, the Company’s
      sole director and officer, and 250,000 shares of common stock to a financial
      consultant. The stock was valued at an aggregate price of $25,000, or $0.05
      per
      share, which was the same per share value of the cash purchases of common stock
      in the transactions mentioned above, which occurred contemporaneously. The
      Company considers this to be the best estimate of the fair value of the non-cash
      transaction.




On
      October 24, 2005, the Company issued 500,000 shares of common stock to KI Equity
      at a purchase price of $0.05 per share for an aggregate price of
      $25,000.




**NOTE
      4 - INCOME TAXES**




The
      Company has a federal net operating loss carryforward of $88,830 available
      to
      offset taxable income through the year 2026. The Company recorded a deferred
      income tax asset for the tax effect of net operating loss carryforwards
      aggregating $88,830, against which the Company has recorded a full valuation
      allowance in recognition of the uncertainty regarding the ultimate amount of
      income tax benefits to be derived. Under the Tax Reform Act of 1986, the amounts
      of and benefits from net operating losses carried forward may be impaired or
      limited in certain circumstances. Events which may cause limitations in the
      amount of net operating losses that the Company may utilize in any one year
      include, but are not limited to, a cumulative ownership change of more than
      50
      percent over a three-year period. At May 31, 2006, the effect of such
      limitation, if imposed, has not been determined.




Components
      of the Company's deferred tax assets and liabilities are as
      follows:


Net
                operating loss carryforward and temporary differences
            
            $
            33,400Valuation
                allowance
            
            
            (33,400
            )Net
                deferred tax asset
            
            $
            —


A
      reconciliation of the effective tax rate per the financial statements to the
      federal statutory rate follows:




Federal
                statutory rate
            
            
            34.0
            %State
                corporate rate, net of federal effect
            
            
            3.6
            %Valuation
                allowance
            
            
            (37.6
            )%Effective
                tax rate
            
            
            0.0
            %




F-12
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            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE
      5 - GOING CONCERN**




The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. The Company has no current operations. The
      Company's success is dependent upon numerous items, certain of which are the
      completion of the exchange agreement with Prime Fortune Enterprises Limited,
      an
      international business company incorporated in the British Virgin Islands
      ("Prime")(see Note 8) or, if the exchange with Prime is not completed,
      a successful acquisition or merger with another operating company. Unanticipated
      problems, expenses, and delays are frequently encountered in negotiating
      business mergers and acquisitions. No assurance can be given that the Company
      will successfully merge or acquire a profitable company.




The
      only
      foreseeable cash requirements during the next twelve months will relate to
      maintaining the corporate entity, complying with the periodic reporting
      requirements of the U.S. Securities and Exchange Commission and evaluating
      and
      reviewing possible business ventures and opportunities. In order to meet these
      cash requirements, the Company will have to raise funds through the issuance
      of
      debt and/or equity securities. If new capital is required, the Company may
      not
      be able to raise it; or the terms of such funds may not be acceptable to the
      Company. Cash requirements may be significantly increased in the event of a
      merger.




These
      factors, among others, raise substantial doubt about the Company's ability
      to
      continue as a going concern.  The accompanying financial statements do not
      include any adjustments to reflect the possible future effects on the
      recoverability and classification of assets or the classification of liabilities
      that might result from the outcome of these uncertainties.




**NOTE
      6 - RELATED PARTY TRANSACTIONS**




On
      October 4, 2005, the Company entered into a contract with Vero Management,
      L.L.C. (“Vero”) for managerial and administrative services. Vero has not been
      engaged to provide, and Vero does not render, legal, accounting, investment
      banking or capital formation services. Kevin R. Keating, the sole director
      of
      the Company, is the manager of Vero. In consideration of the services provided,
      Vero was paid $1,000 for the month of October 2005 and $2,500 each month
      thereafter in which services are rendered.




