SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                   __________________________________________

                               AMENDMENT NO. 1 TO
                                  FORM 10-KSB

(Mark  one)

[X]  Annual report under section 13 or 15(d) of the Securities Exchange Act of
                     1934 For the fiscal year ended June 30, 2000
                                       OR
[ ]  Transition  report under section 13 or 15(d) of the Securities Exchange Act
            of 1934 For the transition Period from _______ to _______

                        Commission file number 001-15643


                 Cyber Merchants Exchange, Inc. d.b.a. C-ME.com
            ---------------------------------------------------------
                 (Name of small business issuer in its charter)

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

     600 S. Lake Avenue, Suite 405
          Pasadena, California                              91106
----------------------------------------               ---------------
(Address of principal executive offices)                  (Zip Code)

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

Securities registered under Section 12(b) of the Act:
              (Title of Class)                         Name of exchange on which
                                                                registered

                   None                                             None
             ---------------                                  ---------------


Securities registered under Section 12(g) of the Act:      Common Stock, no
                                                      --------------------------
                                                              par  value
                                                      --------------------------
                                                           (Title of class)

Check  whether  the Issuer (1) filed all reports required to be filed by Section
13  or  15(d)  of  the Securities 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
          ---          ---

Check  if there is no disclosure of delinquent filers in response to Item 405 of
Regulation  S-B  is  not  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.


Registrant's  revenues  for  its  most  recent  fiscal  year:  $55,530


The  aggregate  market  value  of the voting stock held by non-affiliates of the
registrant  on  August  31,  2000, computed by reference to the closing price of
that  date,  was  $31,670,732,  assuming solely for purposes of this calculation
that  all directors and executive officers of the issuer are "affiliates."  This
determination  of affiliate status is not necessarily a conclusive determination
for  other  purposes.

On  August 31, 2000, the registrant had 7,589,669 shares of Common Stock, no par
value  per  share.

DOCUMENTS  INCORPORATED  BY  REFERENCE

Portions  of  the  registrant's definitive proxy statement under Regulation 14A,
which  statement  will  be  filed  not  later than 120 days after the end of the
fiscal  year  covered  by this report, are incorporated by reference in Part III
hereof.


<PAGE>

<TABLE>
<CAPTION>
                                    CYBER MERCHANTS EXCHANGE, INC.

                                               INDEX TO
                                     ANNUAL REPORT ON FORM 10-KSB
                                     FOR YEAR ENDED JUNE 30, 2000

PART I                                                                                           PAGE
<S>                                                                                            <C>
Item 1    Description of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     3
Item 2    Description of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    25
Item 3    Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    25
Item 4    Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . .    26

PART II
Item 5    Market for Common Equity and Related Stockholder Matters. . . . . . . . . . . . . . .    26
Item 6    Management's Discussion and Analysis of Financial Condition and Results of Operations    27
Item 7    Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    30
Item 8    Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.    30

PART III
Item 9    Directors, Executive Officers, Promoters and Control Persons; Compliance With
          Section 16(a) of the Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . .    31
Item 10   Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    31
Item 11   Security Ownership of Certain Beneficial Owners and Management. . . . . . . . . . . .    31
Item 12   Certain Relationships and Related Transactions. . . . . . . . . . . . . . . . . . . .    31
Item 13   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . .    32

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   .34

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. . . . . . . . . . . . . . . . . . . . . . .   F-2
</TABLE>



                                        2
<PAGE>
                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS
-----------------------------------

Certain  statements  contained  in  this  Report, including, without limitation,
statements containing the words, "believes," "anticipates," "expects," and other
words  of  similar  import,  constitute  "forward-looking statements" within the
meaning  of  Section  27A of the Securities Act of 1933, as amended, and Section
21E  of  the  Securities  Exchange Act of 1934, as amended. Such forward-looking
statements  involve  known  and  unknown risks, uncertainties and other factors,
which  may  cause  the  actual   results,   performance   or   achievements   of
Cyber-Merchants  Exchange,  Inc.  to  be  materially  different  from any future
results,  performance,  or   achievements   expressed   or   implied   by   such
forward-looking  statements.  These factors include, but are not limited to, the
factors  discussed under the caption "Company Risks" elsewhere in Item 1 of this
Report.  Given  these  uncertainties,  readers  are cautioned not to place undue
reliance  on  such  forward-looking  statements.  Cyber-Merchants Exchange, Inc.
disclaims  any obligation to update any such factors or to announce publicly the
results  of  any  revision  of  the  forward-looking  statements  contained  or
incorporated  by  reference  herein  to  reflect  future events or developments.

OUR  COMPANY

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

OVERVIEW

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

C-ME.com  is  using  our  proprietary  Web-based  software  to  create  a global
business-to-business  e-commerce  solution  that  streamlines  the way retailers
locate  viable merchandise sources. The Company believes its business model will
be successful by leveraging retailers' purchasing power to increase their vendor
base, and providing a direct, global merchandise-sourcing channel for retailers.
The  Company  will  also  provide  a  dynamic  pricing  community for the retail
industry  using  a non-fraudulent online auction. To attract retailers' vendors,
the  Company  is  planning  to  provide  an  affordable  and complete e-commerce
solution,  an  open electronic marketplace for vendors to publicly showcase more
diverse  merchandise,  and  plans  a  vertical  marketplace  enabling
direct-to-consumer  product marketing and sales using the Internet. In addition,
in August, 2000, C-ME.com announced a strategic alliance with the CIT Group. The
alliance,  which involves the development of multiple joint projects, will focus
on  integrating  CIT's  factoring  services  with  C-ME.com's  global  sourcing
business.  The  Company  believes  the need for letters of credit when retailers
import  merchandise  will  be  eliminated.


                                        3
<PAGE>
C-ME.com has adopted a retailer-centric business focus by creating a proprietary
Internet  Sourcing  Network(TM)  which consists of specialized private extranets
for  retailers  that centralizes the merchandise review and search process.  Its
current  retail  partners are Burlington Coat Factory and Factory 2-U Stores. To
further  enhance and add value to this retail focus, C-ME.com has two additional
online  services  under  development: (1) a Wholesale Auction Center, which will
create  a  dynamic pricing community, immune from the fraud that plagues typical
auctions (this patent-pending process is in partnership with The CIT Group); and
(2)  a Factory Outlet Mall, which will create a vertical marketplace for vendors
to  directly  market  and  sell  their  products  to  consumers.

When utilized to full capability and employed on a wide-scale basis, the Company
believes that its products are capable of reducing a retailer's cost of sourcing
and,  more  importantly,  substantially expediting the sourcing process and more
effectively  managing  the  quality  performance  of vendors.  Consequently, the
Company's  software  products  and services enable merchandising, purchasing and
shipping  decisions  to  be  made  by all parties at dates closer to the selling
season,  helping  such  parties  make  better  informed and more timely business
decisions.  The  objective is to enable its retail partners that source products
through  the  Company's  software  and services to obtain lower costs, increased
sales  volume,  faster inventory turnover, fewer involuntary price discounts and
improved  margins  and  profitability.

C-ME.com  is  also aggressively expanding internationally.  As of June 30, 2000,
the  Company  has  formed  joint  ventures  in  Taiwan,  China, Thailand and the
Philippines.  C-ME.com's  strategy  is to partner with reputable local companies
and  key  government entities to establish local companies.  Through these joint
ventures,  7  to  12  localized  merchandise-sourcing  offices are planned to be
established  by  year-end  2000 in these four countries. Through these localized
offices,  our  retail  partners  will  be  able  to source merchandise directly.

INDUSTRY  BACKGROUND

The  retail  industry is characterized by intense competition, consolidation and
tightening  of  profit  margins.  Consumers increasingly are more discerning and
consequently  demand  that  retailers  offer  more  value  in  return  for their
purchasing  dollar.

To  attract and keep consumers, retailers must offer more desirable products and
prices,  while  optimizing  factors  such as product variety, inventory carrying
costs,  retail  prices  and  costs of goods.  The average large department store
carries  a large number of Stock Keeping Units ("SKUs") at any time, each unique
in  terms  of  product  style,  size,  color, features, packaging, and so forth.
Retailers  need  to source these SKUs from hundreds, or in some cases thousands,
of  vendors  worldwide.  Retail  industry  vendors  include  direct  factories,
suppliers,  manufacturers,  jobbers  and  importers.

Sourcing  related  communications  between  retailers  and  their  vendors  is a
continuous  flow  of  information regarding products, pricing, delivery, special
promotions,  packaging  and  other  issues.  To  date, these communications have
largely  been  carried  out  through  paper  flow,  telephone calls, facsimiles,
courier  services,  or  through  travel  and  personal  visits.  This  manner of
maintaining  retail  supply  communications  is  time-consuming, challenging and
expensive.

Pressure on retailers affects all players in the sourcing environment.  Emerging
technologies  now  offer dramatic improvements in efficiency, costs and business
process  management.  Purchasing  automation  efforts,  such  as  EDI, currently
address  the  back-end  efficiency.  The  front-end  sourcing process, should be
automated  as  well.  Retailers,  in particular those serving global or national
markets,  are  increasingly  exploring automated merchandise sourcing solutions.


                                        4
<PAGE>
BUSINESS-TO-BUSINESS  E-COMMERCE  IN  RETAIL

Retail  buyers  spend 60 to 80 percent of their time sourcing (searching for and
locating)  merchandise  and  vendors.  The  buying  process  is  complex  and
multi-faceted.  A  buyer's decision process involves selecting qualified vendors
based  on  production  volume,  delivery,  quality,  and  price.  The  buyer's
objectives  include  achieving  pre-set  goals for sales, turnover rate, expense
levels,  margins  and  profitability,  and  updating  product  selection to meet
fashion  trends.

To  better  manage  their relationships and merchandise flow, both retailers and
vendors  are  turning  to  information technology and specifically to e-commerce
solutions.  C-ME.com  believes that the e-commerce market is at the beginning of
a  long-term  expansion  driven by adoption of the Internet as a marketing venue
and  data  highway.

The challenge is coming up with an affordable e-commerce solution that addresses
both  the  front-end  and  back-end  problems facing the retailer and its supply
chain  vendors.  C-ME.com's  services  are  designed  specifically to meet these
challenges.

SERVICES

Overview  of  the  C-ME.com  System

The  Company's  Internet-based  system  was  designed  to  meet  the  general
merchandising  needs  of  retailers  and their vendors, with an initial emphasis
placed  on the bargain, or "off-price," apparel market segment. To that end, the
Company  has  developed three potential interrelated services: Internet Sourcing
Network,  Virtual Trade Show, Web Design and Hosting. Two additional services in
development  are  the  Wholesale  Auction  Center  and  Factory  Outlet  Mall.

     1.  Internet  Sourcing  Network  ("ISN")

The  cornerstone  of  our services is the proprietary ISN, consisting of private
extranets  built  and  maintained by C-ME.com according to each retail partner's
specifications.  These  Web-based  turnkey  systems  automate  the  front-end
merchandise  sourcing  activities of retailers at no cost, and provide retailers
with  tremendous time and cost savings. The solution the ISNs create is a simple
one.  The ISNs enable retailers and vendors to conduct business privately, using
any  Internet  connection  without  investing in expensive hardware, software or
training.  After  subscribing  to  a retailer's ISN, vendors of any size can get
instant  feedback  about  merchandising needs and decisions. The vendor can then
change  its  strategies  to  meet these needs by updating its product line - all
over  the  same  Internet  connection.  Vendors  also  receive  a  broadcast
"open-to-buy",  of  what  a  retailer  is  sourcing.  Vendors  pay  a  monthly
subscription  fee  to  display  products  on  the  ISNs.

     2.  Virtual  Trade  Show

The  progenitor of C-ME.com's diverse services is the Virtual Trade Show ("VTS")
which is a centralized product showcase that features a multitude of products in
easily  understandable  and  searchable  categories.  The  appeal of the Virtual
Trade  Show  is  its  ability  to  enable direct marketing to a wide universe of
retail buyers.  Vendors may display product free of charge, if they also display
on  an  ISN.

     3.  Web  Design  And  Hosting

Many  vendors  do  not have an Internet commerce strategy and most do not have a
Web  presence.  C-ME.com  solves  this by providing a free template Web page and
shared  domain  name.  Additionally,  C-ME.com  offers  fee-based customized Web
design  and  hosting  services  to  meet  the e-commerce needs of its customers.


                                        5
<PAGE>
     Wholesale  Auction  Center  ("WAC")  (In  development)

C-ME.com's  WAC  will  provide a Web community for vendors to liquidate odd lots
and  closeouts  in  bulk  quantity.  The  WAC  will  feature  the  Company's
patent-pending  auction  process,  which,  by  a partnership with The CIT Group,
utilizes  the  benefits  of  account receivable factoring for sellers and credit
checks  for  buyers  to  eliminate  the  possibility  of  fraud  in  the auction
transaction.  The  Company  has  filed a patent application for the WAC process.
Depending  on market conditions, the plan is to launch the WAC in the next 12 to
24  months.  Sellers  using  the  WAC  will  pay  transaction  commission  fees.

     Factory  Outlet  Mall  ("FOM")  (In  development)

The  FOM  is  a  public  vertical marketplace, which will enable vendors to sell
merchandise  directly  to  consumers.  The  FOM  supplements  C-ME.com's
business-to-business  solutions  by giving vendors a direct business-to-consumer
e-commerce package, consisting of secure credit card transactions, shopping cart
functions and automatic calculation of sales tax and freight charges.  Depending
on market conditions, the plan is to launch the FOM in the next 12 to 24 months.
Vendors  selling  on  the  FOM  will  pay  transaction  commission  fees.

Cost  Benefits  to  Retailers  and  Manufacturers

C-ME.com  believes  that  much  of its value lies in its intermediary abilities;
specifically  in  its  ability  to create an information pipeline for the retail
industry.  The  retail  industry  is  fragmented,  with  thousands of buyers and
sellers  connecting  sporadically  and  inefficiently.  C-ME.com  believes  its
virtual pipeline can eliminate cost, redundancy, and system integration barriers
now  faced  by retailers, and expedite the flow of usable product information to
retailers  from vendors who will use its low cost, low technology, high feedback
communication  system.  The  Company's  management  understands  not  only  the
individual  retailer's  business  but  also the retail industry as a whole.  The
significant  retail  experience  of  the  Company's  management  enables  it  to
effectively  create  and  implement  services  that  precisely meet the needs of
retailers  and  their  vendors.

Benefits  to  Retailers

C-ME.com  believes  its services create time and cost efficiencies for retailers
that  lead  to  increased  merchandise  turnover  and higher gross margins.  Key
benefits  include  the  following:

-    Efficiency  -  C-ME.com  builds  and  maintains  a  Web-based  system  that
     streamlines  and  automates  the front-end merchandise sourcing process and
     provides  instantaneous  visual  access  to available merchandise on a 24/7
     basis.
-    Cost  - The solution is delivered at no cost to the retailer without legacy
     system  integration  and without eliminating the "touch-and-feel" necessary
     to  retail  buyers.

-    Time  Savings  - C-ME.com's product reduces time and cost to find products,
     which  shortens  the  crucial  time  between  merchandise  availability and
     presentation,  this is because viewing and editing merchandise with vendors
     in showrooms and at market consumes approximately one hour per appointment.
     Therefore,  using  traditional sourcing, each buyer can see approximately 8
     to  10  lines  a day and 40 to 50 per week. Using the Company's ISN, buyers
     can  each  view  50  lines  in  their  offices  before market and eliminate
     unnecessary  appointments  and  make  actual  appointments  more efficient,
     effective,  and  meaningful.


                                        6
<PAGE>
-    Sourcing  Benefits  -  The network facilitates new relationships with added
     domestic  vendors,  helping retailers to build their product sourcing bases
     and  lower prices to achieve higher margins by establishing direct sourcing
     relationships  with  new  international  vendors, directly lowering cost of
     goods  sold.  Because  buyers  using  the  network  will  not  require  a
     face-to-face  meeting  with  vendors,  each transaction can be completed in
     less than one week rather than the normal three to four week cycle. This is
     a  competitive  advantage,  as the other retailers will be using the normal
     three  to  four  week  buying  cycle.  The  shortened  transaction  time is
     especially important for off-price retailers with faster turning inventory,
     and  all  retailers' overseas purchases. This speed to market should assist
     in  reducing  markdowns, as the selling cycle will be extended on the front
     end.  Assuming  a normal markdown is 10% of retail sales, purchases through
     the  Internet  sourcing network could have a reduction to 5 to 7%, or 30 to
     50%  because  of  starting  the  selling  cycle  sooner.

-    Innovative  Financing  -  C-ME.com  has  dramatically simplified the import
     process  by  replacing  traditional  letters  of  credit  with  CIT  credit
     assurance  of  its  retail partners. The Company believes this substitution
     will  reduce  the  cost of exporting by as much as 50% as compared with the
     standard  letters  of  credit  that  would  normally  be  required.

Benefits  to  Vendors

C-ME.com's  services  give  vendors  direct  access  to  targeted retail buyers,
foresight  into  the  retailer's  procurement  cycle,  the  ability  to  receive
broadcast open-to-buy information from retailers, and 24-hour, real-time ability
to  diversify  their  product  lines  by  adding,  changing and updating product
information.  C-ME.com  creates  value  for  vendors  by:

     -    Matching  Buyers  and Sellers Securely - The Company's system works by
          guaranteeing  that  the right buyer views every product a vendor wants
          to  sell,  making  business  more  time  and  cost  efficient.

