SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                   ------------------------------------------
                                   FORM 10-KSB
                                   (Mark one)

               |_| Annual report under section 13 or 15(d) of the
                        Securities Exchange Act of 1934
                     For the fiscal year ended May 31, 2005

                                       OR

             |X| Transition report under section 13 or 15(d) of the
                        Securities Exchange Act of 1934
          For the transition Period from July 1, 2004 to May 31, 2005

                        Commission file number 001-15643

                         CYBER MERCHANTS EXCHANGE, INC.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

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

    4349 Baldwin Avenue, Suite A       Registrant's  telephone number:
        El Monte, California           (626) 636-2530                   91731
----------------------------------------                              ---------
(Address of principal executive offices)                              (Zip Code)

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

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes [ ]   No [X]

Registrant's  net  revenue  for the  eleven  month  period  ended May 31,  2005:
$1,793,155.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
registrant  on August 22, 2005,  computed by  reference to the closing  price of
that date, was $280,000,  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  25,  2005,  the  registrant  had  1,014,880  shares  of Common  Stock
outstanding, no par value per share

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:  Yes |_|  No |X|

<PAGE>

CYBER MERCHANTS EXCHANGE, INC.

INDEX TO
TRANSITION REPORT ON FORM 10-KSB
FOR 11-MONTH PERIOD ENDED MAY 31, 2005

PART I                                                                      Page
Item 1   Description of Business.............................................. 3
Item 2   Description of Property..............................................11
Item 3   Legal Proceedings....................................................11
Item 4   Submission of Matters to a Vote of Security Holders..................11

PART II
Item 5   Market for Common Equity and Related Stockholder Matters.............12
Item 6   Management's Discussion and Analysis or Plan of Operations...........13
Item 7   Financial Statements.................................................19
Item 8   Changes In and Disagreements with Accountants on Accounting and
         Financial Disclosure.................................................19
Item 8A  Controls and Procedures..............................................19
Item 8B Other Information.....................................................19

PART III
Item 9   Directors, Executive Officers, Promoters and Control Persons;
         Compliance With Section 16(a) of the Exchange Act....................20
Item 10  Executive Compensation...............................................22
Item 11  Security Ownership of Certain Beneficial Owners and Management and
         Related Stockholder Matters .........................................23
Item 12  Certain Relationships and Related Transactions.......................23
Item 13  Exhibits  ...........................................................23
Item 14  Principal Accountant Fees and Services...............................25
SIGNATURES....................................................................26

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......................F-1

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<PAGE>

PART I

FORWARD-LOOKING STATEMENTS
--------------------------

Except for the historical  information  presented in this document,  the matters
discussed  in this  Form  10-KSB,  and  specifically  in the  sections  entitled
"Description of Business" and  "Management's  Discussion and Analysis or Plan of
Operations," or otherwise  incorporated by reference into this document  contain
"forward-looking  statements" (as such term is defined in the Private Securities
Litigation Reform Act of 1995). These statements can be identified by the use of
forward-looking  terminology  such as  "believes,"  "plans,"  "expects,"  "may,"
"will,"  "should,"  or  "anticipates"  or the  negative  thereof  or  any  other
variations thereon or comparable terminology, or by discussions of strategy that
involve risks and  uncertainties.  The safe harbor  provisions of Section 21E of
the  Securities  Exchange  Act of  1934,  as  amended,  and  Section  27A of the
Securities Act of 1933, as amended, apply to forward-looking  statements made by
the Company,  as defined below. These  forward-looking  statements involve risks
and  uncertainties,  including those  statements  incorporated by reference into
this Form  10-KSB.  The actual  results  that the  Company  achieves  may differ
materially  from  any   forward-looking   projections  due  to  such  risks  and
uncertainties.  The  following  are some of the factors  that could cause actual
results  to differ  materially  from  those  reflected  in any  forward  looking
statement made by or on behalf of the Company:  domestic and foreign  government
regulations,  an early-stage company with a limited operating history,  unproved
profit potential of the business model,  intense competition from many entities,
dependent on many foreign alliances, market acceptance of the services provided,
maintaining  relationships  with key apparel retailers / buyers, and the ability
to create additional  relationships and regulatory  factors beyond the Company's
control. These forward-looking statements are based on current expectations, and
the Company assumes no obligation to update this information.  Readers are urged
to carefully review and consider the various  disclosures made by the Company in
this Form 10-KSB and in the Company's  other  reports filed with the  Securities
and Exchange  Commission that attempt to advise interested  parties of the risks
and factors that may affect the Company's business.