Kevin
      R.
      Keating is the father of Timothy J. Keating. Timothy J. Keating is the managing
      member of KI Equity, which is the majority shareholder of the Company. Timothy
      J. Keating is also the principal member of Keating Investments, LLC, which
      is a
      90% owner of Keating Securities, LLC, a registered broker-dealer. KI Equity
      owns
      approximately 85% of the outstanding shares of the Company’s common stock as of
      May 31, 2006. Kevin R. Keating is not affiliated with and has no equity interest
      in KI Equity, Keating Investments, LLC or Keating Securities, LLC and disclaims
      any beneficial interest in the shares of the Company’s stock owned by KI Equity.
      Similarly, Keating Investments, LLC, Keating Securities, LLC and KI Equity
      disclaim any beneficial interest in the shares of the Company’s common stock
      currently owned by Kevin R. Keating.


F-13
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            Statements**




**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE
      7 - PENDING LITIGATION**





On
      March
      7, 2006, a complaint was filed against the Company in a Chapter 7 bankruptcy
      proceeding in U.S. Bankruptcy Court in the District of Delaware in the matter
      captioned In
      Re:
      Factory 2-U Stores, Inc. The
      complaint seeks to recover from the Company $91,572 in alleged preferential
      transfers made to the Company by the debtor during the ninety-day period prior
      to the filing of the debtor’s bankruptcy petition. The Company intends to defend
      against such preference claim by asserting that such transfers were made in
      the
      ordinary course of business and such other available defenses.




To
      the
      extent the Company incurs any losses, costs or damages with respect to the
      preference claim, including attorneys’ fees and related costs, the Company
      believes it may recover such losses, costs and damages from Frank Yuan and
      ASAP
      pursuant to the indemnification provisions under the Transfer Agreement. The
      Company has informed Frank Yuan and ASAP that it intends to seek indemnification
      from them with respect to the preference claim. Further, the Company has
      informed Frank Yuan and ASAP that the $50,000 reserve originally due to be
      paid
      March 30, 2006 under the terms of the Transfer Agreement will be retained by
      the
      Company until this preference claim is resolved to satisfy any potential
      indemnity claims.





**NOTE
      8 - SUBSEQUENT EVENT**





Effective
      July 7, 2006, the Company entered into an Exchange Agreement (“Exchange
      Agreement”) with KI Equity Partners II, LLC, a Delaware limited liability
      company (“KI Equity”), Prime Fortune Enterprises Limited, an international
      business company incorporated in the British Virgin Islands ("Prime"), and
      each
      of the equity owners of Prime (the “Prime Shareholders”). Under the terms of the
      Exchange Agreement, the Company will, at closing of the Exchange transaction,
      acquire all of the outstanding capital stock and ownership interests of Prime
      from the Prime Shareholders in exchange for 1,000,000 shares of the Company's
      newly issued Series A Convertible Preferred Stock. The Series A Convertible
      Preferred Stock will be convertible into an aggregate of 116,721,360 of the
      Company's common shares. Following completion of the exchange transaction (the
      “Exchange”), Prime will become a wholly-owned subsidiary of the
      Company.




The
      consummation of the Exchange is contingent on a minimum of $7,000,000 (or such
      lesser amount as mutually agreed to by Prime and the placement agent) being
      subscribed for, and funded into escrow, by certain accredited and institutional
      investors (the "Investors") for the purchase of the Company's newly issued
      Series B Convertible Preferred Stock under terms and conditions approved by
      the
      Company's board of directors immediately following the Exchange. (the
      "Financing.")


F-14
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            Statements**





**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE 8
      - SUBSEQUENT EVENT (continued)**





Both
      the
      Series A and Series B Preferred Shares will be issued pursuant to exemptions
      from registration under the Securities Act of 1933. However, it is expected
      that
      the Company will agree to register for public re-sale the shares of its common
      stock underlying the Series B Preferred Shares. In addition, the Company has
      agreed to register for public re-sale after the Exchange: (i) 2,000,000 shares
      of its common stock which are currently outstanding and have been granted
      piggyback registration rights, (ii) 7,104,160 shares of its common stock
      currently held by KI Equity which do not have piggyback registration rights,
      (iii) 2,850,000 of its common stock to be issued to a consultant, for services
      rendered in connection with the Exchange, prior to the Exchange, (iv)
      approximately 6,484,519 shares of its common stock underlying Series A Preferred
      Shares, and (v) 134,100 shares of its common stock issued for legal services
      rendered to Prime in connection with the Exchange and Financing.