     -    Dynamic  Response  -  The  Company creates value by providing specific
          feedback  from  retailers on products, making strategic product design
          and  marketing  more  exact;

     -    Affordable  and Complete Solution - Vendors pay a nominal subscription
          fee,  and need only the technology they have in order to post products
          on  the  Company's system. Auxiliary services including Web design and
          hosting,  free template home pages, and plans to provide an e-catalog,
          a  consumer  mall,  and  a  dynamic  pricing  community, when entirely
          implemented, will provide an industry-specific and complete e-commerce
          solution;

     -    Open-to-Buy  -  The  Company  brings  significant  value to vendors by
          delivering a retailer's buying needs ("Open-to-Buy") into the vendors'
          mailbox  on a weekly basis, providing a reactive not proactive selling
          opportunity.


                                        7
<PAGE>
SUPPORTING  TECHNOLOGY

The Company has developed three proprietary technologies designed to improve the
efficiency  of  its  services:

     1.  Product  Driven  Search  Engine

The Company believes the keyword search functions employed by traditional search
engines are impractical for merchandise sourcing.  Rather, the Company developed
a  product  driven  search  engine,  which  simplifies the search process.  This
search  engine is linked to dynamic listings of the vendor's product catalog and
line  sheets,  complete  with  detailed  product  descriptions  and  digital
photographs.  These  products  are  then  indexed  and  separated  into  easily
recognizable  categories  which  facilitate  quick  product  searches  by retail
buyers.

     2.  Focused  Broadcasting  ("FOCASTING(TM)")

The  Company's FOCASTING(TM) software enables retail buyers to create individual
Web  pages  filled  with  only  those  products  that  fall  within their buying
responsibilities,  thereby  limiting  unnecessary  "surfing."  After  the  buyer
creates  his  or her customized Web page, the FOCASTING(TM) software will "push"
or  broadcast  all  products contained within the Company's database directly to
the  buyer's  desktop.  For example, if a Men's jeans buyer created a customized
Web  page  using  FOCASTING(TM)  and  selected  "Men's Jeans," the FOCASTING(TM)
software  will  transmit  all the information and images relating to Men's Jeans
within  the  Company's  database  to  the  buyer  each  time  he or she logs on.

     3.  Dynamic  End-User  Profile  System  ("DEPS(TM)")

The  DEPS(TM)  software  provides  retail  buyers  and  vendors  with  numerous
interactive  functions.  Featured in the Company's ISN, the DEPS software allows
the  user  to  maneuver  and  manipulate  (delete,  restore,  etc.)  the product
information contained within his or her own product database.  In addition, DEPS
alerts  the  user  whenever  "new"  or "close-out" items are added to the user's
database.  For  the  vendor,  DEPS  enables  them to remotely change, upload and
delete  their  product  information  based  on  user requests as well as receive
business  critical  announcements from the buyers.  Additionally, DEPS(TM)  will
allow  the  buyer  to  send  bulk or personal e-mails to all vendors in the ISN.
These  may  be  used  to  announce  the  buyer's "Open to Buy position", request
special  products,  and  announce  merchandise buying and planning goals.  These
interactive  features available through DEPS(TM) give vendors a competitive edge
in  providing  a means of rapid response to buyers' needs and vendors' products.

RESEARCH  AND  DEVELOPMENT

The Company currently provides two services to its customers: Virtual Trade Show
and  Internet Sourcing Network.  Both services are embedded with custom Web-site
design.  The  Company also has three supporting technologies: (i) Product Driven
Search  Engine;  (ii)  Focused  Broadcasting; and (iii) Dynamic End-User Profile
System.  All these technologies were developed in 1997 and 1998.  In fiscal year
2000,  the  Company  spent  an insignificant amount on research and development.
The  Company's  expertise  is  in Internet-based business-to-business automation
processes.  Any  funding of research and development will be used to develop the
services  offered  and  supporting  technologies  mentioned in the preceding two
sections.


                                        8
<PAGE>
The  Company  is  expected  to  spend  a  significant  amount  on  research  and
development in the future as the Company is evaluating the potential benefits of
launching  two  new services:  Wholesale Auction Center and Factory Outlet Mall.
The  Company is currently evaluating three options to launch these two services:
(i)  internal  development;  (ii)  outsourcing;  or  (iii)  purchasing  on-shelf
software.  The  decision  will  be  based  upon  competition situations, product
availability,  and  relative  costs  and  performance.

SALES  AND  MARKETING

The  company  will  expand  its  efforts to identify and target key subscribers.
Subscribers are defined as:  (i) domestic & foreign retailers; (ii) domestic and
foreign  vendors  /  jobbers;  or  (iii)  foreign  manufacturers.

C-ME.com  will  continue prospecting for new retailers and vendors to add to the
ISN  through  a  team  of National Sales Executives located in key market areas.
The Company will leverage existing retailer and vendor relationships by offering
additional  services  provided  by  C-ME.com.  These  services  include  product
development,  Web  design  and  hosting,  and  open  to  buy  broadcasts.

Marketing  the  Company's global sourcing consortium through its foreign offices
will  be  key to the development of long-term retailer and vendor relationships.

BUSINESS  DEVELOPMENT  STRATEGY

C-ME.com  believes  that  by  providing  retailers with direct access to foreign
manufacturers,  it  can  better  support  its  existing  retail partnerships and
attract  new  retail  partners by aggregating vendors to create efficiencies for
both  foreign  manufacturers  and  U.S.  retailers.  To  do  this  C-ME.com  is
partnering  with companies in other countries that have the connections, capital
and  ability  to form joint ventures.  These joint ventures are opening regional
merchandise  sourcing  offices and marketing ISNs to international manufacturers
that  would  like  to  sell  directly  to large U.S. retailers.  By establishing
localized  merchandise  sourcing  offices, C-ME.com is fulfilling its mission of
being  the  retailers' global sourcing solution by making international commerce
convenient  and  feasible  for  many  manufacturers who know how to make quality
products  but do not have technological knowledge or Internet access.  Beginning
in  the  Pacific Rim, the Company has formed joint ventures in Taiwan, Thailand,
The  Philippines,  and  China  during  2000,  and  plans  to form six more joint
ventures  in  various  Asian  countries  during  2001,  as well as to expand its
operations  to  Central  and  South  America  and  Europe  in  2002.

The  Company's strategy is designed to enable it to provide a complete front-end
Web-based  sourcing  and  production system for retailers and their supply chain
vendors.  In  addition,  the Company's services may provide retailers a complete
back-end  solution from order management and fulfillment to inventory management
(including  administration  and  replenishment)  to  store  operations  and
Point-of-Sale  ("POS").  Additionally,  a  transaction function such as "FOM" or
"WAC" may be built into the system whereby retailers may have additional avenues
to sell vendor merchandise.  The Company anticipates taking a transaction fee as
commission.

POTENTIAL  REVENUE  STREAMS

The Company's sources of revenue are anticipated to be fees paid by domestic and
global  vendors  who  subscribe  to  the ISN, and a commission to be paid by the
retailers  on  overseas  purchases  through  the  Company's  operating  system.

KEY  CONTRACTS  AND  COLLABORATIVE  PARTNERS

Management has established or is in the process of establishing affiliations and
contracts with several retailers. To date, the Company has  two retail partners:
Burlington  Coat  Factory  Warehouse Corporation ("BCF") and Factory 2-U Stores,
Inc.  ("F2U").  Under  the  terms  of the BCF contract, the Company has built an
exclusive  ISN  for BCF free of charge.  In return, BCF will provide the Company


                                        9
<PAGE>
with  a list of its existing vendors and assist the Company in marketing the ISN
to  these  vendors. BCF also will receive 50 percent of the monthly hosting fees
collected  from vendors who join BCF's ISN.  BCF has a stock warrant whereby BCF
has  the  discretion  to  purchase an equity interest of up to 10 percent of the
Company.

The  Company's  second  retail  partner  is  F2U.  Under  the  terms  of the F2U
contract, the Company has built an exclusive ISN free of charge.  In return, F2U
has  agreed to mandate its vendors to join the ISN.  F2U will receive 33 percent
of  the  subscription fees collected from vendors who join F2U's ISN.  F2U has a
stock  warrant  whereby F2U has the discretion to purchase an equity interest of
up  to  10  percent  of  the  company.

In  August,  2000,  C-ME.com  announced a strategic alliance with the CIT Group.
The  alliance,  which  involves the development of multiple joint projects, will
focus  on  integrating  CIT's factoring services with C-ME.com's global sourcing
business.  The  Company  believes  the need for letters of credit when retailers
import  merchandise  will  be  eliminated.

In  addition,  C-ME.com  executed  an  agreement with RETEX, a technology-buying
consortium  with more than 2000 member retailers, which provides the opportunity
to  build  and  maintain  ISNs for RETEX's members. The Company is also pursuing
relationships   with   strong   back-end  procurement  technology  providers  to
supplement  its  front-end  merchandise-sourcing  services.

COMPETITION

The  distinction  between  merchandise  sourcing (front-end) and the procurement
function  (back-end)  is  important  to a discussion on competition.  Currently,
standardized  EDI  transaction  sets,  including  purchase  orders,  are common.
However,  EDI  is  costly  and does not solve the front-end issue of merchandise
sourcing.  On the back-end, the emergence of Internet Protocol ("I/P") standards
creates  an opportunity for tighter inter-operation between the business systems
of  supply  chain  trading  partners.

The  company's  primary  competitors  are  as  follows:

     -    SOURCING  LINK  -  This  company  is a business-to-business electronic
          commerce  solutions provider for the retail industry. It is focused on
          developing,  marketing  and  supporting the leading electronic toolset
          for  the  retail  industry  sourcing  process  using  standard  open
          technologies.  Sourcing  Link  operates an Internet-based subscription
          service,  which  enables  retailers  to  collaborate with their supply
          chain  using standard Web browsers. IBM Corporation sells, distributes
          and  supports  the  Sourcing  Link  service,  which is positioned as a
          strategic  procurement  solution  in  the  IBM  Supply Chain Solutions
          Portfolio.

     -    PURCHASE  PRO.COM  -  This  company  helps  businesses  sell goods and
          services online to other businesses. Purchase Pro.com plays matchmaker
          to  lonely  businesses looking for e-commerce relationships. Customers
          buy  memberships in order to access buying and selling communities, or
          "e-marketplaces."  One  of  its  services  is  group buying discounts.

     -    VERTICAL  NET  - This company is a leading operator of online vertical
          trade  communities  focusing  specifically on the business-to-business
          segment  of  the  Internet. Its stable of more than 50 Web-sites spans
          industries  such as communications, healthcare, and sciences. Vertical
          Net's  industry-specific  Web-sites  offer  features  such  as  online
          shopping,  buyer's  guides and news. The company has also enhanced its
          Web-  sites  with  online  auction  capabilities.


                                       10
<PAGE>
     -    TRADEOUT.COM  -  This  company  provides  an  online  marketplace  for
          businesses to buy and sell excess inventory and idle assets. It brings
          together  companies to buy and sell surplus assets in over 100 product
          categories  online.

     -    TRADEWEAVE.COM  -  This company enables retailers and vendors to list,
          buy  and  sell  merchandise  through a staged auction process over the
          Internet.  All buyers and sellers are pre-registered and authorized to
          trade  by  QRS.  After  registering, customers will be provided with a
          Tradeweave  'Passport,' which authenticates them as an approved trader
          in  the  marketplace.  Sellers will issue 'Visas' to selected approved
          buyers  to  formalize  trading  relationships.  Sellers  benefit  by
          increasing  their  market  reach,  drawing  more  competitive bids and
          gaining  more  control  over their brand and the sales process. Buyers
          benefit  by  having broader access to merchandise at attractive prices
          through  a  central  location. Both sellers and buyers benefit from an
          integrated  e-commerce  back-end  using  existing  QRS  services.  All
          industry  players  will have access to Tradeweave's retail trade news,
          content  and  directories.

Our  main  procurement  competitors  are  as  follows:

     -    QRS  CORPORATION  - This company is using technology to alter the face
          of  merchandise  management.  It  provides electronic data systems and
          services  for  retailers,  vendors  and shippers. Its catalog services
          include  a  database  of  67  million  products  from  more than 8,700
          vendors. The database lists products by their Universal Product Codes.
          Additional  products  marketed  by  QRS  include networking stems that
          provide  two-way electronic transmission of business data and Internet
          access,  Web  security  and  Web  development,  management  tools  for
          tracking  products by sales and store location, motor freight shipment
          tracking  and  delivery  performance  reporting  and  education  and
          consulting  services.

     -    ARIBA  -  This  company  makes  operating  resource management ("ORM")
          products,  which help companies track and manage supply purchases over
          the  Internet  and  corporate  intranets.  Its  scalable  ORM software
          automates  e-commerce  transactions  and contains modules for creating
          customized  forms  and managing expense reports. Its Ariba.com network
          connects buyers to suppliers, helps suppliers provide product catalogs
          and routes order transactions. Ariba's customers include AMD, Chevron,
          Merck  and  Staples.

     -    COMMERCE  ONE - This company offers software and services that connect
          global  buyers  with suppliers of business goods and services over the
          Internet.  Its  BuySite  software  simplifies  the  buying  process by
          providing  product  catalogs  from  different  suppliers,  automating
          approvals  and  enforcing  buyer-  and  seller-specific  policies. Its
          MarketSite.net  Web-site  enables  buyers  and sellers using different
          software  applications  to  seamlessly  connect and perform e-commerce
          transactions.  The  company  also  provides services including content
          management,  order  availability  information,  status  tracking  and
          transaction  support.

     -    RETEK  - This company provides inventory management software that lets
          retailers  interact  across  the  Web  with  suppliers,  wholesalers,
          transportation  companies  and  other  links  in  the  supply  chain.
          Customers  include  Ann  Taylor,  Eckerd,  CBRL  Group  and  Lancome.

Additional  auction  competitors  of  Cyber  Merchants  Exchange are as follows:
Closeout.com;  Retail.com;  Retex.com;  Merchandise-online.com;  Redtagbiz.com;
Market4retail.com;  Brandwise.com;  Retailexchange.com;  Closeoutnow.com;
Bidland.com;  Bid4it.com;  and  i2iretail.com.


                                       11
<PAGE>
Although  the competitors detailed in the preceding paragraphs may offer similar
services  to  C-ME.com, C-ME.com believes that no other company has its range of
services,  approach  to  serving  the industry or such an experienced management
team.  C-ME.com  is focused on the front-end of merchandise sourcing, aggressive
overseas  expansion  plans,  wholesale  auction,  partnerships with retailers to
ensure  that  buyers  and  sellers  connect,  management's retail experience and
complete  e-commerce  solution  for  vendors.  Because  of  its  focus, C-ME.com
believes  that  it  will  be able to compete effectively by providing a complete
merchandise  sourcing  solution  to  the  marketplace.

INTELLECTUAL  PROPERTY  RIGHTS

The Company intends to seek U.S. patent and trademark protection on its products
and  processes,  where  appropriate,  and  to protect its proprietary technology
under  U.S.  and  foreign  laws  that  protect  trade  secrets  and  copyrights.

The  Company  has  trademarked its DEPS(TM), FOCASTING(TM) and Internet Sourcing
Network.

EMPLOYEES

As  of  June  30,  2000,  the  Company  had 12 employees and 6 independent sales
contractors.  Of  these  employees, three were classified as executive.  None of
the  employees are subject to a collective bargaining agreement, and the Company
believes  that  its  relations  with  its  employees  is  good.

RISK  FACTORS

Shareholders  and  prospective  purchasers  of the Company's Common Stock should
carefully  consider  the  following  risk  factors  in  addition  to  the  other
information  appearing  in  this  Annual  Report  on  Form  10-KSB.

     INVESTORS  ARE CAUTIONED AGAINST RELYING ON FORWARD-LOOKING STATEMENTS USED
     BY  THE  COMPANY  TO  DESCRIBE  ITS  FUTURE  FINANCIAL  CONDITION  AS THOSE
     PREDICTIONS  COULD  DIFFER  MATERIALLY  FROM  WHAT  ACTUALLY  RESULTS.

This  Annual  Report  on  Form  10-KSB contains forward-looking statements.  The
words  "anticipate",  "believe",  "expect",  "plan",  "intend",  "estimate",
"project",  "could",  "may",  "foresee"  and similar expressions are intended to
identify  forward-looking  statements.  The following discussion of risks should
be  read  in  conjunction  with the Company's financial statements and notes and
other financial information included elsewhere in this Form 10-KSB.  In addition
to  historical  information,  this  Form 10-KSB contains statements that involve
risks  and  uncertainties.  The Company's actual results could differ materially
from  the  results  discussed  in  the forward-looking statements.  Factors that
could  cause  or  contribute to such differences include those discussed in this
"Risk  Factors"  section  of  the  Form  10-KSB.

Industry  Risks

     THERE  IS  NO  ASSURANCE  OF  FUTURE  INDUSTRY  GROWTH.

There  can be no assurance that the marketplace in which the Company operates is
as  large as reported in market data or that such projected growth will occur or
continue.  Market  data  and  projections  are  inherently uncertain, subject to
change  and  often  dated.  In  addition,  the  underlying market conditions are
subject  to  change based on economic conditions, consumer preferences and other
factors  that  are beyond the Company's control.  A slower pace of growth within
the  industry  will  have a significant negative impact on C-ME.com's operations
and  projections  for  growth.


                                       12
<PAGE>
     THE  INTERNET  INDUSTRY  IS  EXPERIENCING  CONSOLIDATION THAT MAY INTENSIFY
     COMPETITION.

The  Internet  industry has recently experienced substantial consolidation and a
proliferation of strategic transactions.  The Company expects this consolidation
and  strategic  partnering to continue.  Acquisitions or strategic relationships
could  harm  it  in  a  number  of  ways.  For  example:

     -    competitors  could  acquire  or  partner with companies with which the
          Company  has strategic relationships and discontinue its relationship,
          resulting  in  the loss of opportunities for its products and services
          or  the  loss  of  certain enhancements or value-added features to its
          products  and  services;

     -    a  competitor  could be acquired by a party with significant resources
          and  experience  that  could increase the ability of the competitor to
          compete  with  its  products  and  services;  and

     -    other  companies  with  related  interests  could combine to form new,
          formidable  competition,  which  could  preclude  the  Company  from
          obtaining  access  to  certain  markets  or  content,  or  which could
          dramatically  change  the  market  for  the  Company's  products  and
          services.