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

THE COMPANY

         Cyber Merchants  Exchange  ("C-Me") was incorporated in July 1996 under
the laws of the State of  California.  In July 1999,  C-Me raised  approximately
$3.2 million  through its IPO. On June 30, 2000 the Company raised an additional
$6.3 million in a private  placement  offering  subscribed by 30 high  net-worth
Chinese  investors.  As of August 25, 2005, C-Me had 1,014,880  shares of common
stock  outstanding,  after giving  effect to the reverse  stock split  described
below.  The  Company  has  approximately  190  shareholders  of  record  and  an
undetermined  number of additional  shareholders  through nominee or street name
accounts with brokers.  The Company is currently listed on the  Over-the-Counter
Bulletin  Board  ("OTC  BB")  under the symbol  CMXG and is  complaint  with the
reporting requirements of the Securities Exchange Act of 1934, as amended.

         Effective  for fiscal  year  ending in 2005,  the  Company  changed its
fiscal year end from June 30 to May 31. Accordingly,  the Company is filing this
Form 10-KSB as a transition report for the 11-month period ended May 31, 2005.

THE REORGANIZATION

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

         1. The Company entered into an amended and restated Securities Purchase
         Agreement  ("SPA")  with KI  Equity  Partners  II,  LLC  ("KI  Equity")
         effective as of August 25, 2005;

         2. The Company issued a stock bonus to current  shareholders of 120,862
         shares of the

                                       3

<PAGE>

         Company's  common stock, on a post-Reverse  Split basis,  effective May
         31, 2005 (the "Stock Bonus");

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

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

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

         6. The sale of  7,104,160  shares of common  stock of the Company to KI
         Equity for $415,000 (the "Investment").  In connection with the closing
         of the  Investment,  the current  directors and officers of the Company
         will resign and Kevin  Keating will be appointed  the sole director and
         officer of the Company.

The details of the transaction summarized above are as follows:

SECURITIES PURCHASE AGREEMENT

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

STOCK BONUS

         The Company issued  120,862  shares (on a post-Reverse  Split basis) to
certain key employees and directors of the Company  effective May 31, 2005.  The
Stock Bonus was not subject to shareholder  approval.  The individuals receiving
the Stock Bonus previously had stock options in the Company which were cancelled
as  part of the  Stock  Bonus  and  Reorganization.  In  addition,  the  Company
terminated all of its stock option plans, and all outstanding stock options were
cancelled.  In addition,  the employees  have not received any  significant  pay
increases in recent years.  Directors  have never been paid fees for services on
the  Board.  The  intent of the  issuance  of the Stock  Bonus was to  partially
compensate these individuals for their significant  contributions to the Company
since  employees did not receive any  significant  pay increases in recent years
and outside directors were never paid for services on the Board.

REVERSE SPLIT

         After the issuance of the Stock Bonus, the Company had 8,500,000 shares
outstanding at May 31, 2005 before the Reverse Split.  The Company  effected the
one-for-eight and one-half share  (1-for-8.5)  Reverse Split on a record date of
July 18,  2005.  The  Reverse  Split  allows for  special  treatment  of certain

                                       4
<PAGE>

shareholders to preserve round lot (100 shares or more) shareholders,  which the
Company  believes  will  make  it  more  attractive  for a  subsequent  business
combination  with an operating  company.  Under the terms of the Reverse  Split,
shareholders  holding  between 100 and 850 shares  received 100 shares after the
Reverse  Split.  Shareholders  holding  less  than 100  common  shares  were not
affected by the Reverse Split.  No special  treatment was given to  shareholders
holding more than 850 shares; however, they will receive a full common share for
any  fractional  share interest  created by the Reverse Split.  There are no tax
consequences  to  shareholders  as a result of the  Reverse  Split.  Upon giving
effect to the Reverse Split, the Company has 1,014,880 shares  outstanding as of
August 25, 2005.