The
      Series A Preferred Shares will immediately and automatically be converted into
      shares of the Company's common stock upon the approval by a majority of its
      stockholders (voting together on an as-converted-to-common-stock basis),
      following the exchange transaction, of an increase in the number of authorized
      shares of the Company's common stock from 40,000,000 shares to 300,000,000
      shares and a change of its corporate name. Accordingly, upon completion of
      the
      Exchange and the Financing (assuming maximum gross proceeds from the Financing
      of $10,000,000), the Prime Shareholders together with the Investors (assuming
      the Investors elect to convert all of their Series B Preferred Shares) will
      own
      approximately 92.3% of the total outstanding shares of the Company’s common
      stock, and the current stockholders will own approximately 7.7% of the total
      outstanding shares of its common stock.




Effective
      as of the closing of the Exchange, and subject to applicable regulatory
      requirements, including the preparation, filing and distribution to our
      stockholders of the 14f-1 Information Statement at least ten (10) days prior
      to
      Closing, the Company’s current board of directors and its current sole officer
      will resign such positions and the Company’s board will appoint as
      directors:





·
            Kwok
                Chung, InfoSmart’s current Chief Executive
                Officer


·
            Pauline
                Sze, InfoSmart’s current Chief Financial
                Officer


·
            Andrew
                Chang, a director of InfoSmart


·
            Godwin
                Wong, an independent director designated by KI
                Equity




If
      the
      Exchange closes as contemplated, it will be treated for accounting purposes
      as a
“reverse merger” whereby Prime, the acquired company, will be considered the
      accounting acquirer as it will retain control of the Company after the reverse
      merger.




The
      Exchange Agreement may be terminated as follows: (i) by mutual written consent,
      (ii) by either party if the exchange transaction is not consummated by August
      31, 2006 , (iii) by either party if the exchange transaction is prohibited
      by
      issuance of an order, decree or ruling, and


F-15
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            to Financial
            Statements**


**CYBER
      MERCHANTS EXCHANGE, INC.**


**(A
      Development Stage Company)**


**NOTES
      TO FINANCIAL STATEMENTS (continued)**






**NOTE 8
      - SUBSEQUENT EVENT (continued)**





(iv)
      by
      either party if the other is in material breach of any representation, warranty,
      covenant or agreement.




At
      or
      prior to the closing , the Company will also enter into a certain financial
      advisory agreement with Keating Securities, LLC (“Keating Securities”), a
      registered broker-dealer, under which Keating Securities will be compensated
      by
      the Company for advisory services rendered to the Company in connection with
      the
      Exchange. The transaction advisory fee will be $450,000, with the payment
      thereof being subject to the closing of the Exchange. This fee will be paid
      in
      full at the closing of the Exchange.




Prime
      owns all of the capital stock of Infosmart Group, Limited, a company
      incorporated in the British Virgin Islands (“InfoSmart”). InfoSmart beneficially
      owns 100% of the issued and outstanding capital stock of both: (i) Info Smart
      Technology Limited, a company incorporated under the laws of Hong Kong (“IS
      Technology”); and (ii) Info Smart International Enterprises Limited, a company
      incorporated under the laws of Hong Kong (“IS International”). IS Technology
      owns all of the issued and outstanding capital stock of Infoscience Media
      Limited, a company incorporated under the laws of Hong Kong (“IS Media”). IS
      Media owns 99.42% of the issued and outstanding capital stock of Discobras
      Industria E Comercio de Electro Eletronica Limiteda, a company incorporated
      under the laws of Brazil (“Discobras”). Prime, Infosmart, IS International, IS
      Technology, IS Media and Discobras, collectively, the "InfoSmart Group," are
      engaged in the business of development, manufacturing, marketing and sales
      of
      recordable DVD media.


F-16