     THE  COMPANY'S  FUTURE  REVENUE  DEPENDS  SIGNIFICANTLY  ON  THE  VOLUME OF
     INTERNET  USE  AND  THE  ACCEPTANCE  OF  THE INTERNET AS A COMMERCE MEDIUM.

If  use  of  the  Internet  and  growth  of  the market for business-to-business
exchanges  do  not  continue,  the  Company may not achieve the critical mass of
customers necessary for sustaining revenues and achieving profitable operations.
The Company's future revenues and profits, if any, substantially depend upon the
widespread acceptance and use of the Internet as an effective medium of business
by target consumers. Rapid growth in the use of and interest in the Internet has
occurred  only  recently.  As  a  result, acceptance and use may not continue to
develop  at  historical  rates,  and  a sufficiently broad base of retailers and
vendors  may  not  use  the  Internet  and  other online services as a medium of
commerce.

The  Company's  future  revenue  will  depend  significantly  on  the widespread
acceptance  and  use  of the Internet as an information source and as a commerce
vehicle.  Rapid  growth  in Internet use is a recent trend and market acceptance
of  the  Internet  as  an  commercial  medium  is  highly  uncertain.

The Internet may not be accepted as a viable commerce medium for distribution of
information and engaging in commerce for a number of reasons, including, without
limitation:

     -    inadequate  development  of  the  network  infrastructure;
     -    inadequate  development  of  enabling  technologies;  and
     -    concerns  about  privacy  and  security  among  users.


                                       13
<PAGE>
     THE  COMPANY'S  BUSINESS  IS  DEPENDENT  ON  ITS ABILITY TO MAKE USE OF NEW
     COMPUTER  TECHNOLOGIES  AND  ON THE SUCCESS OF THE INTERNET AS A VEHICLE OF
     COMMERCE.

The  market for Internet access is characterized by rapidly changing technology,
evolving  industry  standards,  changes in users' needs and frequent new service
introductions.  The Company's future success will depend, in part, on the use of
leading  technologies  to  provide  seamless  access to and services through its
Web-site. There can be no assurance that the Company will be successful in using
new  technologies  effectively,  developing  new  services or enhancing existing
services  on  a  timely  basis.

The  Company's  success  also  depends  on  continued  use  and expansion of the
Internet.  The  Internet  infrastructure  may not be able to support the demands
placed  on  it by continued growth. The growth in volume of Internet traffic may
create  instabilities  in  its structure such as shortages in Internet addresses
and  overworked search engines. Such instabilities may have an adverse affect on
its  operations and business if they are not addressed.  The Internet could also
lose its viability due to delays in the development or adoption of new standards
and  protocols  to  handle  increased  levels  of  Internet  activity, security,
reliability,  cost,  ease  of  use,  accessibility,  and quality of service. The
Company's  network infrastructure may be vulnerable to computer viruses, hacking
or  similar disruptive problems caused by users, other connected Internet sites,
the  interconnecting  networks  and  the  various  telephone  networks. Computer
viruses  or problems caused by third parties could lead to interruptions, delays
or  cessation  in  service  to  the  Company's  member  retailers.

The Company's success will depend, in large part, upon third parties maintaining
the  Internet  infrastructure  to  provide  a reliable network backbone with the
speed,  data  capacity,  security  and  hardware necessary for reliable Internet
access  and  services.

     THE  COMPANY'S  BUSINESS  WILL  BE  SEVERELY IMPACTED IF TELECOMMUNICATIONS
     CARRIERS  AND  OTHER  SUPPLIERS  ON  WHICH IT DEPENDS ARE UNABLE TO PROVIDE
     UNINTERRUPTED  SERVICES.

The  Company relies on providers such as the local telephone companies and other
companies  to provide data-communications via local telecommunications lines and
leased long-distance lines. The means of ordering and paying for products may be
disrupted  or  eliminated  if  the  company  experiences disruptions or capacity
constraints  in  its  telecommunications  services.  There  may  be  no means of
replacing  these  services  on  a  timely  basis  or  at  all.

In  addition,  the  inability or unwillingness of any third-party to provide the
Company point of presence access or its inability to secure alternative point of
presence  arrangements  could  significantly  limit  its  ability to service its
existing  customers  and  expand  to  new  markets, which could, in turn, have a
material  adverse  effect  on  its  business, financial condition and results of
operations.

     GOVERNMENT  REGULATION OF THE INTERNET COULD ADVERSELY AFFECT THE COMPANY'S
     PROFITABILITY.

Increased  government  regulation, or the application of existing laws to online
activities,  could inhibit Internet growth, expose the Company and other sellers
of  products  for use on the Internet to additional liabilities and increase the
cost  of  doing  business.  This  could  have  a  material adverse effect on the
Company's  profits  and  liquidity.  The  increasing  popularity  and use of the
Internet  and  other  online  services  may lead to the adoption of new laws and
regulations  in  the  United States and elsewhere covering issues such as online
privacy,  copyright  and  trademark,  sales taxes and fair business practices or
which  require  qualification to do business as a foreign corporation in certain
jurisdictions.


                                       14
<PAGE>
Existing  or future legislation could limit growth in use of the Internet, which
would  curtail  the Company's revenue growth.  Statutes and regulations directly
applicable  to  Internet  communications,  commerce and advertising are becoming
more  prevalent. The law remains largely unsettled, however, even in areas where
there  has  been  legislative action. It may take years to determine whether and
how  existing  laws governing intellectual property, privacy, libel and taxation
apply  to  the  Internet,  electronic  commerce and online advertising.  Any new
regulation or taxation of Internet commerce could damage the Company's business,
affect  the  profitability  and  perhaps the viability of the Company's business
plan,  and  cause  the  price  of  the  Company's  common stock to decline. Such
regulation  or  taxation  could  prove  to be burdensome, and impose significant
additional  costs  on  the  Company's  business  or  subject  it  to  additional
liabilities.

Most  of  the  laws  that  relate to the Internet have not yet been interpreted.
Changes  to  or  the  interpretation  of  these  laws  could:

     -    limit  the  growth  of  the  Internet;
     -    create uncertainty in the marketplace that could reduce demand for the
          Company's  products  and  services;
     -    increase  the  Company's  cost  of  doing  business;
     -    expose  the Company to significant liabilities associated with content
          available  on  its  Web-sites  or  distributed or accessed through its
          products  or  services;
     -    lead  to  increased  product  development costs, or otherwise harm the
          Company's  business;  or
     -    decrease  the  rate of growth of the Company's user base and limit its
          ability  to  effectively communicate with and market to its user base.

As  Internet  commerce  continues  to  evolve, increasing regulation by federal,
state,  or  foreign  agencies  becomes more likely.  Regulation is likely in the
areas  of  user privacy, pricing, content, and quality of products and services.
Taxation  of Internet use, or other charges imposed by government agencies or by
private organizations for accessing the Internet, may also be imposed.  Laws and
regulations  applying to the solicitation, collection, or processing of personal
or  consumer information could limit the Company's activities.  In addition, any
regulation  imposing  fees for Internet use could result in a decline in the use
of  the  Internet  and  the  viability  of Internet commerce, which could have a
material  adverse  effect  on the Company's business, results of operations, and
financial  condition.

Company  Risks

     THE  COMPANY  HAS  A LIMITED OPERATING HISTORY, WHICH MAKES IT DIFFICULT TO
     EVALUATE  THE  COMPANY'S  BUSINESS.

The  Company  was incorporated in July 1996 and has a limited operating history.
The  Company  just  recently developed and built its operating assets, including
its  proprietary software and its network server.  C-ME.com is a new company and
has  no  history  of earnings or profit.  There is no assurance that the Company
will  operate profitably in the future.  As such, there is no assurance that the
Company  will  generate  a  return  on  your  investment  in  the  future.

The  Company  has  limited  financial results on which you can assess its future
success.  The  Company's  prospects  must  be  considered in light of the risks,
expenses and difficulties frequently encountered by growing companies in new and
rapidly  evolving  markets.


                                       15
<PAGE>
To  address  the  risks  and  uncertainties  faced  by  the  Company,  it  must:

     -    establish  and  maintain  broad  market acceptance of its services and
          convert  that acceptance into direct and indirect sources of revenues;

     -    maintain and enhance its presence as a viable and attractive option to
          retailers;

     -    continue  to  timely  and  successfully  develop new products, product
          features  and services, and increase the functionality and features of
          its  existing  products;

     -    successfully  respond  to  competition  from  others;  and

     -    develop  and  maintain  strategic  relationships  to  enhance  the
          distribution,  features  and  utility  of  its  products and services.

The  Company's  business  strategy  may  be unsuccessful and it may be unable to
address the risks it faces in a cost-effective manner, if at all.  The Company's
inability  to  successfully  address  these  risks  will  harm  its  business.

     THE  COMPANY  HAS  NOT PRODUCED A PROFIT AND CANNOT BE CERTAIN THAT IT WILL
     PRODUCE  A  PROFIT  OR  REMAIN  PROFITABLE  IF  IT  DOES GENERATE A PROFIT.

The  Company  is not profitable and may never become profitable.  If the Company
does  achieve profitability, it cannot be certain that it will remain profitable
nor  that  profits  will  increase  in  the  future.  The  Company  has incurred
significant  losses  since  its  inception  and  may never generate or sustain a
profit. For the fiscal year ended June 30, 2000, the Company reported a net loss
of  $3,287,659.  The  Company  devotes  significant  resources  to  developing,
enhancing,  selling  and  marketing  its products and services. As a result, the
Company  will  need  to generate significant revenues to maintain profitability.
The  Company  may  not  continue  its  historical  growth or generate sufficient
revenues  to sustain or increase profitability on a quarterly or annual basis in
the  future.

     THE  COMPANY  EXPECTS  TO  DEPEND  ON  REVENUE  FROM  ITS  DOMESTIC  AND
     INTERNATIONAL  INTERNET  SOURCING  NETWORKS,  VIRTUAL TRADE SHOW, WHOLESALE
     AUCTION  CENTER  AND  WEB  DESIGN  AND  HOSTING.

The  Company  expects  to  depend  primarily  on  revenue  from  the  complete
implementation  of  its  domestic  and international Internet Sourcing Networks,
Wholesale  Auction  Center,  and  Factory  Outlet  Mall, and on revenue from the
existing  Virtual  Trade  Show,  and continuing revenue from Web-site design and
hosting  for  its  subscribers.  The Internet Sourcing Network has not generated
any  revenue  and  there  is  no  guarantee that it will generate revenue in the
future.  The  Wholesale  Auction  Center  and  Factory  Outlet  Mall  are  in
development;  there is no guarantee either of these services will be implemented
or generate any revenue.  The Virtual Trade Show and Web-site design and hosting
have  generated  revenue in the past.  However, there is no guarantee that these
services  will  continue  to generate revenue or that that revenue will meet the
Company's  expectations.


                                       16
<PAGE>
     THE  COMPANY'S  OPERATING  RESULTS  ARE  LIKELY  TO FLUCTUATE SIGNIFICANTLY

As  a result of the Company's limited operating history and the rapidly changing
nature  of  the markets in which it competes, the Company's quarterly and annual
revenues  and  operating  results are likely to fluctuate from period to period.
These  fluctuations  may  be  caused  by  a number of factors, many of which are
beyond  the  Company's control.  These factors include the following, as well as
others  discussed  elsewhere  in  this  section:

     -    how  and  when  the  Company  introduces new products and services and
          enhances  its  existing  products  and  services;
     -    the  Company's  ability  to  establish  and  maintain  strategic
          relationships;
     -    the  Company's  ability  to  attract,  train and retain key personnel;
     -    the  Company's  ability  to form and maintain strategic alliances with
          retail  businesses;
     -    the  emergence  and  success  of  new  and  existing  competition;
     -    varying  operating  costs  and  capital  expenditures  related  to the
          expansion  of  the  Company's  business operations and infrastructure,
          domestically  and  internationally,  including  the  hiring  of  new
          employees;
     -    technical  difficulties  with the Company's products, system downtime,
          system  failures  or  interruptions  in  Internet  access;
     -    costs  related  to  the  acquisition  of businesses or technology; and
     -    costs  of  litigation  and  intellectual  property  protection.

In  addition,  because  the  market  for  the Company's products and services is
relatively new and rapidly changing, it is difficult to predict future financial
results.  To  the  extent that these predictions prove inaccurate, the Company's
revenues  and  operating  expenses  may  fluctuate.

For  these  reasons,  you should not rely on period-to-period comparisons of the
Company's  financial  results  as  indications of future results.  The Company's
future  operating  results  could  fall  below the expectations of public market
analysts  or  investors  and significantly reduce the market price of its common
stock.  Fluctuations in the Company's operating results will likely increase the
volatility  of  its  stock  price.

     THE  COMPANY  FACES  INTENSE  COMPETITION  FROM  MANY  ENTITIES.

The  marketplace  for  business-to-business e-commerce is highly competitive and
relatively  new,  constantly  changing  and  intensely competitive. As retailers
depend more upon the Internet as a source for product, more companies will enter
the  market  and  compete  directly  with the Company.  The Company expects that
competition  will  continue  to  intensify.

The Company has identified and continues to identify numerous companies that are
better funded, have more experience and more significant resources and that have
entered  or  are planning to enter business-to-business e-commerce.  Barriers to
entry  are  minimal  and  current  and  new  competitors  can  launch sites at a
relatively  low  cost.  Should  these  companies  decide  to enter the Company's
specific  market,  there  is  no  guarantee  that it will be able to effectively
compete  with  them.  Currently, the Company's main on-line sourcing competitors
include  Sourcing  Link,  Purchase  Pro.com,  Vertical  Net,  Tradeout.com  and
Tradeweave.com.  Its  main  procurement  competitors  include  QRS  Corporation,
Ariba,  Commerce  One  and  Retek.  Price  concessions or the emergence of other
pricing  or  distribution  strategies  of competitors may diminish the Company's
revenues,  impact its margins or lead to a reduction in its market share, any of
which  will  harm  its  business.


                                       17
<PAGE>
     THE  COMPANY'S  DEPENDENCE  ON  ALLIANCES  WITH  BUSINESSES AND GOVERNMENTS
     OUTSIDE  OF  THE  UNITED  STATES  INVOLVES  RISKS.

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

The Company is subject to the normal risks of doing business internationally, as
well  as  risks  specific  to Internet-based companies in foreign markets. These
risks  include:

     -    delays  in  the  development  of  the  Internet  as  a  vehicle  for
          business-to-business  transactions  in  international  markets;
     -    difficulties  in  managing  operations  due  to distance, language and
          cultural  differences;
     -    unexpected  changes  in  regulatory  requirements;
     -    export and import restrictions, including those restricting the use of
          encryption  technology;
     -    tariffs  and  trade  barriers  and  limitations  on  fund  transfers;
     -    longer  payment cycles and problems in collecting accounts receivable;
     -    potential  adverse  tax  consequences;
     -    exchange  rate  fluctuations;
     -    increased  risk  of  piracy  and  limits  on  the Company's ability to
          enforce its  intellectual  property  rights;  and
     -    other  legal  and  political  risks.

Any  of  these  factors  could  harm  the  Company's  business  operations.

     THE  COMPANY DEPENDS ON MARKET DEMAND FOR AN ACCEPTANCE OF ITS PRODUCTS AND
     SERVICES.

Much  of  the  Company's  success  depends  on  aggregating  a  critical mass of
subscribing  vendors  and establishing and maintaining strong relationships with
retail partners.  If market demand and acceptance for the Company's products and
services  is  not  in line with its expectations, it is likely that revenue will
not  meet the Company's expectations and the Company may not be able to fund its
operations.

     THE  COMPANY  DEPENDS  ON  RELATIONSHIPS  WITH  KEY RETAIL PARTNERS AND ITS
     ABILITY  TO  CREATE  MORE  SUCH  RELATIONSHIPS.

The  Company's business model is retailer-centric.  Successful implementation of
the  model  is  predicated on the Company's ability to create and nurture strong
partnerships  with  retailers.  If  the  Company  is unable to maintain existing
partnerships  or  establish  new  partnerships  with  retailers, its revenue and
profitably  will  not  meet  its expectations and it may not be able to fund its
operations.


                                       18
<PAGE>
     THE  COMPANY  MAY  BE  UNABLE  TO  PROTECT ITS INTELLECTUAL PROPERTY, TRADE
     SECRETS  AND  KNOW-HOW  WHICH WOULD REMOVE A BARRIER TO COMPETITION AND MAY
     DIRECTLY  AFFECT  THE  AMOUNT  OF  REVENUE  IT  GENERATES.

The  Company  depends  heavily  on continued service and software development to
maintain  the  quality  and reliability of its services and to continue to grow.
The Company is dependent on its ability to keep trade secrets and obtain patents
on business processes as well as on its ability to develop new processes to meet
its  customers'  sourcing  needs.

Although  the  Company  employs  various methods, including trademarks, patents,
copyrights  and confidentiality agreements with employees, consultants and third
party  businesses, to protect its intellectual property and trade secrets, there
can  be no assurance that it will be able to maintain the confidentiality of any
of  its  proprietary  technology, know-how or trade secrets, or that others will
not  independently  develop substantially equivalent technology.  The failure or
inability  to  protect  these rights could have a material adverse effect on the
Company's  operations.

     THE  COMPANY'S  FAILURE  TO  ATTRACT,  TRAIN  OR  RETAIN  HIGHLY  QUALIFIED
     PERSONNEL  COULD  HARM  ITS  BUSINESS

The  implementation  of  the  Company's  business plan and its continued success
relies  on  key members of the management team and sales, marketing, and finance
personnel.  There is no guarantee that these employees will continue to work for
the  Company.  In  addition, there is no guarantee that the Company will be able
to replace these employees with personnel of similar caliber, should they not be
able  to  work,  or  decide  not  to  work  for  the  Company.