ASAP SHOW, INC.

         The Company  formed ASAP on  December 1, 2005.  ASAP is a wholly  owned
subsidiary of the Company and owns all  8,626,480  shares of ASAP's common stock
currently  outstanding.  The officers and  directors of ASAP are the same as the
officers and directors of the Company.

         Since  the  Transfer,  ASAP  has been  and  will  continue  to focus on
operating  the trade show  business  previously  operated  by the  Company.  The
Investment  contemplated as part of the  Reorganization  will be used to pay the
liabilities  of the  Company  that  were  assumed  by ASAP  under  the  Transfer
Agreement.  ASAP will  continue  to  operate  its trade show twice a year in Las
Vegas,  four shows in China, and manage Material World Global Pavilion in Miami,
FL and New York. As part of the Transfer Agreement, ASAP has assumed a revolving
$500,000  line of  credit  from  Frank  Yuan and his  wife  (the  "Yuan  Line of
Credit").  Frank Yuan and his wife  consented to the assumption of the Yuan Line
of Credit and released the Company from any and all liabilities thereunder.  The
Yuan  Line of  Credit  has an  outstanding  balance  as of  August  18,  2005 of
$477,133,  including accrued interest of $7,133, bears interest at 8% per annum,
and  expires  in  February  2006.  With  the  payment  of  liabilities  with the
Investment,  the expected cash flow  generated from the trade shows and the Yuan
Line of Credit, ASAP believes it will have sufficient cash resources to grow its
business and meet the liabilities and obligations with respect to its operations
through at least December 2005.

         As a further condition of the Investment,  the Company and ASAP entered
into the Transfer Agreement  effective May 31, 2005 whereby all of the assets of
the  Company  were  transferred  to ASAP and all  liabilities,  obligations  and
contracts of the Company  (known and unknown,  fixed or contingent or otherwise)
were assumed by ASAP ("Assumed  Liabilities").  In exchange the Company received
8,626,480  shares  of  ASAP  common  stock.  Any  third  party  consents  to the
assumption of contracts by ASAP will be obtained prior to closing of the SPA and
the  Investment.  ASAP and Frank  Yuan have  agreed  to  indemnify  and hold the
Company  harmless from any loss,  costs or damages  incurred by the Company with
respect to the Assumed Liabilities  ("Indemnity  Claims"). As a condition of the
Investment, the Company must have no liabilities,  obligations, debts, contracts
or agreements of any kind or nature.

         In order to provide  incentive  compensation  for ASAP's  employees and
directors,  following the Distribution,  ASAP will adopt a stock option plan for
employees and members of the Board of Directors.  There will be 2,000,000 shares
of common stock of ASAP  available for grant pursuant to such stock option plan.
There are no current plans for the issuance of stock options.

DISTRIBUTION

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

         ASAP will file a Form 10-SB with the Securities and Exchange Commission
(the "SEC") to register the shares of ASAP's common stock under Section 12(g) of
the Securities  Exchange Act of 1934, as amended  ("Exchange  Act"),  which will
subject ASAP to the reporting requirements of the Exchange Act. The Distribution
will be paid to U. S. Stock Transfer  Corporation as depository agent for ASAP's
shareholders. The ASAP shares will be held by the depository

                                       5

<PAGE>

agent until such time as the Form 10-SB has become  effective  and all  comments
from the SEC have been cleared. At that time, the certificates representing ASAP
shares  will be  disbursed  by the  depository  agent  to  ASAP's  shareholders.
Following  disbursement  of the ASAP  shares,  ASAP  intends  to make  available
information  that will allow a broker to file a Form 15c2-11 to post a quotation
and  obtain a trading  symbol  for the  shares  of ASAP on the OTC BB.  The ASAP
shares distributed as part of the Distribution will be freely tradable,  subject
to certain  restrictions  applicable to insiders and  affiliates,  once the Form
10-SB has become effective and all comments of the SEC have been cleared.

         The distribution will be taxable to the Company's shareholders.