The  loss  of the services of executive officers or key employees could harm the
Company's  business.  None  of  the  Company's executive officers has a contract
that  guarantees  employment.  The  Company  does not maintain "key person" life
insurance  policies.

The  Company's  success also depends on its ability to attract, train and retain
qualified  personnel, specifically those with management and product development
skills.  In  particular,  the  Company  must  hire  additional  skilled software
engineers to further its research and development efforts.  Competition for such
personnel  is  intense.  In  making  employment  decisions,  particularly in the
Internet and high-technology industries, job candidates often consider the value
of  stock  options they may receive in connection with their employment.  If the
Company does not succeed in attracting new personnel or retaining and motivating
its  current  personnel,  its  business  could  be  harmed.

     THE  COMPANY  MAY  NOT BE ABLE TO EFFECTIVELY MANAGE ITS GROWTH WHICH COULD
     HAVE  A  MATERIAL  EFFECT  ON  ITS  BUSINESS  OPERATIONS.

The  Company's  ability to manage its growth depends in part upon its ability to
develop and expand operating, management, information and financial systems, and
production  capacity,  which  may  significantly  increase  its future operating
expenses.  No  assurance can be given that it will grow in the future or that it
will  be  able  to  effectively manage such growth.  Its inability to manage its
growth  successfully  could  have  a  material  adverse  effect on its business,
financial  condition  and  results  of  operations.


                                       19
<PAGE>
The  Company  cannot  successfully  implement  its business model if it fails to
manage  its  growth.  The  Company  has  rapidly  and significantly expanded its
operations domestically and internationally and anticipates further expansion to
take advantage of market opportunities.  The Company has increased the number of
its  full-time employees from 6 on June 30, 1999, to 12 on June 30, 2000. If its
growth  continues,  it  will  need  to  continue  to  improve  its financial and
managerial  control  and  reporting  systems  and  procedures.

     THE  COMPANY  MAY  ENTER INTO NEW LINES OF BUSINESS WHICH INVESTORS ARE NOT
     GIVEN  THE  OPPORTUNITY  TO  EVALUATE

In  the  event  of a business combination, acquisition, or change in shareholder
control, the Company may enter into a new line of business which an investor did
not  anticipate  and  in  which  that investor may not want to participate.  The
Company  may make investments in or acquire complementary products, technologies
and businesses, or businesses completely unrelated to its current business plan.
Similarly, an asset acquisition or business combination would likely include the
issuance of a significant amount of the Company's common stock, which may result
in  a  majority  of  the  voting  power being transferred to new investors.  New
investors  may  replace the Company's management.  New management may decide not
to  continue to implement the Company's current business plan, and may decide to
enter into a business completely unrelated to the current business plan which an
investor  did  not  anticipate  and  in  which  that  investor  may  not want to
participate.  In  such  case,  an investor could lose its entire investment on a
business  decision  it  did  not get to evaluate at the time of investing in the
Company.



     POTENTIAL  BUSINESS  COMBINATIONS COULD BE DIFFICULT TO INTEGRATE AND COULD
     DISRUPT  BUSINESS  OPERATIONS.

Any  acquisition  of  or business combination with another company could disrupt
the  Company's  ongoing business, distract management and employees and increase
expenses.  If  the  Company acquires another company, it could face difficulties
in  assimilating  that company's personnel and operations.  In addition, the key
personnel  of  the  acquired  company  may  decide  not to work for the Company.
Acquisitions also involve the need for integration into existing administration,
services, marketing, and support efforts.  Any amortization of goodwill or other
assets,  or  other charges resulting from the costs of these acquisitions, could
limit  the  Company's  profitability  and  decrease  the value of its stock.  In
addition,  the Company's liquidity and capital resources may be diminished prior
to  or  as  a  result of the business combination and its capital may be further
depleted  by  the  operating  losses,  if  any, of the business entity which the
Company  may  eventually  acquire.

     THE  COMPANY  COULD  LOSE STRATEGIC RELATIONSHIPS THAT ARE ESSENTIAL TO ITS
     BUSINESS

The  loss  of  current  strategic  relationships,  the  inability  to find other
strategic  partners  or  the  failure of the Company's existing relationships to
achieve meaningful positive results for it could harm its business.  The Company
relies  in  part  on  strategic  relationships  to  help  it:

     -    maximize  adoption  of  its  products  and  services  among retailers;
     -    expand the range of commercial activities based on its technology; and
     -    increase  the  performance  and  utility of its products and services.

Many of these goals are beyond the Company's traditional strengths.  The Company
anticipates  that  the  efforts  of  its  strategic  partners  will  become more
important  as  the  Internet  matures.  For example, the Company may become more
reliant  on  strategic  partners  to  provide  additional services, provide more
secure  and  easy-to-use  electronic  commerce solutions and build the necessary


                                       20
<PAGE>
infrastructure  for  business-to-business  transactions.  The Company may not be
successful  in forming strategic relationships.  In addition, the efforts of the
Company's  strategic partners may be unsuccessful.  Furthermore, these strategic
relationships  may  be  terminated  before  the  Company  realizes  any benefit.

     THE  COMPANY'S  BUSINESS  WILL  SUFFER  IF  ITS  SYSTEMS  FAIL  OR  BECOME
     UNAVAILABLE.

A  reduction  in  the performance, reliability and availability of the Company's
Web-sites  and  network  infrastructure  will harm its ability to distribute its
products  and  services  to  its users, as well as its reputation and ability to
attract  and  retain  users  and customers. The Company's systems and operations
could  be  damaged or interrupted by fire, flood, power loss, telecommunications
failure,  Internet  breakdown,  earthquake  and  similar  events.  The Company's
systems  are  also subject to break-ins, sabotage, intentional acts of vandalism
and similar misconduct. The Company's computer and communications infrastructure
is  located  at  its  principal  executive  offices in Pasadena, California. The
Company  does  not  have  fully  redundant systems or a formal disaster recovery
plan,  and does not carry adequate business interruption insurance to compensate
for  losses  that  may  occur  from  a  system  outage. The Company's electronic
commerce  and  digital  distribution  activities  are  managed  by sophisticated
software  and  computer  systems. The Company may encounter delays in developing
these  systems,  and  the systems may contain undetected errors that could cause
system  failures.  Any  system  error  or  failure  that  causes interruption in
availability of products or content or an increase in response time could result
in  a  loss  of  potential  or  existing  business  services  customers,  users,
advertisers  or  content providers. If the Company suffers sustained or repeated
interruptions,  its products, services and Web-sites could be less attractive to
such  entities  or  individuals  and  its  business  would  be  harmed.

A  sudden  and  significant increase in traffic on the Company's Web-sites could
strain  the  capacity  of  the software, hardware and telecommunications systems
that  it  deploys  or  uses.  This could lead to slower response times or system
failures.  The  Company's operations also depend on receipt of timely feeds from
its  content  providers, and any failure or delay in the transmission or receipt
of  such  feeds  could  disrupt  its  operations.  The  Company  depends  on Web
browsers,  ISPs and online service providers to provide Internet users access to
its  Web-sites.  Many of these providers have experienced significant outages in
the  past,  and  could  experience outages, delays and other difficulties due to
system  failures  unrelated to the Company's systems.  In addition, certain ISPs
have  temporarily  interrupted  the Company's Web-site operations in response to
the heavy volume of e-mail transmission it generates and sends to its large user
base.  These  types  of  interruptions could continue or increase in the future.

Investment  Risks

     THE  COMPANY'S  COMMON  STOCK  HAS  LIMITED  LIQUIDITY.

At  the  present  time,  the  Company's common stock is not listed on The Nasdaq
Stock  Market, Inc. or on any national exchange.  Although dealer prices for the
Company's Common Stock are listed on the Nasdaq Over-the-Counter Bulletin Board,
trading  has  been  limited  since such quotations first appeared in July, 1999.
The  Company  has applied to have its common stock approved for quotation on the
Nasdaq  SmallCap  Market.  The Company cannot assure you that it will be able to
secure  the listing, or that it will meet the requirements for continued listing
on  the  Nasdaq  SmallCap  Market.  Under  Nasdaq  rules, in order to maintain a
listing  on the Nasdaq SmallCap Market, a company must have, among other things,
either $4,000,000 in net tangible assets, a market capitalization of $50,000,000
or more, or $750,000 net income in its last fiscal year or two of its last three
fiscal years.  In addition, the listed security must have a minimum bid price of
$3.00  per  share.  Further,  Nasdaq  has  the  right to withdraw or terminate a
listing  on  the  Nasdaq  SmallCap  Market at any time and for any reason in its
discretion.  If  the Company were unable to obtain or to maintain listing on the
Nasdaq  SmallCap  Market quotations, if any, for "bid" and "asked" prices of the


                                       21
<PAGE>
common  stock  would  be  quoted  in the "pink sheets" published by the National
Quotation  Bureau,  Inc.  or  on the Nasdaq Over-the-Counter Bulletin Board.  In
such  event, an investor could find it more difficult to dispose of or to obtain
accurate  quotations of prices for the shares of the Company's common stock than
would  be  the  case if the shares of its common stock were quoted on the Nasdaq
SmallCap  Market.

Irrespective of whether or not shares of the Company's common stock are included
in  the  Nasdaq system, the Company cannot assure you that the public market for
shares  of its common stock will become more active or liquid in the future.  In
that  regard,  prospective  purchasers  of the common stock should consider that
this offering is being made without underwriting arrangements typically found in
an  initial  public offering of securities.  Such arrangements generally provide
for the issuer of the securities to sell the securities to an underwriter which,
in  turn,  sells the securities to its customers and other members of the public
at a fixed offering price, with the result that the underwriter has a continuing
interest  in  the  market  for  such  securities  following  the  offering.

     THE  QUOTED  TRADING PRICE OF SHARES OF THE COMPANY'S COMMON STOCK COULD BE
     ADVERSELY  AFFECTED  BY  THE  POTENTIAL ENTRY INTO TRADING OF A SUBSTANTIAL
     NUMBER  OF  ADDITIONAL  SHARES  OF  ITS  COMMON  STOCK

On  June  30, 2000, the Company had 6,333,769 shares of common stock outstanding
before  the  private  placement.   On  June  30, 2000, the sale of an additional
1,255,900 of common shares at $4.878 per share were sold for gross cash proceeds
of  $6,126,336.  At  the  close  of  business  on June 30, 2000, the Company had
7,589,669  of  common  shares outstanding.  This increase in common shares could
have  a  negative  impact  on  the  market price for the shares of the Company's
common  stock.

In  April  1999,  32  of  the  Company's  shareholders, collectively controlling
5,173,000  of  its  5,750,000 outstanding shares of common stock, entered into a
lock-up  agreement.  The shareholders agreed to trading restrictions that depend
on  trading  price.  As  the price climbs, so does the number of shares that are
released  from  the  lock-up  agreement.  Trading restrictions on all the shares
currently  under  the  lock-up  agreement  will  be  lifted  after  the two-week
weighted-average trading price of the Company's common stock exceeds $30.   Over
time,  blocks  of  shares  will be released and add to the number of free-traded
shares  outstanding.

A  portion  of  the Company's restricted securities are saleable under Rule 144,
promulgated  by  the Securities and Exchange Commission under the Securities Act
of  1933,  as  amended,  upon  the  seller's compliance with the holding period,
manner of sale and other conditions and limitations of that Rule.  Rule 144 also
requires  that specified information concerning the Company must be available at
the  time  any  such  sale  is  made.  Since the Company has been subject to the
reporting  requirements  of  the Securities Exchange Act of 1934, its compliance
with  such  rules  also will satisfy Rule 144 "public information" requirements.

     FUTURE  ISSUANCE  OF  STOCK  BY  THE  COMPANY MAY HAVE A DILUTIVE EFFECT ON
     OWNERSHIP  INTERESTS OF SHAREHOLDERS AND MAY NEGATIVELY IMPACT THE PRICE OF
     ITS  STOCK.

Any  additional issuances by the Company from its authorized but unissued shares
may  have  the  effect  of  diluting  the  percentage  interest  of  existing
shareholders.  Out  of  the  40,000,000 authorized common shares of the Company,
32,410,331,  or 81%, remain unissued.  The Board of Directors of the Company has
the  power  to  issue  such  shares  without  shareholder approval.  None of the
10,000,000  authorized  preferred  shares  of  the Company are issued. There are
outstanding  warrants  and  options  whose holders may acquire additional common
shares.  The  Company  fully  intends  to  issue  additional  common  shares  or
preferred  shares  in order to raise capital to fund its business operations and
growth  objectives.


                                       22
<PAGE>
An additional 4,245,652 shares have been reserved for issuance upon the exercise
of  outstanding  options or warrants.  Although the Company's Board of Directors
has  no  present intention to do so, it has the authority, without action by the
shareholders,  to issue authorized and unissued shares of Common Stock or one or
more  series  of  Preferred  Stock.  Any  outstanding  series  of  the Company's
Preferred  Stock,  if and when issued, could also have rights superior to shares
of  its Common Stock, particularly in regard to voting, the payment of dividends
and  upon  liquidation  of  the  Company.

The Company has signed an agreement to negotiate an Equity Line whereby it would
have  the  right  to  issue  shares  of  its common stock.  Also it has issued a
warrant  to  Factory  2-U  Stores  to  purchase  shares  of  common  stock.

The  issuance  of  new  shares under the Equity Line and the Factory-2-U warrant
could have a negative impact on the market price for the shares of the Company's
common  stock.

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

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

     POTENTIAL  BUSINESS  COMBINATIONS  MAY  DILUTE  SHAREHOLDER  VALUE.

If  the Company is not successful in developing a viable market for its service,
its  management  will  spend  a  significant  portion  of the time it devotes to
evaluating  other  business  opportunities that may be available to the Company.
In  the  event  of a business combination, the ownership interests of holders of
existing  shares  of  the  Company's  stock will be diluted.  Due to its limited
financial  resources,  the  only  way  the Company will be able to diversify its
activities,  should its business plan prove to be impractical, would be to enter
into  a  business  combination.

Any  asset acquisition or business combination would likely include the issuance
of  a  significant  amount of the Company's common stock, which would dilute the
ownership  interest  of holders of existing shares, and may result in a majority
of the voting power being transferred to new investors.  Depending on the nature
of  the  transaction,  the Company's shareholders may not have an opportunity to
vote  on  whether  to approve it.  For example, the Company's board of directors
may  decide  to  issue  a significant amount of stock to effect a share exchange
with another company.  Such a transaction does not require shareholder approval,
but  the  Company's  officers  and  directors must exercise their powers in good
faith  and  with  a  view  to  the  interests  of  the  corporation.


                                       23
<PAGE>
     THE  COMPANY  MAY  NEED ADDITIONAL FINANCING WHICH MAY NOT BE AVAILABLE, OR
     WHICH  MAY  DILUTE  THE  OWNERSHIP  INTERESTS  OF  INVESTORS

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

     THE  BOARD  OF  DIRECTORS'  AUTHORITY  TO  SET  RIGHTS  AND  PREFERENCES OF
     PREFERRED  STOCK  MAY  PREVENT  A  CHANGE IN CONTROL BY SHAREHOLDERS OF THE
     COMPANY'S  COMMON  STOCK.

Preferred  shares  may  be  issued  in  series  from  time  to  time  with  such
designation,  rights,  preferences  and limitations as the Board of Directors of
the  Company determines by resolution and without shareholder approval.  This is
an  anti-takeover  measure.  The  Board of Directors has exclusive discretion to
issue  preferred  stock  with  rights that may trump those of common stock.  The
Board  of  Directors  could  use an issuance of Preferred Stock with dilutive or
voting  preferences  to  delay,  defer  or  prevent  common  shareholders  from
initiating  a  change  in  control of the Company or reduce the rights of common
shareholders  to the net assets upon dissolution.  Preferred stock issuances may
also  discourage  takeover  attempts  that  may offer premiums to holders of the
Company's  common  stock.



     SHAREHOLDERS  DO  NOT  HAVE THE AUTHORITY TO CALL A SPECIAL MEETING THEREBY
     DISCOURAGING  TAKEOVER  ATTEMPTS

Pursuant  to the Company's by-laws, only the Board of Directors, the Chairman of
the  Board  or  the  President  of  the Company have the power to call a special
meeting  of  the  shareholders  thereby  limiting the ability of shareholders to
effect  a  change  in  control  of  the  Company.

     REQUIREMENTS  OF THE SEC WITH REGARD TO LOW-PRICED "PENNY STOCK" SECURITIES
     MAY ADVERSELY AFFECT THE ABILITY OF SHAREHOLDERS TO SELL THEIR STOCK IN THE
     SECONDARY  MARKET

"Penny  stocks" are low-priced, and usually highly speculative, stock selling at
less  than  $5.00  per share. The Company's securities are subject to Rule 15g-9
under  the  1934  Act,  which  imposes additional sales practice requirements on
broker-dealers  who  sell  such  securities  to  persons  other than established
customers  and "accredited investors" (generally, an individual with a net worth
in  excess  of  $1,000,000  or  an annual income exceeding $200,000, or $300,000
together  with  his  or  her  spouse).  For transactions covered by this rule, a
broker-dealer  must  make  a special suitability determination for the purchaser
and  have  received  the purchaser's written consent to the transaction prior to
sale.  Consequently, the rule may adversely affect the ability of broker-dealers
to  sell  the  Company's  securities  and  may  adversely  affect the ability of
shareholders  to  sell  their  stock  in  the  secondary  market.


                                       24
<PAGE>
     LIMITED  LIABILITY  OF  EXECUTIVE  OFFICERS  AND  DIRECTORS  MAY DISCOURAGE
     SHAREHOLDERS  FROM  BRINGING  A  LAWSUIT  AGAINST  THEM

The  Company's  articles  of  incorporation  and by-laws contain provisions that
limit  the  liability  of  directors  for  monetary  damages  and  provide  for
indemnification  of  officers  and  directors.  These  provisions may discourage
shareholders from bringing a lawsuit against officers and directors for breaches
of  fiduciary  duty  and may also reduce the likelihood of derivative litigation
against  officers  and  directors  even though such action, if successful, might
otherwise  have  benefited  the  shareholders.  In  addition,  a  shareholder's
investment  in the Company may be adversely affected to the extent that costs of
settlement  and  damage  awards  against  officers  or directors are paid by the
Company  pursuant  to  the  indemnification  provisions  of  the  articles  of
incorporation and by-laws.  The impact on a shareholder's investment in terms of
the  cost  of  defending  a lawsuit may deter the shareholder from bringing suit
against  one  of  the  Company's  officers  or  directors.

ITEM  2.  DESCRIPTION  OF  PROPERTY
-----------------------------------

The Company leases its corporate headquarters located at 600 S. Lake Ave., Suite
405, Pasadena, CA  91106.  Telephone number (626) 793-5000.  The lease commenced
on October 1, 1999, and expires on October 30, 2002, with an option to renew for
3-year  period.  The Company currently leases approximately 1,956 square feet at
an  average  monthly  rent  of  approximately  $3,520.

The  Company  is  expanding  its  principal  offices  and has signed a lease for
approximately  2,000  additional  square  feet.  This lease provides for a gross
rent  of  $3,604  per month and will expire October 30, 2002.  The total average
rent  for  the  entire  4,000  square feet of space will be $7,124.  The Company
believes  that  these  facilities  will  be  suitable  for  the operation of its
business  for  the  foreseeable  future.  The  facilities are adequately insured
against  perils  commonly  covered  by  business  insurance  policies.

ITEM  3.  LEGAL  PROCEEDINGS
----------------------------

The  Company has been named as a defendant, along with BCF, in a lawsuit brought
by  Stanley  Rosner ("Rosner"), an individual.  In March, 1998, Rosner commenced
an action in the Supreme Court of the State of New York, Nassau County, New York
(Index  No.  98-006524).  Rosner  alleges  breach  of oral and written contracts
between  the  Company  and  Rosner  and  between BCF and Rosner in 1997.  Rosner
claims  that  he  is due certain fees from both the Company and BCF for services
allegedly  rendered  in  connection  with  certain  transactions  and  alleged
transactions  involving  the  Company  and  BCF.  Such  transactions and alleged
transactions  relate  to  the  Internet services that the Company may provide to
BCF,  and  contemplated transactions arising from vendors of BCF.  Rosner claims
that  he  is  due damages in an amount not less than $5,000,000 plus unspecified
punitive  damages  from  both the Company and BCF.  Rosner's attorney has agreed
that  the  Company  and  BCF  are  entitled  to  have  the  venue of the lawsuit
transferred  from  Nassau  County,  New York to New York County (Manhattan), New
York;  Rosner's  attorney  also  agreed  to  arrange  for the transfer. Rosner's
attorney also agreed that the Company's and BCF's responsive papers would be due
no  later  than  ten (10) days after notice of such transfer had been served. To
date,  the Company has not received notice of the proposed transfer of venue and
has  not  filed  its responsive papers or otherwise moved against the complaint.

The Company intends to vigorously defend this action.  The Company believes that
it  is not obligated to make any payments to Rosner and has meritorious defenses
to  all  of Rosner's allegations. However, if the Company does not prevail and a
significant  damage  award  against  the  Company  is granted, this would have a
material  adverse  effect  upon  the  Company.


                                       25
<PAGE>
ITEM  4.  SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS
---------------------------------------------------------------------

None.


                                     PART II

ITEM  5.  MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS
-------------------------------------------------------------------------

The  Company's  common  stock  is  traded on the Over-the-Counter Bulletin Board
(OTC-BB)  under  the  symbol  "CMEE."  The  following  table sets forth, for the
periods  indicated,  the  range  of  high  and low sales prices of the Company's
common  stock  as quoted by various market makers for the period of July 1, 1999
through  June  30,  2000.

     July  1,  1998  through  June  30,  1999:  Not  publicly traded

     July 1, 1999 to June 30, 2000:      High*               Low*
                                         ---------------------------
          First  Quarter                 $11.00              $2.50
          Second  Quarter                $ 8.00              $2.125
          Third  Quarter                 $20.00              $7.00
          Fourth  Quarter                $ 9.00              $3.50

     *The  pricing  information  was  provided  by  CNBC.com

On  August  15,  2000,  the Company's common stock was held by approximately 562
shareholders  of record or through nominee or street name accounts with brokers.

The  Company  has  not  paid  dividends  in  prior years and has no plans to pay
dividends  in  the near future.  The Company intends to reinvest its earnings on
the  continued  development  and  operation  of  its  business.  Any  payment of
dividends  would  depend  upon  the  Company's pattern of growth, profitability,
financial  condition,  and such other factors as the Board of Directors may deem
relevant.

RECENT  SALES  OF  UNREGISTERED  SECURITIES

In  June,  2000, the Company completed a private placement offering of 1,255,900
shares  of  its  Common  Stock  at an offering price of $4.878 per share.  Gross
proceeds  from the offering were $6,126,336.  This offering was made pursuant to
an exemption from the registration requirement under the Securities Act of 1933,
as  amended  (the  "Act").  The  exemption  relied  upon  was either Rule 506 of
Regulation  D or Regulation S of the Act.  The Company limited the manner of the
offering  and  provided  all  of  the  investors  with  an  offering memorandum.

In  June,  2000, the Company also issued 838,119 warrants to Factory 2-U Stores,
Inc.  to  purchase Common Stock at $4.878 per share with an exercise period of 5
years.  This  offering  was  made pursuant to an exemption from the registration
requirement under the Act.  The exemption relied upon was Rule 506 of Regulation
D  of  the  Act.


                                       26
<PAGE>
LISTING  ON  THE  NASDAQ  SMALLCAP  MARKET

The  Company  delivered an application for listing on the Nasdaq SmallCap Market
under  the  trading  symbol  "CMEE"  on July 17, 2000.  The application is under
review  by  Nasdaq.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF  OPERATIONS
--------------


The following discussion of the financial condition and results of operations of
the  Company should be read in conjunction with the financial statements and the
related  notes  thereto  included elsewhere in this annual report for the fiscal
year  ended  June 30, 2000.  This annual report contains certain forward-looking
statements,  (see  Certain  Factors  That  May  Affect  Future  Results) and the
Company's  future operating results could differ materially from those discussed
herein.


INTRODUCTION

The Company was formed in July 1996, to develop, establish, and market Web-based
E-commerce  solutions  for  retailers  and  their  supply  chains.  The business
strategy  of  the Company is focused on establishing collaborative relationships
with  U.S.-based retailers wherein the Company will provide the retailer with an
ISN  in  return  for their assistance in marketing the ISN to their supply chain
vendors.  After  establishing  ISNs for these collaborative retail partners, the
Company  intends to use the Internet's near-global accessibility to expand these
retailers'  supply  chains  to  foreign-producing  countries,  primarily  in the
Pacific  Rim.

To  date,  the Company's primary activities have involved developing its VTS and
ISN software and database, organizing its sales force, and marketing its VTS and
ISN.  Research and development costs are expensed as incurred.  Selling expenses
consist  primarily of salaries, commissions, and administrative costs associated
with  the Company's payroll and marketing personnel.  General and administrative
expenses  include the costs of consultants and other administrative functions of
the  Company.

FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS

Fiscal  year  ended  June  30,  2000,  compared  to  year  ended  June  30, 1999

The following discussion sets forth information for the twelve months ended June
30, 2000, compared with the twelve months ended June 30, 1999.  This information
has  been  derived  from  audited  financial statements of the Company contained
elsewhere  in  this  Form  10-KSB.


Subscriber  fees  increased  $7,720 (116%) to $55,530 in the year ended June 30,
2000 from $47,810 in the prior year.  The financial statements have been revised
to  restate the revenue recognized by the Company during the year ended June 30,
2000  as  discussed in Note 4 to the financial statements, which is incorporated
herein  by  reference.


Cost of revenue increased $124,668 (116%) to $232,492 in the year ended June 30,
2000  from  $107,824  in  the  prior  year.  The  increase  was due mainly to an
increase  in  internal  personnel  and  consultants  to maintain and improve the
Company's  operating  systems.

General  and  administrative  expenses increased $390,073 (60%) to $1,042,205 in
the  year  ended  June 30, 2000 from $652,132 in the prior year. The increase of
$390,073 was due mainly to the following: approximately $166,500 of compensation
expense  as a result of adding a new President and a new Chief Operating Officer
to  the  management  of  the  Company;  approximately   $133,500   of   external
professional  services;  approximately  $65,000  of travel and lodging expenses,
primarily  to  establish  foreign  joint  ventures; and approximately $25,000 of
moving  expenses  and  office  supplies,  as  the  Company  relocated to its new
location  in  Pasadena,  California.


                                       27
<PAGE>
During  the  fiscal  year  ended  June 30, 2000, the Company granted 105,000 and
1,655,315  stock  options,  under  its  1996  and  1999  Stock   Option   Plans,
respectively.  In  accordance  with  APB  No.  25  and  SFAS  123,  the  Company
recognized  a  stock-based compensation expense of $2,122,631.  The notes to the
financial  statements,  specifically,  Notes  6  and  7  describe  in detail the
accounting  required  under  generally  accepted  accounting  practices.

Interest  income  increased $80,713 (461%) to $98,205 in the year ended June 30,
2000  from  $17,492  in  the  prior  year.  The  increase was mainly due to cash
investments  in  long-term certificates of deposit, as a result of the Company's
initial  public  offering  in  July 1999.  In addition, the Company recognized a
$74,573  loss from its investment in C-ME.com Taiwan, under the equity method of
accounting.


Net  loss  per share increased $0.41 (342%) to $0.53 per share in the year ended
June  30, 2000 from $0.12 in the prior year.  The increase in the loss per share
is  mainly  due to the recognition of non-cash stock-based compensation expense,
which  accounted  for  $0.34  per  share.


Fiscal  year  ended  June  30,  1999  compared  to  year  ended  June  30,  1998

The following discussion sets forth information for the twelve months ended June
30, 1999, compared with the twelve months ended June 30, 1998.  This information
has  been  derived  from  audited  financial statements of the Company contained
elsewhere  in  this  annual  report.

For  the  twelve  months  ended June 30, 1999, the Company had revenues totaling
$47,810, representing a decrease of $17,912 from the same period a year ago, due
to  the  Company's  shift  in  focus  from marketing its services to the Initial
Public  Offering's  process,  resulting  in  a decline in fees received from the
users  of  the  Company's  VTS,  ISN  and  Web  design  services.  The Company's
operating expenses for the twelve months ended June 30, 1999, totaling $759,956,
consisted  of  $107,824  for  the  cost  of  revenue  and  $652,132  for general
administration  and  selling expenses, representing an increase of $107,427 from
the  twelve  months  ended  June 30, 1998 due to approximately $250,000 expenses
related to the IPO process.  Consequently, the Company experienced a net loss of
$695,454  for  the  fiscal  year  ended  June 30, 1999 compared to a net loss of
$571,360  for  1998.

RECENT  ACCOUNTING  PRONOUNCEMENTS

In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities"  (SFAS  No.  133).  SFAS No. 133 requires companies to recognize all
derivatives  contracts  as either assets or liabilities in the balance sheet and
to  measure them at fair value.  If certain conditions are met, a derivative may
be  specifically  designated  as a hedge, the objective of which is to match the
timing  of  gain  or  loss  recognition  on  the  hedging  derivative  with  the
recognition  of  (i)  the  changes  in  the  fair  value  of the hedged asset or
liability  that  are attributable to the hedged risk or (ii) the earnings effect
of  the  hedged  forecasted  transaction.  For  a derivative not designated as a
hedging  instrument,  the  gain or loss is recognized in income in the period of
change.  SFAS  No.  133  is  effective  for  all fiscal quarters of fiscal years
beginning  after  June  15,  2000.

Historically,  the  Company has not entered into derivatives contracts either to
hedge existing risks or for speculative purposes.  Accordingly, the Company does
not  expect  adoption  of  the  new  standard  on  January 1, 2001 to affect its
financial  statements.


                                       28
<PAGE>
In  December  1999,  the  SEC  staff released Staff Accounting Bulletin No. 101,
"Revenue  Recognition  in  Financial  Statements" ("SAB 101").  SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in  the  financial  statements.  SAB  101  must  be  applied  to  the  financial
statements  no  later  than  the quarter ending September 30, 2000.  The Company
does not believe that the adoption of SAB 101 will have a material affect on the
Company's  financial  results.

In  March  2000,  the Financial Accounting Standards Board issued Interpretation
No.  44  ("FIN  44")  Accounting  for  Certain  Transactions  Involving  Stock
Compensation,  an  Interpretation  of  APB Opinion No. 25.  FIN 44 clarifies the
application  of  APB  No.  25 for (a) the definition of employee for purposes of
applying  APB  No. 25, (b) the criteria for determining whether a plan qualifies
as  a  non-compensatory  plan,  (c)  the  accounting  consequences  of  various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for  an  exchange  of  stock  compensation awards in a business
combination.  FIN  44  is  effective July 2, 2000, but certain conclusions cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
The  Company  has  adopted  FIN  44  in accounting for the stock options granted
during  the  year  ended  June  30,  2000.

In  March  2000,  EITF  00-2  "Accounting  for  Web  Site Development Costs" was
released.  EITF 00-2 provides guidance on how an entity should account for costs
involved in such areas as planning, developing software to operate the web site,
graphics,  content, and operating expenses.  EITF 00-2 is effective for web site
development  costs  incurred  for fiscal quarters beginning after June 30, 2000.

STATUS  OF  OPERATIONS


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

LIQUIDITY  AND  CAPITAL  RESOURCES

The  Company's  working capital increased from $1,966,950 as of June 30, 1999 to
$6,024,581  as  of  June  30,  2000,  primarily  due  to  the successful private
placement  of  the  Company's  common  stock  during June of 2000.  However, the
Company  committed  to  invest  $400,000 in E-SEA and $1 million in GP.com as of
June  30,  2000.  During the past twelve months, the Company had average monthly
general  and  administrative expenses (excluding non-cash compensation expenses)
of  approximately  $90,000 as compared to $55,000 in 1999.  With working capital
of  approximately  $6.0  million and an average monthly expense of approximately
$90,000,  the  Company  believes  it  has  a  high  level  of  liquidity.


On June 30, 2000, the Company closed a private placement offering, which secured
equity  funding of more than $6.1 million.  The Company sold 1,255,900 shares of
common  stock  at  $4.878  per  share in connection with this transaction.   The
consideration  for  the  common  stock consisted only of cash.  No warrants were
issued.  Cash  proceeds  from  the  offering  will be used for general corporate
purposes.

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


                                       29
<PAGE>
The  Company  plans  over the next two to five years to utilize a combination of
internally  generated  funds  from  operations,  potential  debt and / or equity
financings  to  fund  its  longer-term  growth.  The  availability  of  future
financings  will  depend  on  market  conditions.

On  January  12,  2000,  the  Company  entered  into  a revolving line of credit
agreement  with a commercial bank for up to $600,000.  Borrowing under this line
of  credit  bears  interest at 6.56% per annum and is secured by a $700,000 time
certificate  of  deposit at the bank.  The line of credit will expire on January
2, 2001.  During the year ended June 30, 2000, the Company borrowed $299,834 and
paid  the  full  amount  in  April  2000.

CERTAIN  FACTORS  THAT  MAY  AFFECT  FUTURE  RESULTS


From  time  to time, information provided by the Company, statements made by its
employees,  or  information  included  in  its  filings  with the Securities and
Exchange  Commission  (including this Form 10-KSB) may contain statements, which
are  not  historical  facts,  known  as  "forward-looking  statements".  These
forward-looking  statements  are  made pursuant to the safe harbor provisions of
the  Private  Securities  Litigation  Reform  Act of 1995.  The Company's actual
future results may differ significantly from those stated in any forward-looking
statements.  Forward-looking  statements  involve  a  number  of  risks  and
uncertainties,  including,  but  not limited to, product demand, pricing, market
acceptance,  litigation,  intellectual  property  rights,  risks  in product and
technology  development,  product  competition, limited number of customers, key
personnel, potential transactions and other risk factors detailed in this Annual
Report  on  Form  10-KSB  and  in  the  Company's  other Securities and Exchange
Commission  filings.


In  light  of  the "safe harbor" provisions of the Private Securities Litigation
Reform  Act  of  1995, the Company hereby identifies the following factors which
could  cause  actual  results  to  differ materially from those reflected in any
forward  looking  statement  made  by  or  on behalf of the Company: reliance on
collaborative  retail  partners;  market  acceptance  of  Company  products  and
services;  changing  business  conditions or technologies in the industry, which
could  affect  demand  for  the  Company's  products and services; the impact of
competition;  problems  with  technology;  product  development  schedules;  and
regulatory  factors  beyond  the  Company's  control.

ITEM  7.  FINANCIAL  STATEMENTS
-------------------------------

Financial  statements  and  supplementary  data  are set forth on pages F-1 thru
F-19.

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

None


                                       30
<PAGE>
                                    PART III

ITEM  9.  DIRECTORS,  EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
-----------------------------------------------------------------------------
COMPLIANCE  WITH  SECTION  16(A)  OF  THE  EXCHANGE  ACT
--------------------------------------------------------

The  information  required  by  this item is included under the caption entitled
"Election  of  Directors"  and  "Information  Concerning Directors and Executive
Officers"  in  the  Company's  definitive  proxy statement on Schedule 14A to be
filed  within  120  days  from  June  30,  2000,  and  is incorporated herein by
reference.