INVESTMENT

         The  closing  of the  transactions  contemplated  by the  SPA  and  the
Investment will occur after the  Distribution.  Pursuant to the Investment,  the
Company will issue  7,104,160  shares of common stock to KI Equity for $415,000.
The proceeds of the  Investment  will be used to satisfy  liabilities  that were
assumed  by ASAP  as part of the  Transfer  and  any  other  liabilities  of the
Company,  which will be applied to all third party  liabilities which existed at
May 31, 2005 and any remaining  funds being  transferred  to ASAP,  less $50,000
which the Company will hold in reserve for a period of six months  following the
closing  of the  SPA  to  satisfy  any  Indemnity  Claims.  The  closing  of the
Investment is subject to a number of conditions,  and there is no guarantee that
the closing will occur.

ACCOUNTING TREATMENT

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

      o     the  accounting  spinnor  (legal  spinnee,  ASAP) is larger than the
            accounting spinnee (legal spinnor, C-ME);

      o     the fair value of the accounting  spinnor (legal spinnee) is greater
            than that of the accounting spinnee (legal spinnor);

      o     the accounting spinnor (legal spinnee) retains the senior management
            of the formerly combined entity; and

      o     the accounting spinnor (legal spinnee) retains senior management.

TRADE SHOW BUSINESS

         ASAP's  value to global  suppliers  and  buyers  in the  manufacturing,
wholesaling  and  retailing  apparel  business  lies in its  capabilities  as an
intermediary for the industry.  ASAP has used its capital and nine years of hard
work to build a unique  foundation to meet today's  ever-changing  international
apparel  trading  landscape.  ASAP presently has  representatives  located in 25
countries   throughout  Asia,   Africa,   and  the  Middle  East  to  facilitate
international transactions.

         Over the years, various quotas governing exports from apparel-producing
countries to the U.S. and other industrial countries have been established under
the  auspices  of the General  Agreement  on

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<PAGE>

Tariffs and Trade ("GATT").  U.S. ready-wear apparel quota purchased from China,
India,  Pakistan,  Bangladesh,  etc. was removed  January 1, 2005. ASAP believes
that the market share of apparel  exports to the U.S.  will  rapidly  change its
sources to those low-labor-cost countries.

         ASAP's  strength  lies  in its  management  knowledge  of  the  apparel
industry. Through its sourcing trade shows in the U.S., ASAP will have access to
decision-makers  in the U.S.  industry  and  manufacturers  of apparel in China,
India,  Pakistan,  Bangladesh  and elsewhere in the world.  The Company's  other
value added services,  including an innovative  international financial platform
to replace  outdated  Letters of Credit,  B2B  electronic  trading  targeted  on
stock-lot merchandise and logistics, will then potentially gain more revenue and
market share.

TRADE SHOWS

         ASAP  GLOBAL  SOURCING  SHOW is a trade  show for U.S.  buyers  to meet
hundreds of overseas  ready-made garment  manufacturers and is held twice a year
in Las  Vegas.  The  February  2005  show had  approximately  200  full  package
factories from 30 countries exhibiting.

         ASAP CHINA  BUYING TRIP 2005 was  arranged by ASAP to take more than 80
U.S. and EU buyers,  each with more than $5 million in purchasing power, to four
production centers in China. This "reverse  trade-show" event was overwhelmingly
supported by the U.S. Cotton Council, American Apparel and Footwear Association,
America Apparel  Production  Network,  and many other leading  corporations  and
associations  active in the apparel industry.  The first buying tour of its kind
assisted U.S. and EU buyers to place  production  orders,  license their brands,
understand China's distribution  channels,  find joint venture possibilities and
relocate  U.S.  textile  plants to  China.  Participation  from the U.S.  and EU
included  such  prominent  names such as Fruit of the Loom,  Warnaco,  Salvatore
Ferragamo, Marks & Spencers, and many others.

         MATERIAL WORLD is a textile, fabrics and accessories sourcing show held
twice a year in Miami,  Florida and New York. ASAP has entered into an exclusive
agreement with Material World to represent it as their Global Marketing  partner
and will share 50% of the net profits associated with sales of booths by ASAP.