ITEM  10.  EXECUTIVE  COMPENSATION
----------------------------------

The  information  required  by  this item is included under the caption entitled
"Executive Compensation" in the Company's definitive proxy statement on Schedule
14A  to  be filed within 120 days from June 30, 2000, and is incorporated herein
by  reference.

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

The  information  required  by  this item is included under the caption entitled
"Security  Ownership  of  Certain  Beneficial  Owners  and  Management"  in  the
Company's definitive proxy statement on Schedule 14A to be filed within 120 days
from  June  30,  2000,  and  is  incorporated  herein  by  reference.

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

The  information  required  by  this item is included under the caption entitled
"Certain  Relationships  and  Related  Transactions" in the Company's definitive
proxy  statement on Schedule 14A to be filed within 120 days from June 30, 2000,
and  is  incorporated  herein  by  reference.


                                       31
<PAGE>

<TABLE>
<CAPTION>
ITEM  13.  EXHIBITS  AND  REPORTS  ON  FORM  8-K
------------------------------------------------

EXHIBITS

 EXHIBIT
  NUMBER    DESCRIPTION
----------  -----------
<S>         <C>

      3.1*  Articles of Incorporation

      3.2*  Bylaws

     4.1**  Lock-Up Agreement

  4.2*****  Specimen Stock Certificate for Shares of Common Stock of the Company

      4.3*  Warrant expiring October 15, 2002 issued by the Company to Burlington Coat
            Factory Warehouse Corporation on October 15, 1997

  4.4*****  Warrant expiring February 10, 2004 issued by the Company to Imperial Bank on
            February 10, 1999

    4.5***  Warrant expiring May 25, 2005 issued by the Company to Factory 2-U on May
            25, 2000

     10.1*  Lease of registrant's facilities

     10.2*  Participation  Agreement with Burlington Coat Factory Warehouse Corporation

     10.3*  Contract with Family Bargain Corporation

     10.4*  Employment contract with David Rau

     10.5*  Escrow Agreement with Union Bank of California

     10.6*  1996 World Wide Magic Net, Inc. Stock Option Plan

 10.7*****  Employment contract with John F. Busey

 10.8*****  Employment contract with Serena Kokjer-Greening

 10.9*****  1999 Stock Option Plan

10.10*****  Software Sales Agreement to Global Purchasing Dotcom

10.11*****  Software Sales Agreement to eSEA Co., LTD

10.12*****  Software Sales Agreement to C-ME.com Taiwan

10.13*****  Joint Venture Agreement with Good Support International, Limited


                                       32
<PAGE>
10.14*****  Joint Venture Agreement with Vickem Patana Co., Ltd.

10.15*****  Joint Venture Agreement with Abest Tech Company, Ltd.

10.16*****  Factory 2-U Stores, Inc. - Joint Marketing and Cooperation Agreement

10.17*****  Retex Master Purchase Agreement

10.18*****  Individual Agreement - (IMA) Retex

  16.1****  Letter from KPMG LLP

 23.1*****  Consent of BDO Seidman LLP, Independent Certified Public Accountants

   27.1     Financial Data Schedule
</TABLE>

*    Filed  as  an Exhibit to the Company's Registration Statement on Form SB-2,
     Amendment  No. 5 on May 6, 1999, and incorporated herein by this reference.

**   Filed  on  January  27,  2000 as an Exhibit to a report by the Company on a
     Form  8-A  dated  January  27,  2000.

***  Filed  on July 18, 2000, as an Exhibit to a report by the Company on a Form
     8-K  dated  June  30,  2000.

**** Filed  on  October  1,  1999, as an Exhibit to a report by the Company on a
     Form  8-K  dated  June  30,  1999.

*****Previously  filed  with  the  Commission  on  September  29,  2000.

REPORTS  ON  FORM  8-K

No reports on Form 8-K were filed by the Company during the fourth quarter ended
June  30,  2000.


                                       33
<PAGE>
                                   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.

                        By:  /s/  John  F.  Busey
                           ------------------------------
                           John  F.  Busey
                           President

                        Date:  May 11,  2001
                             -----------------


In  accordance  with  the Exchange Act, this report has been signed below by the
following  persons  on behalf of the registrant and in the capacities and on the
dates  indicated.

                        By:  /s/  Frank  S.  Yuan            Date: May 11, 2001
                           -------------------------              -------------
                           Frank  S.  Yuan
                           Chief Executive Officer


                        By:  /s/  John  F.  Busey            Date: May 11, 2001
                           -------------------------              -------------
                           John  F.  Busey
                           President,  Director


                        By:  /s/  Charles  Rice              Date: May 11, 2001
                           -------------------------              -------------
                           Charles  Rice
                           Director


                        By:  /s/  Deborah  Shamaley          Date: May 11, 2001
                           -------------------------              -------------
                           Deborah  Shamaley
                           Director



                                       34
<PAGE>
                         CYBER MERCHANTS EXCHANGE, INC.
                                 D.B.A. C-ME.COM



                            _______________________




                     REPORT ON AUDITED FINANCIAL STATEMENTS


                   FOR THE YEARS ENDED JUNE 30, 1999 AND 2000



                             _______________________



REPORTS  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS                     F-2


CONSOLIDATED  FINANCIAL  STATEMENTS

              Balance  Sheets                                                F-3

              Statements  of  Operations                                     F-4

              Statements  of  Shareholders'  Equity                          F-5

              Statements  of  Cash  Flows                                    F-6


         NOTES  TO  FINANCIAL  STATEMENTS                                    F-7


                                      F-1
<PAGE>
                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT



The  Board  of  Directors
Cyber Merchants Exchange, Inc.
d.b.a.C-ME.com


We  have  audited  the  accompanying balance sheets of Cyber Merchants Exchange,
Inc.  (the  Company),  d.b.a.  C-ME.com,  as  of  June 30, 1999 and 2000 and the
related  statements  of  operations, shareholders' equity and cash flows for the
years  then  ended.  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  audits.

We  conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  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  audits  provide  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.,
d.b.a.  C-ME.com, as of June 30, 1999 and 2000 and the results of its operations
and  its  cash  flows  for  the  years  then  ended in conformity with generally
accepted  accounting  principles.


As discussed in Note 4 to the financial statements, the financial statements for
2000 have been restated to adjust the Company's accounting for its investment in
its  joint  ventures.

                                   BDO  Seidman,  LLP




Los Angeles, California
September 5, 2000, except for Note 4
as to which the date is April 26, 2001



                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                         CYBER MERCHANTS EXCHANGE, INC.
                                 D.B.A. C-ME.COM

                                 BALANCE SHEETS

                                                                           June 30,
                                                                   --------------------------
                                                                       1999          2000
                                                                   ------------  ------------
                                                                                  (Restated)
<S>                                                                <C>           <C>
ASSETS

Current assets:
 Cash and cash equivalents (Note 4)                                $   595,265   $ 1,274,395
 Certificates of deposit (Notes 4 and 8)                             1,500,200     3,900,000
 Stock subscription receivable (Note 6)                                 96,984     1,481,240
 Accounts receivable, net of allowance for doubtful accounts of
  $5,990 and $4,640                                                     8,150         54,693
 Prepaid expenses                                                            -         5,367
                                                                   ------------  ------------

Total current assets                                                 2,200,599     6,715,695

Furniture, fixtures and equipment, net (Note 2)                         38,540        63,937
Investment in ABNet (Note 3)                                                 -     1,000,000
Investments in overseas joint ventures (Note 4)                              -       (49,573)
Other assets                                                             3,143         3,619
                                                                   ------------  ------------

Total assets                                                       $ 2,242,282   $ 7,733,678
                                                                   ============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accrued expenses                                                  $   230,139   $   691,114
 Deferred revenue                                                        3,510             -
                                                                   ------------  ------------
Total current liabilities                                              233,649       691,114
                                                                   ------------  ------------

Commitments and contingency (Note 9)

Shareholders' equity (Notes 6 and 7):
 Common stock, no par value; 40,000,000 shares authorized;
  6,003,170 shares and 7,589,669 shares issued and outstanding at
  June 30, 1999 and 2000, respectively                               3,169,034     8,550,777
 Additional paid-in capital                                             30,000     3,332,827
 Common stock subscribed (Note 6)                                      664,024     1,481,240
 Unearned stock compensation                                                 -    (1,180,196)
 Accumulated deficit                                                (1,854,425)   (5,142,084)
                                                                   ------------  ------------
Total shareholders' equity                                           2,008,633     7,042,564
                                                                   ------------  ------------
Total liabilities and shareholders' equity                         $ 2,242,282   $ 7,733,678
                                                                   ============  ============
</TABLE>

                 See accompanying notes to financial statements.


                                      F-3
<PAGE>

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

                            STATEMENTS OF OPERATIONS

                                                         Years Ended June 30,
                                                       -------------------------
                                                          1999          2000
                                                       -----------  ------------
                                                                    (Restated)
<S>                                                    <C>          <C>
Revenues:
 Subscribers' fees                                     $   47,810   $    55,530

Cost of revenue                                           107,824       232,492
                                                       -----------  ------------

Gross profit (loss)                                       (60,014)     (176,962)
                                                       -----------  ------------

Operating expenses:
 General and administrative expenses                      652,132     1,042,205
 Stock-based compensation (Notes 6 and 7)                       -     2,122,631
                                                       -----------  ------------

Total operating expenses                                  652,132     3,164,836
                                                       -----------  ------------

Operating loss                                           (712,146)   (3,341,798)

Other income (expenses):
 Interest income, net                                      17,492        98,205
 Gain from amortization of negative goodwill                    -        25,000
 Equity in loss of C-ME/Taiwan                                  -       (74,573)
 Other                                                          -         7,222
                                                       -----------  ------------

Loss before income taxes                                 (694,654)   (3,285,944)

Income taxes (Note 5)                                         800         1,715

Net loss                                               $ (695,454)  $(3,287,659)
                                                       ===========  ============

Basic and diluted net loss per share (Note 1)          $    (0.12)  $     (0.53)
                                                       ===========  ============

Weighted-average number of common shares outstanding    5,793,889     6,228,249
                                                       ===========  ============
</TABLE>

                 See accompanying notes to financial statements.


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

                                          STATEMENTS OF SHAREHOLDERS' EQUITY
                           YEARS ENDED JUNE 30, 1999 AND 2000 (NOTES 6 AND 7) (RESTATED)


                                    Common Stock       Additional     Common        Unearned                         Total
                                ---------------------   Paid-In       Stock       Stock-Based     Accumulated     Shareholders'
                                 Shares      Amount     Capital     Subscribed    Compensation      Deficit          Equity
                                =========  ==========  ==========  ============  ==============  ==============  ==============
<S>                             <C>        <C>         <C>         <C>           <C>             <C>             <C>

BALANCE, June 30, 1998          5,750,000  $1,550,000  $   30,000  $         -   $           -   (1,158,971)     $     421,029

Issuance of common stock          253,170   1,619,034           -            -               -            -          1,619,034
Subscription of common stock            -           -           -      664,024               -            -            664,024
Net loss                                -           -           -            -               -     (695,454)          (695,454)
                                ---------  ----------  ----------  ------------  --------------  --------------  --------------

BALANCE, June 30, 1999          6,003,170   3,169,034      30,000      664,024               -   (1,854,425)         2,008,633

Proceeds from stock
  subscribed                       83,003     664,024           -     (664,024)              -            -                  -
Issuance of common stock          111,000     999,980           -            -               -            -            999,980
Private placement               1,255,900   3,711,719           -    1,475,240               -            -          5,186,959
Options exercised with cash
  proceeds                        105,000       6,020           -        6,000               -            -             12,020
Options exercised without cash
  proceeds                         31,596           -     265,102            -               -            -            265,102
Compensation cost for options
granted under the 1996 Option
  Plan                                  -           -     275,800            -               -            -            275,800
Compensation cost for options
granted under the 1999 Option
  Plan                                  -           -   2,077,187            -               -            -          2,077,187
Compensation for warrants
  granted                               -           -     684,738            -               -            -            684,738
Unearned stock-based
  compensation                          -           -           -            -      (1,180,196)           -         (1,180,196)
Net loss                                            -           -            -               -   (3,387,659)        (3,387,659)
                                ---------  ----------  ----------  ------------  --------------  --------------  --------------

BALANCE, June 30, 2000          7,589,669  $8,550,777  $3,332,827  $ 1,481,240   $  (1,180,196)  (5,142,084   )  $   7,042,564
                                =========  ==========  ==========  ============  ==============  ==============  ==============
</TABLE>

                 See accompanying notes to financial statements.


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                          CYBER MERCHANTS EXCHANGE, INC.
                                                  D.B.A. C-ME.COM

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

                                                                             Years Ended June 30,
                                                                           --------------------------
                                                                               1999          2000
                                                                           ------------  ------------
                                                                                           (Restated)
<S>                                                                        <C>           <C>
Cash flows from operating activities:
 Net loss                                                                  $  (695,454)  $(3,287,659)
 Adjustments to reconcile net loss to net cash used in
   operating activities:
   Depreciation and amortization                                                40,281        36,545
   Gain from amortization of negative goodwill                                       -       (25,000)
   Loss on investment in Taiwan                                                      -        74,573
   Provision for doubtful accounts                                               2,390         7,803
   Compensation cost for options granted (Note 7)                                    -     1,172,791
   Compensation cost for warrants granted (Note 7)                                   -       684,738
   Compensation cost for options exercised without cash proceeds (Note 6)            -       265,102
   Changes in assets and liabilities:
     Accounts receivable                                                        (3,063)      (54,346)
     Prepaids                                                                        -        (5,367)
     Other assets                                                                1,419          (476)
     Accounts payable and accrued expenses                                     182,637       460,975
     Deferred revenue                                                             (455)       (3,510)
                                                                           ------------  ------------
Net cash used in operating activities                                         (472,245)     (673,831)
                                                                           ------------  ------------

Cash flows from investing activities:
 Investment in certificates of deposit                                      (1,500,200)   (2,399,800)
 Investment in ABNet                                                                 -    (1,000,000)
 Proceeds from maturity of certificates of deposit                             300,000             -
 Purchase of office equipment                                                        -       (61,942)
 Proceeds received from note receivable                                              -             -
                                                                           ------------  ------------
Net cash provided by (used in) investing activities                         (1,200,200)   (3,461,742)
                                                                           ------------  ------------

Cash flows from financing activities:
 Proceeds from borrowings under line of credit                                 275,000       299,834
 Repayments of borrowings under line of credit                                (275,000)     (299,834)
 Proceeds received from stock subscribed                                       567,040        96,984
 Proceeds from issuance of common stock                                      1,619,034       999,980
 Proceeds from private placement                                                     -     3,711,719
 Proceeds from options exercised                                                     -         6,020
                                                                           ------------  ------------

Net cash provided by financing activities                                    2,186,074     4,814,703
                                                                           ------------  ------------

Net increase in cash and cash equivalents                                      513,629       679,130

Cash and cash equivalents, beginning of year                                    81,636       595,265
                                                                           ------------  ------------
Cash and cash equivalents, end of year                                     $   595,265   $ 1,274,395
                                                                           ============  ============
Supplemental disclosure of cash flow information:
 Cash paid during the year for:
   Interest                                                                $     2,871   $     4,187
   Income taxes                                                                    800           800
                                                                           ============  ============
</TABLE>


                 See accompanying notes to financial statements.


                                      F-6
<PAGE>
                          NOTES TO FINANCIAL STATEMENTS

NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Cyber  Merchants  Exchange (the Company), d.b.a. C-ME.com, was established under
the laws of the State of California in July 1996 and was formerly known as World
Wide  Magic  Net,  Inc.

The  Company  is  engaged  in  developing  and  marketing  Internet  based
business-to-business  e-commerce  network  services  to  the retailers and their
worldwide  vendors.  The  Company  provides a private extranet sourcing network,
whereby a retailer can go on-line, review vendors' product information, and make
purchases  through the network developed and maintained by the Company. A vendor
pays  a  one-time setup fee and a monthly subscription fee, through the network,
to  display  its products and receive real time responses, inquiries, and orders
from  these  retailers.  Retailers  pay a 5% commission on merchandise purchased
from  overseas  through  the  Company's  system.

The  Company  also  provides  paid  vendors  with  additional  services  such as
customized  web  design and hosting services, and Virtual Trade Show, which is a
continuous  revolving product forum showcase that allows buyers to freely search
for  products.

REVENUE  RECOGNITION

Subscribers' fees represent revenues generated through a one-time, nonrefundable
setup  fee and monthly hosting fees.  Revenues are recognized after the services
have  been  rendered and no significant vendor obligation remains.  Unearned but
billed  revenues  are  deferred.

CASH  AND  CASH  EQUIVALENTS

The  Company  considers all highly liquid financial instruments with an original
maturity  of  three  months  or  less  to  be  cash  and  cash  equivalents.

FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

The  carrying  value  of  financial instruments, including cash, certificates of
deposit,  accounts  receivable, and accounts payable, approximate fair value due
to  their  short  maturity.

INVESTMENT  IN  OVERSEAS  JOINT  VENTURES  AND  ABNET

Investments  in  overseas  joint  ventures  are  accounted  for under the equity
method.  Investment  in  ABNet is accounted for under the cost method and valued
at  the  lower  of  cost  or  net  realizable  value.

FURNITURE,  FIXTURES  AND  EQUIPMENT

Furniture,  fixtures and equipment are stated at cost.  Depreciation of property
and  equipment  is  calculated  on  the  straight-line method over the estimated
useful  lives  of  the  assets,  generally  three  to  five  years.  Leasehold
improvements  are  amortized  over  the shorter of the amortized useful lives or
lease  term.