         Trade show revenue is generated  primarily from booth sales.  There are
many other ancillary  revenues such as seminar fees,  advertisements,  tradeshow
decoration material rentals,  etc. Currently,  ASAP conducts and participates in
five tradeshows per year, as mentioned above.

THE INTERNET SOURCING NETWORK ("ISN")

         The ISN is a private  extranet  that ASAP builds and  maintains for its
U.S.  retail  users.  ISN allows U.S.  retail  users and  overseas  suppliers to
conduct business using a web-based  application.  Overseas suppliers have direct
access to U.S.  retail  buyers,  push the stock lot  information  to the buyer's
computer and receive feedback on their immediate  merchandise needs.  Currently,
ASAP is focused on apparel stock lot (excess inventories) transactions.  In most
cases,  ASAP makes at least 10% net  transaction  revenue for  selling  overseas
stock lots to U.S. retailers.

GLOBAL FINANCIAL PLATFORM ("GFP")

         Letters  of credit  have  historically  been the  predominant  means of
payment  for  international  trading.  ASAP's  patent  pending  GFP  provides  a
framework  for  obtaining  non-recourse  financing of  merchandise  shipments to
pre-approved  buyers in the  United  States,  without  the need for  letters  of
credit.  Through ASAP's GFP, each of the three  parties,  the CIT Group ("CIT"),
the overseas bank and ASAP, each plays an integral role.  First,  CIT guarantees
the credit  worthiness of the U.S.  buyers.  Second,  the overseas bank provides
working capital  financing and acts as the conduit for foreign  manufacturers to
receive payment.  Consequently,  U.S. buyers can purchase  overseas  merchandise
just as they purchase  domestic  goods,  with open terms and without the need to
open letters of credit.

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<PAGE>

         CIT will pay ASAP 0.5% of the transaction  value.  CIT and Bank SinoPac
have tested the GFP platform  and model  successfully.  As of May 31, 2005,  the
Company  does not have the  financial  resources  to allocate  to this  project.
However,  management believes GFP could be a large revenue source in the future.
CIT and the Company  cancelled the factoring and commission  agreement by mutual
consent and released each other's  responsibilities  and liabilities under these
agreements.  ASAP  management  will  enter a similar  factoring  and  commission
agreement  with CIT  when  ASAP has more  resources  ready to  promote  this GFP
business.

LOGISTICS AND WAREHOUSING

         ASAP is intending  to leverage the contacts  from its trade show buyers
and sellers to  negotiate  with FedEx,  DHL,  and many ocean  carriers to gain a
discounted  bulk rate. In turn,  ASAP keeps a portion of the discount as its net
profit.

         ASAP also provides  logistics  and warehouse  services for its overseas
exhibitors/suppliers.  This added value service  provides a closer  relationship
with ASAP's exhibitors and attendees.

         Management anticipates it will generate revenue equal to 10% of freight
charges if DHL,  FedEx and ocean carriers are willing to offer the bulk discount
rate of 25% to ASAP's  exhibitors and attendees.  ASAP's apparel  exhibitors and
attendees are the target clients for U.S. logistic companies.

         ASAP's   warehousing   services  charges  its  overseas  suppliers  and
exhibitors the same rate as a public warehouse charge.

EMPLOYEES

         As of May 31, 2005, the Company  employed 14 full-time  employees and 1
part-time employee  classified as follows:  3 full-time  executive  officers;  1
full-time  administrative  personnel;  10 full-time marketing  personnel;  and 1
part-time technical personnel. None of the employees are subject to a collective
bargaining agreement, and the Company believes that relations with its employees
are good. All employees  entered into  termination and release  agreements as of
May 31, 2005 whereby their  employment  with the Company was  terminated,  their
C-Me  options  were  cancelled  and they  released  the Company from any and all
obligations  relating to their  employment.  Pursuant to the same agreement they
were hired by ASAP on the same terms and conditions as their employment with the
Company.

COMPETITORS

         There are numerous fashion,  apparel,  textile and accessories/supplies
trade shows in the U.S. each year. Some of these shows are well  established and
have been held for years.