Maintenance,  repairs  and  minor  renewals  are  charged directly to expense as
incurred.  Additions  and betterments to property and equipment are capitalized.
When  assets  are  disposed  of,  the  related cost and accumulated depreciation
thereon are removed from the accounts and any resulting gain or loss is included
in  the  statement  of  operations.


                                      F-7
<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

IMPAIRMENT  OF  LONG-LIVED  ASSETS

Statement  of  Financial  Accounting  Standards  No.  121,  "Accounting  for the
Impairment  of  Long-Lived  Assets  and  Long-Lived  Assets  to be Disposed Of,"
establishes  guidelines  regarding  when impairment losses on long-lived assets,
which  include plant and equipment and investment in equity securities of ABNet,
should  be recognized and how impairment losses should be measured.  The Company
periodically  reviews  such assets for possible impairments and expected losses,
if  any,  are  recorded  currently.

INCOME  TAXES

The Company accounts for income taxes using the liability method, which requires
an  entity  to  recognize  deferred tax liabilities and assets.  Deferred income
taxes  are  recognized  based on the differences between the tax bases of assets
and  liabilities  and  their  reported amounts in the financial statements which
will  result  in  taxable  or  deductible amounts in future years.  Further, the
effects of enacted tax laws or rate changes are included as part of deferred tax
expenses  or benefits in the period that covers the enactment date.  A valuation
allowance  is recognized if it is more likely than not that some portion, or all
of,  a  deferred  tax  asset  will  not  be  realized.

USE  OF  ESTIMATES

The  preparation  of  financial  statements  in  conformity  with U.S. generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  amounts  of assets and liabilities and
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements  and  the  reported  amounts  of  revenues  and  expenses  during the
reporting  period.  Among  the  more  significant  estimates  included  in these
financial  statements  are the estimated allowance for doubtful accounts and the
valuation  allowance  for  deferred  income assets.  Actual results could differ
from  those  estimates.

STOCK-BASED  COMPENSATION

Statements of Financial Accounting Standards No. 123 "Accounting for Stock-Based
Compensation"  (SFAS  123)  establishes  a  fair  value method of accounting for
stock-based  compensation plans and for transactions in which an entity acquires
goods  or  services  from  nonemployees in exchange for equity instruments.  The
Company  adopted  this  accounting  standard  on January 1, 1999.  SFAS 123 also
encourages,  but does not require companies to record compensation utilizing the
intrinsic value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting  for Stock Issued to Employees."  Accordingly, compensation cost for
stock options is measured as the excess, if any, of the fair market price of the
Company's stock at the date of the grant over the amount an employee must pay to
acquire  the  stock.

EARNINGS  (LOSS)  PER  SHARE

The  Financial  Accounting  Standards  Board  issued  Statement  of  Financial
Accounting  Standards  No.  128,  "Earnings  per  Share"  (SFAS No. 128).  Basic
earnings  per  share  excludes  any  diluted  effects  of options, warrants, and
convertible  securities.  Diluted  earnings  per  share is based on the weighted
average number of common shares outstanding as well as dilutive potential common
shares,  such  as  options,  warrants  and other convertible securities.  As the
Company  suffered  losses  for the years ended June 30, 1999 and 2000, the basic
loss  per  share  and  diluted  loss  per  share  are  identical.


                                      F-8
<PAGE>
NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES  (CONTINUED)

CURRENT  VULNERABILITY  DUE  TO  CERTAIN  CONCENTRATIONS

Certain  financial  instruments,  principally  trade  receivables,  potentially
subject  the  Company  to  credit  risk.  The  Company  performs  ongoing credit
evaluations  of  its  customers  but  does  not require collateral.  The Company
maintains  an  allowance  for  doubtful  receivable and sales returns based upon
factors surrounding the credit risk of specific customers, historical trends and
the  Company's  estimate  of  future  product  returns.

The  Company  invested  $2,830,000,  $500,000,  $1,200,000,  and  $300,000  in
certificates  of  deposit  at four different banks, respectively, as of June 30,
2000.  These  certificates  mature  from  six  months  to 20 months.  The amount
invested  at  each  bank  exceeded the FDIC insurance coverage limit ($100,000).

RECLASSIFICATION

Certain  reclassifications  have  been made to conform the prior year's with the
current  year's  presentation.

NEW  ACCOUNTING  STANDARDS  NOT  ADOPTED  YET

In  June  1998,  the  Financial  Accounting  Standards Board issued Statement of
Financial  Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities"  (SFAS  No.  133).  SFAS No. 133 requires companies to recognize all
derivatives  contracts  as either assets or liabilities in the balance sheet and
to  measure them at fair value.  If certain conditions are met, a derivative may
be  specifically  designated  as a hedge, the objective of which is to match the
timing  of  gain  or  loss  recognition  on  the  hedging  derivative  with  the
recognition  of  (i)  the  changes  in  the  fair  value  of the hedged asset or
liability  that  are attributable to the hedged risk or (ii) the earnings effect
of  the  hedged  forecasted  transaction.  For  a derivative not designated as a
hedging  instrument,  the  gain or loss is recognized in income in the period of
change.  SFAS  No.  133  is  effective  for  all fiscal quarters of fiscal years
beginning  after  June 15, 2000.  Historically, the Company has not entered into
derivatives  contracts  either  to  hedge  existing  risks  or  for  speculative
purposes.  Accordingly, the Company does not expect adoption of the new standard
on  January  1,  2001  to  affect  its  financial  statements.

In  December  1999,  the  SEC  staff released Staff Accounting Bulletin No. 101,
"Revenue  Recognition  in  Financial  Statements" ("SAB 101").  SAB 101 provides
interpretive guidance on the recognition, presentation and disclosure of revenue
in  the  financial  statements.  SAB  101  must  be  applied  to  the  financial
statements  no  later  than  the quarter ending September 30, 2000.  The Company
does not believe that the adoption of SAB 101 will have a material affect on the
Company's  financial  results.

In  March  2000,  the Financial Accounting Standards Board issued Interpretation
No.  44  ("FIN  44")  Accounting  for  Certain  Transactions  Involving  Stock
Compensation,  an  Interpretation  of  APB Opinion No. 25.  FIN 44 clarifies the
application  of  APB  No.  25 for (a) the definition of employee for purposes of
applying  APB  No. 25, (b) the criteria for determining whether a plan qualifies
as  a  non-compensatory  plan,  (c)  the  accounting  consequences  of  various
modifications  to the terms of a previously fixed stock option or award, and (d)
the  accounting  for  an  exchange  of  stock  compensation awards in a business
combination.  FIN  44  is  effective July 2, 2000, but certain conclusions cover
specific  events that occur after either December 15, 1998, or January 12, 2000.
The  Company  has  adopted  FIN  44  in accounting for the stock options granted
during  the  year  ended  June  30,  2000.

In  March  2000,  EITF  00-2  "Accounting  for  Web  Site Development Costs" was
released.  EITF 00-2 provides guidance on how an entity should account for costs
involved in such areas as planning, developing software to operate the web site,
graphics,  content, and operating expenses.  EITF 00-2 is effective for web site
development  costs  incurred  for fiscal quarters beginning after June 30, 2000.
The  Company  is  in  the  process  of  evaluating the effect of adoption on its
financial  statements.


                                      F-9
<PAGE>
NOTE  2  -  PROPERTY  AND  EQUIPMENT

A  summary  of  property  and  equipment  at  cost  is  as  follows:

                                                  June 30,
                                           -----------------------
                                              1999        2000
                                           ----------  -----------
Leasehold improvement                      $   4,351   $    7,261
Furniture and fixtures                        20,844       20,953
Computer equipment and software               98,579      156,710
Office equipment                              16,270       17,065
                                           ----------  -----------

                                             140,044      201,989
Accumulated depreciation and amortization   (101,504)    (138,052)
                                           ----------  -----------

                                           $  38,540   $   63,937
                                           ==========  ===========

Depreciation  expense  was $40,281 and $36,545 for the years ended June 30, 1999
and  2000,  respectively.


NOTE  3  -  INVESTMENT  IN  ABNET  (A  RELATED  PARTY  TRANSACTION)

As  disclosed  in  Note  6,  the  Company  received  proceeds  of  approximately
$1,000,000  in  2000 through the issuance of 111,000 shares of its common stock.
The  shares  were  purchased by ABNet.  The Company, in turn, acquired 1,500,000
shares  of ABNet, representing 15% of the outstanding common stock of ABNet, for
$1,000,000.  The  net  result  of  the transactions is an investment in ABNet of
$1,000,000,  which  represents the then fair value of the Company's common stock
issued.  The Company accounts for its investment in ABNet under the cost method.

NOTE  4  -  INVESTMENTS  IN  OVERSEA  JOINT  VENTURES

On  December  22,  1999,  the  Company entered into an agreement with Abest Tech
Company,  Ltd.  d.b.a. ABNet.tw (ABNet), to form a joint venture in Taiwan named
C-ME.com  Taiwan  to  facilitate  the  buying  and  selling  activities  between
U.S.-based  retailers and Taiwan-based exporters through the Company's web-based
communication system.  The Company invested $300,000 (which was used to purchase
a  set  of  software  from  the Company) for a 30% interest in February 2000 and
accounts  for  this investment under the equity method. As of June 30, 2000, the
Company recognized an investment loss from this Taiwan joint venture of $49,573.

On March 11, 2000, the Company entered into an agreement with Vickem Patana Co.,
Ltd.,  a  Thailand  Corporation, to form a joint venture named E-SouthEast Asia,
Inc.  (E-SEA)  a  Delaware  Corporation which will use the Company's proprietary
web-based communication system to facilitate the front-end merchandise sourcing.
The Company invested $400,000 ($300,000 of which is to be used to purchase a set
of  software  from the Company) for a 40% equity interest subsequent to June 30,
2000.
On  March  25,  2000,  the  Company  entered into an agreement with Good Support
International Limited, a British Virgin Islands Company, to form a joint venture
named  Global Purchasing Dotcom, Inc. (GP.com), a Washington Company, which will
focus  on implementing several targeted businesses in China's e-commerce market.
The  Company  invested $1 million ($400,000 of which is to be used to purchase a
set  of  software from the Company) for a 50% equity interest subsequent to June
30,  2000.


                                      F-10
<PAGE>
NOTE  4  -  INVESTMENTS  IN  OVERSEA  JOINT  VENTURES  (CONTINUED)

During  fiscal year 2000, each of C-ME/Taiwan, E-SEA, and GP.com entered into an
agreement  to  purchase  the  Company's  software  for  $300,000,  $300,000  and
$400,000,  respectively.  The  amount  due  from C-ME/Taiwan was received during
fiscal 2000 and the remaining amounts were received by the Company subsequent to
June 30, 2000.  The Company has reduced the carrying amount of its investment in
each  of  the  joint ventures by the amount of the software sale.  These amounts
will  be  recognized  in  income as an adjustment to the Company's equity in the
operating  results  of  the joint ventures on a straight line basis over a three
year  period,  the  estimated  life  of  the  software  sold.

Previously  issued  financial  statements  for  the  year  ended  June 30, 2000,
reported  revenue of $590,000 resulting from the foregoing sales, rather than as
a  reduction of the Company's investment. This amount represented the percentage
of  each  of  the  joint  ventures not owned by the Company applied to the sales
amount.  The Company subsequently changed its judgment regarding the recognition
of  revenue and determined that it was more appropriate to recognize this amount
over  the  life  of  the  software  sold.  The  effect of this restatement is to
increase  the  reported net loss by $565,000 and the net loss per share by $0.09
for  the  year  ended  June  30,  2000.

As  of  June 30, 2000, the investment in respective joint venture are summarized
as  follows:

                           C-ME/Taiwan     E-SEA       GP.com        Total
-----------------------------------------------------------------------------

Investment                $    300,000   $ 300,000   $ 400,000   $ 1,000,000
Negative goodwill             (300,000)   (300,000)   (400,000)   (1,000,000)
Amortization of negative
  goodwill                      25,000           -           -        25,000
Equity in loss of joint
  venture                      (74,573)          -           -       (74,573)
-----------------------------------------------------------------------------

Net investment            $    (49,573)   $      -   $        -   $  (49,573)
=============================================================================

NOTE  5  -  RELATED  PARTY  TRANSACTIONS

The  Company  maintains  a certain banking relationship, such as checking, money
market,  certificates  of  deposit  accounts, with a bank of which the Company's
Chairman  and  CEO  is  a  founder  and a shareholder.  As of June 30, 1999, the
Company  had  a cash and cash equivalent balance of $570,209 and certificates of
deposit  of  $300,000 at this bank.  As of June 30, 2000, the Company had a cash
and  cash  equivalents  balance  of  approximately  $26,000  and certificates of
deposit  of  $100,000  at  the  bank.  Management  believes that the Bank offers
competitive  interest  and  services.

NOTE  6  -  INCOME  TAXES

Income  tax  expense  is  comprised  of  the  minimum  state franchise tax.  The
difference  between  the amount of income tax benefit recorded and the amount of
income  tax  benefit  calculated using the U.S. Federal statutory rate of 34% is
due  to  a  valuation  allowance  for  any  benefit  from  net operating losses.


                                      F-11
<PAGE>
NOTE  6  -  INCOME  TAXES  (CONTINUED)

The Company has gross deferred tax assets of $753,000 and $1,250,000 at June 30,
1999  and  2000,  respectively,  relating  principally to the tax effects of net
operating  loss  carryforwards.  In assessing the recoverability of deferred tax
assets,  management considers whether it is more likely than not that the assets
will  be realized.  The ultimate realization of deferred tax assets is dependent
upon  the  generation of future taxable income during the periods in which those
temporary  differences become deductible.  Management considers projected future
taxable  income  and  tax  planning strategies in making this assessment.  Based
upon  the  level  of  historical taxable loss and projections for future taxable
income over the periods in which the deferred tax items are recognizable for tax
reporting  purposes,  management does not believe it is more likely than not the
Company  will  realize  the  benefits  of these differences at June 30, 1999 and
2000.  As  such,  management  has  recorded  a  valuation allowance for the full
amount  of  deferred  tax  assets  at  June  30,  1999  and  2000.

At  June  30,  2000,  the  Company  has  available  net  operating  losses  of
approximately  $3,130,000 and $1,850,000 for Federal and California state income
tax  purposes,  respectively,  to  offset  future  taxable income, if any, which
expire at various dates throughout the year 2015 for Federal income tax purposes
and throughout the year 2005 for California state income tax purposes.  However,
the utilization of net operating losses may be subject to certain limitations as
prescribed  by  Section  382  of  the  Internal  Revenue  Code.

NOTE  7  -  SHAREHOLDERS'  EQUITY


THE  FISCAL  YEAR  OF  1999

On  May  14,  1999,  the  Company  filed  and  effected  its prospectus with the
Securities and Exchange Commission to offer 2,500,000 shares of its common stock
to  the  public.  On  June  1,  1999,  the  Company  launched its initial public
offering  on  a best efforts basis.  The Company issued 253,170 shares of common
stock  at  $8.00  per  share  and  received  $1,619,034 in cash proceeds (net of
$406,326  issuance  cost).  The  Company  also received subscriptions for 83,003
shares  of  its  common stock at $8.00 per share, totaling $664,024.  As of June
30,  1999,  $567,040  in cash was received and the remaining $96,984 in cash was
received  in  July  1999.

In  conjunction  with  its  initial  public  offering,  the Company offered a 7%
commission  to  all broker-dealers based on securities they sold.  The Company's
Chairman and CEO sold certain securities of the Company and received commissions
in  the  amount  of  $41,934  based  on  the  same  commission  percentage.

THE  FISCAL  YEAR  OF  2000

On  February  9,  2000,  the  Board  of  Directors of the Company authorized the
issuance  of 111,000 shares of its restricted common stock at $9.01 per share to
raise  $1  million for business development purposes.  The cash proceeds of this
issuance  were  $999,980,  netting  wire  expenses  of  $20.

In May 2000, the Company conducted a private placement to issue 1,255,900 shares
of  its  common  stock at $4.878 per share.  The private placement was closed on
June  30,  2000  with  net  proceeds  of $5,186,959, netting issuing expenses of
$939,377.  Among  the  net  proceeds, $1,481,240 was received subsequent to June
30,  2000.


                                      F-12
<PAGE>

NOTE  7  -  SHAREHOLDERS'  EQUITY  (CONTINUED)


During the fiscal year ended June 30, 2000, a total of 105,000 options under the
Company's  1996  Stock  Option  Plan  had  been exercised.  The Company received
proceeds  of  $12,020, of which $6,000 was received subsequent to June 30, 2000,
and  issued  105,000  shares  of  its  common  stock  accordingly.

The  Company  adopted  a cashless policy that allows the stock option holders to
exercise  their options without paying any cash.  During the year ended June 30,
2000  the  Company issued a total of 31,596 shares of its common stock, canceled
8,664  options,  and  recognized  an  additional  stock  compensation expense of
$265,102.


NOTE  8  -  STOCK  OPTIONS  AND  WARRANTS


THE  1996  STOCK  OPTION  PLAN

The  Company's 1996 Stock Option Plan (the "1996 Plan") provides for granting of
stock  options  to  employees,  and  non-employee  directors.  The  Company  has
reserved  250,000  shares of common stock for issuance under the 1996 Plan.  The
terms  and  conditions of grants of stock options are determined by the Board of
Directors.  Generally, one-half of the granted options are exercisable after the
employee's  first  year  of  employment.  The  remaining options are exercisable
after  the  end of the employee's third year of employment.  The options granted
will  expire  within  three  months  after  termination  of  employment.

During  the  year  ended June 30, 1999, the Company granted 15,000 options under
1996  Plan  to  a non-employee director at an exercise price of $0.40 per share.
During  the  year  ended June 30, 2000, the Company granted 70,000 options under
the  1996 Plan to all directors for their service during the year ended June 30,
1999  and  35,000 options to four employees as an incentive at an exercise price
of  $0.40  per share.  The Company recognized a total stock compensation expense
of  $275,800,  among  which  $91,000  was  related to employees and $184,800 was
related  to  non-employees.

THE  1999  STOCK  OPTION  PLAN

The  Company's 1999 stock option plan (the "1999 Plan") provides for granting of
stock  options  to  employees,  officers, directors, and other entities who have
made contributions to the Company.  The Company has reserved 2,000,000 shares of
common  stock  for  issuance  under  the  1999  Plan.  The  Board  of  Directors
determines  the  terms and conditions of granting stock options.  Generally, the
vesting  period  is  two  years  allocated  as follows: the first 25% of options
granted are exercisable after the first six months of employment, then 4.16% are
vested each month thereafter.  The 1999 Plan provides for the useful life of the
options  granted  to  be  10 years starting from the date of grant.  The options
granted  expire  within  one  month  after  the  termination  of  employment.

During  the  year  ended June 30, 2000, the Company granted a total of 1,655,315
options  to employees, directors, officers, consultants, attorneys, finders, and
outside  sales representatives.  The exercise prices of options granted vary and
range  from $3.25 to $13.12.  The Company applies APB Opinion No. 25 "Accounting
for Stock Issued to Employees" and related interpretations in accounting for its
stock  option  plans.  As  a  result,  the  Company  recognized  a  total  stock
compensation  expense  of  $2,077,187,  among  which  $1,258,214  was related to
employees  and  $818,  973  was  related  to  non-employees.


NOTE  8  -  STOCK  OPTIONS  AND  WARRANTS  (CONTINUED)


The  stock  compensation  expenses recognized will be amortized over a period of
two  years  based  on  the respective vesting terms.  In the year ended June 30,
2000, the total stock compensation expense included in the net loss for both the
1996  Plan  and  1999  Plan  was  $1,172,791.


                                      F-13
<PAGE>
<TABLE>
<CAPTION>
A  summary  of  changes  in  stock  options during each year is presented below:

                                                                  June 30,
                                                         1999                   2000
                                                ---------------------  ---------------------
                                                             Weighted               Weighted
                                                             Average                 Average
                                                             Exercise               Exercise
                                                  Shares      Price      Shares      Price
                                                ----------  ---------  ----------  ---------
<S>                                             <C>         <C>        <C>         <C>
1996 STOCK OPTION PLAN

Balance outstanding at beginning of year          155,000   $    0.21    120,000   $    0.15
Options granted                                    15,000        0.40    105,000        0.40
Options cancelled                                       -           -       (648)       0.40
Options exercised                                       -           -   (119,352)       0.20
Options terminated                                (50,000)       0.40    (15,000)       0.40
                                                ----------  ---------  ----------  ---------

Options at end of year                            120,000   $    0.15     90,000   $    0.40
                                                ==========  =========  ==========  =========

Options exercisable at end of year                120,000   $    0.15     90,000   $    0.40
                                                ==========  =========  ==========  =========

Weighted-average fair value of options granted
  during the year                                           $    0.40              $    2.64
                                                            =========              =========

1999 STOCK OPTION PLAN

Options outstanding at beginning of year                -   $       -          -   $       -
Options granted                                         -           -  1,655,315        4.33
Options cancelled                                       -           -     (8,016)       3.36
Options exercised                                       -           -    (17,244)       3.36
Options terminated                                      -           -    (27,248)       3.69
                                                ----------  ---------  ----------  ---------

Options at end of year                                  -   $       -  1,602,807   $    4.33
                                                ==========  =========  ==========  =========

Options exercisable at end of year                      -   $       -    769,470   $    7.01
                                                ==========  =========  ==========  =========
Weighted-average fair value of options granted
  during the year                                           $       -              $    1.90
                                                            =========              =========
</TABLE>


                                      F-14
<PAGE>

NOTE  8  -  STOCK  OPTIONS  AND  WARRANTS  (CONTINUED)


The  following  table summarizes information about the stock options outstanding
at  June  30,  2000:


                           Options Outstanding          Options Exercisable
                 ------------------------------------  ----------------------
                                Weighted
                    Number       Average    Weighted     Number     Weighted
                 Outstanding    Remaining    Average   Exercisable   Average
                      at       Contractual  Exercise       at       Exercise
Exercise Price     6/30/00        Life        Price      6/30/00      Price
---------------  ------------------------------------------------------------
    $  0.40           90,000   9.32 years  $    0.40       90,000      $0.40
3.00 to $3.50      1,113,992   9.28 years       3.25      504,072       3.26
4.00 to $13.12       488,815   9.54 years       6.86      265,398       6.44
                  ------------------------------------------------------------

0.40 to $13.12     1,692,807   9.36 years  $    4.14      859,470  $    3.94
=================  ===========================================================

The fair value of the stock options granted during the years ended June 30, 1999
and  2000  was  $0  and $3,426,343, respectively, on the date of grant using the
Black  Scholes  option-pricing  model.  The  pricing  assumptions  used  were as
follows:

                                                                    Year Ended
                                                                   June 30, 2000
                                                                   -------------

Discount rate - bond yield rate                                     5.66 to 6.89
Volatility                                                        16.94 to 17.29
Expected life                                                           2-5
Expected dividend yield                                                  -
                                                                   =============

The  Company  applies  APB  Opinion  No. 25 in accounting for its Plan.  Had the
Company  determined  the  compensation cost based on the fair value at the grant
date for its stock options under SFAS No. 123, the Company's net loss would have
been  increased  to  the  pro  forma  amount  indicated  below:

                                                                     June 30,
                                                                      2000
                                                                  -------------

 Net loss attributable to Common Stock - as reported              $(3,287,659)
 Net loss attributable to Common Stock - pro forma                $(3,822,648)

 Net  loss  per  share  -  as  reported                           $     (0.53)
 Net  loss  per  share  as  pro  forma                            $     (0.61)

The  compensation  cost  was calculated under the minimum-value method using the
assumption  of  a three-year weighted average expected life of the options and a
6%  risk-free  interest  rate.


                                      F-15
<PAGE>

NOTE  8  -  STOCK  OPTIONS  AND  WARRANTS  (CONTINUED)


On  October 15, 1997, the Company entered into an agreement with Burlington Coat
Factory Warehouse Corporation ("BCF").  Under the agreement, the Company and BCF
plan  to  jointly  develop  a network whereby participants of the network can do
business  through  the  Internet.  BCF agrees to use this proprietary network as
its  main  internet  sourcing  method.  BCF  agrees  to  assist in marketing and
promoting  this  network  service to its vendors.  In return, BCF is free to use
the  network  designed  and  maintained  by the Company and will share a certain
portion  of  the  fee  revenue  generated  by this network with the Company.  In
addition,  the  Company  granted a warrant to BCF to allow BCF to purchase up to
10%  of  the  outstanding shares (maximum 676,241 shares as of June 30, 1999) of
common  stock  of  the  Company  on  a  fully  diluted basis, subject to certain
conditions  and  restrictions  as  defined in the warrant agreement.  The common
stock,  if issued to BCF, will have certain registration rights.  As of June 30,
1999,  the  exercise  price  was $4.00 per share.  This agreement will expire on
October  15,  2002.

On  February  10, 1999, the Company issued 20,000 common stock warrants, subject
to  certain  conditions and restrictions as defined in the warrant agreement, at
$8.00  per share to an unrelated bank in addition to the personal guarantee from
the  Chairman  and  President  of the Company in exchange for the extension of a
line  of credit with the Bank (Note 8).  The warrant will expire on February 10,
2004.

The  Company  issued  common  stock  warrants, subject to certain conditions and
restrictions  as  defined in the warrant agreement, to each of the participating
broker-dealers  for  securities  they  sold  during  the initial public offering
period.  The  exercise  price  is  165%  of  the  Company's IPO price ($8.00 per
share).  As of June 30, 1999, there were 10,815 warrants outstanding under these
agreements.  The  warrants  will  expire  on  May  13,  2004.

On  May  25,  2000,  the  Company entered into a joint marketing and cooperation
agreement  with Factory 2-U (NASDAQ: FTUS).  The agreement makes the Company the
exclusive  provider  of  private  extranet merchandise sourcing for Factory 2-U,
sets  joint  marketing  arrangements, and sets a new Factory 2-U policy that all
current and future vendors of Factory 2-U, as part of the cost of doing business
will be required to pay the Company a subscription fee in an amount equal to, at
each  vendor's  selection,  either  $150  per  month or 2.5% of all purchases by
Factory  2-U  from  such vendor.  In addition, the Company granted Factory 2-U a
warrant  that  allows  Factory  2-U  to  purchase  up  to  10% of the issued and
outstanding  shares  of  the Company's common stock immediately after its recent
private placement at the same price at which the shares were sold in the private
placement.  As  of  June 30, 2000, the maximum shares Factory 2-U could purchase
were  838,119  shares at $4.878 per share.  In accordance with SFAS No. 123, the
Company  recognized  expenses  of  $684,738.  The warrant will expire on May 25,
2005.


NOTE  9  -  LINE  OF  CREDIT


During the year ended June 30, 1999, the Company maintained a non-revolving line
of  credit  of  $300,000 with a bank.  Borrowing under the line of credit beared
interest at the bank's prime rate plus 1.5% and was personally guaranteed by the
Company's  Chairman  and  President.  The  Company  issued  20,000  Common Stock
warrant  to  the  bank  (Note  7).  The line of credit expired on June 30, 1999.


                                      F-16
<PAGE>

NOTE  9  -  LINE  OF  CREDIT  (CONTINUED)


On  January  12,  2000,  the  Company  entered  into  a revolving line of credit
agreement with a commercial bank with the maximum amount of $600,000.  Borrowing
under  this  line  of  credit bears interest at 6.56% per annum and secured by a
$700,000  time  certificate  of  deposit  at  the bank.  The line of credit will
expire  on  January  11, 2001.  During the year ended June 30, 2000, the Company
borrowed  $299,834  and  paid  the  full  amount  in  April  2000.


NOTE  10  -  COMMITMENTS  AND  CONTINGENCY


OPERATING  LEASE

The Company leased office space under a non-cancelable operating lease that will
expire  on  September  30,  1999.  The  Company  has  entered  into  another
non-cancelable  operating  lease  agreement,  expiring on September 30, 2002, to
facilitate its principal place of business.  Future minimum lease payments under
noncancelable  operating  leases  as  of  June  30,  2000  are  as  follows:

YEARS  ENDING  JUNE  30,                                               AMOUNT
-----------------------------                                       ------------
      2001                                                          $     42,259
      2002                                                                43,032
      2003                                                                14,474
                                                                    ------------
 Total minimum lease payments                                       $     99,765
                                                                    ============

Rent  expenses  for  the  years  ended June 30, 1999 and 2000 were approximately
$38,000  for  each  year.

Executive  Employment  Agreements

BUSEY  EMPLOYMENT  AGREEMENT

On  October  1,  1999, the Company entered into an employment agreement with Mr.
John  F.  Busey.  Mr. Busey is appointed as President and member of the board of
directors  of  the  Company,  effective  October  1,  1999 for a three-year term
through  October 1, 2002.  The term of the 1999 Busey Agreement will be extended
for  one  additional year at the end of each year unless either Mr. Busey or the
Company  elects not to extend the term by notice given at least 30 days prior to
the  expiration  of  the current term.  If either party elects not to extend the
1999 Busey Employment Agreement in accordance with the foregoing, then, upon the
then-current  effective date of expiration, the Company will continue to pay Mr.
Busey's  salary  and  employee  benefits  for  a  period  of  three  months.

Mr.  Busey's  base salary shall be $100,000 per year.   The Company will provide
Mr.  Busey  with  medical/health  insurance,  three weeks paid vacation and sick
leave.  Mr.  Busey  is  eligible to receive all other benefits made available by
the  Company  to  similarly situated corporate offices and employees, subject to
the  terms, conditions and overall administration of such benefits and plans, in
accordance  with  the  Company's Employee Handbook.   The Company will reimburse
all  business  expenses  incurred  by  Mr.  Busey  on  behalf  of  the  Company.


                                      F-17
<PAGE>

NOTE  10  -  COMMITMENTS  AND  CONTINGENCY  (CONTINUED)


Mr.  Busey  was  granted  stock options of 300,000 shares of common stock at the
exercise  price  of  $3.25  per share under the 1999 Stock Incentive Plan, which
will  vest  in  accordance with the newly-hired employee vesting schedule.   Mr.
Busey  is also entitled to receive stock options for 5% of the shares of any new
issuance  of  the  Company's  common stock on an undiluted basis at the exercise
price  equal  to the current market price at the end of the day of new issuance.
This  additional  stock  option  is  subject  to  the approval of the investment
bankers  or  investors  who are leading the new issuance of the Company's common
stock.  Subsequent  to June 30, 2000, Mr. Busey received additional 77,154 stock
options  pursuant  to  the  aforementioned  term.

In the event that the 1999 Busey Agreement is terminated with cause by Mr. Busey
or  without  cause  by  the  Company,  Mr. Busey is entitled to receive the full
amount of salary and employee benefits for three months.  These damages shall be
reduced  by  all amounts that he earns during the period between the termination
of his employment under this agreement and payment of the damages.   Any dispute
arising  between  the  Company  and  Mr.  Busey will be resolved in arbitration.

SERENA  KOKJER-GREENING  EMPLOYMENT  AGREEMENT

On  January  31,  2000 the Company entered into an employment agreement with Ms.
Serena  Kokjer-Greening.  Ms.  Kokjer-Greening  is  appointed as Chief Operating
Officer of the Company, effective January 31, 2000 for a three-year term through
January  30,  2003  unless  earlier  terminated.  The  term  of employment shall
continue  on an annual basis until terminated at the option of either party upon
(30)  days  written  notice prior to the expiration of the term.   The agreement
may  be  terminated  at  any  time  by  written  agreement  between the parties.

Ms.  Kokjer-Greening's base salary shall be $150,000 per year.  The Company will
provide  Ms.  Kokjer-Greening  with  medical/health  insurance, three weeks paid
vacation  and  sick leave.  Ms. Kokjer-Greening is eligible to receive all other
benefits  made available by the Company to similarly situated corporate officers
and  employees,  subject  to the terms, conditions and overall administration of
such  benefits  and  plans,  in accordance with the Company's Employee Handbook.
The  Company  will  also  reimburse  all  business  expenses  incurred  by  Ms.
Kokjer-Greening  on  behalf  of  the  Company.

Ms.  Kokjer-Greening  received a grant of 180,000 stock at the exercise price of
$6.75  per  share  under  the  1999  Stock  Incentive  Plan,  which will vest in
accordance  with the newly hired employee vesting schedule.  Ms. Kokjer-Greening
is  also  entitled  to  receive  stock  options  for 3% of the shares of any new
issuance  of the Company's common stock on undiluted basis at the exercise price
equal  to the current market price at the end of the day of new issuance.   This
additional  stock option is subject to the approval of the investment bankers or
investors  who  are  leading  the  new  issuance  of the Company's common stock.
Subsequent  to  June  30,  2000,  Ms. Kokjer-Greening received additional 46,292
stock  options  pursuant  to  the  aforementioned  term.

In the event that the 2000 Kokjer-Greening Agreement is terminated with cause by
Ms.  Kokjer-Greening  or  without  cause  by the Company, Ms. Kokjer-Greening is
entitled  to  receive  the full amount of salary and employee benefits for three
months.   These  damages  shall  be reduced by all amounts that she earns during
the  period  between  the termination of her employment under this agreement and
payment  of  damages.   Any  dispute  arising  between  the  Company  and  Ms.
Kokjer-Greening  will  be  resolved  in  arbitration.


                                      F-18
<PAGE>

NOTE  10  -  COMMITMENTS  AND  CONTINGENCY  (CONTINUED)


PENDING  LITIGATION

The  Company  has  been named as a defendant, along with Burlington Coat Factory
Warehouse  ("BCF"),  in  a  lawsuit  brought  by  Stanley  Rosner ("Rosner"), an
individual.  In  March  1998, Rosner commenced an action in the Supreme Court of
the  State of New York alleging breach of oral and written contracts between the
Company and Rosner and between BCF and Rosner in 1997.  Rosner claims that he is
due  certain  fees from both the Company and BCF for services allegedly rendered
in  connection  with  certain transactions involving the Company and BCF.  These
transactions  relate  to  the  Internet  services  that the Company has and will
provide to BCF, and current and anticipated transactions arising from vendors of
BCF.  Rosner claims that he is due damages in an amount not less than $5,000,000
plus  unspecified  punitive  damages  from  both  the  Company  and  BCF.

Rosner's  attorney  has agreed that the Company and BCF are entitled to have the
venue of the lawsuit transferred from Nassau County, New York to New York County
(Manhattan),  New  York;  Rosner's  attorney  also  agreed  to  arrange  for the
transfer.  Rosner's attorney also agreed that the Company's and BCF's responsive
papers  would  be  due no later than ten (10) days after notice of such transfer
had  been  served.  To date, the Company has not received notice of the proposed
transfer  of  venue  and  has not filed its responsive papers or otherwise moved
against  the  complaint.

The Company intends to vigorously defend this action.  The Company believes that
it  is not obligated to make any payments to Rosner and has meritorious defenses
to  all of Rosner's allegations.  However, if the Company does not prevail and a
significant  damage  award  against  the  Company  is granted, this would have a
material  adverse  effect  upon  the  Company.


NOTE  11  -  SUBSEQUENT  EVENT


In  August  2000, the Company signed a new lease to increase its office space by
approximately  2,000  square  feet.  The incremental monthly gross rent is about
$3,604  and  the  lease  will  expire  on  October  30,  2002.


                                      F-19
<PAGE>
                                 EXHIBIT INDEX



Exhibit No.      Description
-----------      -----------

27.1             Financial Data Schedule


<PAGE>