The primary competitors of ASAP are as follows:

      1     MAGIC - MAGIC,  the Men's Apparel Guild in California was founded in
            1933. Due to enormous growth, the show relocated from Los Angeles to
            Las Vegas in 1989. Today, MAGIC International is the world's largest
            and most widely  recognized  organizer of the fashion industry trade
            shows. MAGIC encompasses every facet of fashion. MAGIC announced its
            Sourcing  Zone and  FABRIC@MAGIC  show in 2003,  which is the direct
            competition of ASAP.

      2     IFFE at New York Javits Center - The longest  established fabric and
            trim show in North America.  IFFE recently  concluded its last event
            in April 2005.

      3     SOURCES trade show - Now in its third year,  SOURCES has  exhibitors
            that are non-U.S.  based manufacturers of gifts, home and decorative
            accessories,  and  handcrafted  products  who come to

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            the U.S. to do business with wholesalers,  importers,  distributors,
            catalog and mail order, and direct volume purchasers.

         Although the competitors detailed in the preceding paragraphs may offer
similar  services to ASAP,  ASAP believes that no other company has its range of
services,  approach to serving the  industry or such an  experienced  management
team with years of experience  within the apparel  industry.  ASAP is focused on
providing a complete  merchandise  sourcing  solution by  providing  educational
seminars,  matchmaking  sessions,  dedicated  country  managers and other unique
services  that  interlock  each  other  and  are  focused  on  serving   buyers'
/exhibitors' international sourcing and transaction needs.

RISK FACTORS

         The following  risk factors  include,  among other  things,  cautionary
statements  with  respect  to  certain  forward-looking  statements,   including
statements of certain risks and uncertainties that could cause actual results to
vary  materially  from the future  results  referred to in such  forward-looking
statements.

We are subject to government regulations.
----------------------------------------

         Since ASAP's core business is related to  international  apparel trade,
there are numerous U.S. and foreign government regulations and restrictions that
impose a significant burden upon ASAP's  international  business,  such as quota
limitations for apparel entering the U.S.,  tariffs and U.S.  Customs  controls.
The World Trade Organization's  ("WTO") bilateral agreement between the U.S. and
each overseas country has numerous  limitations and conditions to be met. ASAP's
buyers' or sellers' violation of the WTO conditions would have a material effect
on ASAP's core business.

         Government  regulations  of the Internet are another  barrier that ASAP
faces.  For example,  wide use of the Internet is  restricted in China and other
countries where ASAP may seek to do business.

We are an early-stage company with a limited operating history.
--------------------------------------------------------------

         ASAP is an early-stage  company. It is using an unproven business model
and  cannot   guarantee   that  the  business   model  is   appropriate  to  the
implementation of its business plan.

We expect to depend on revenue from unproven asap trade shows, internet sourcing
--------------------------------------------------------------------------------
network, global financial platform and logistics and warehousing.
----------------------------------------------------------------

         ASAP expects to depend primarily on revenue from trade shows,  ISN, GFP
and  Logistic and  Warehousing.  The trade shows have  generated  revenue in the
past.  However,  there is no  guarantee  that the trade  shows will  continue to
generate revenue or that that revenue will meet management's  expectations.  The
ISN,  GFP  and  Logistics  and  Warehousing  are in  their  development  stages,
therefore there is no significant revenue generated from these services.

We have a history of operating losses.
--------------------------------------

         ASAP has a history  of  operating  losses.  It has not been  profitable
since inception, and we do not expect ASAP to be profitable in the near future.

We have not proven the profit potential of our business model.
-------------------------------------------------------------

         Because the business model is unproven, the profit potential of ASAP is
uncertain.  If ASAP meets its revenue  expectations,  there is no guarantee that
ASAP will be profitable or that costs will not continue to exceed revenue.

                                       9

<PAGE>

We face intense competition from many entities.
-----------------------------------------------

         The  trade  show  marketplace  is  highly  competitive.  Although  ASAP
believes it has several key advantages, the barrier to entry is not significant.
We have identified and continue to identify  numerous  companies that are better
funded, have more experience and more significant resources that have entered or
are planning to enter the trade show business.  Should these companies decide to
enter our specific market, there is no guarantee that we will be able to compete
with them effectively.

We are dependent on our foreign alliances.
------------------------------------------

         ASAP is dependent upon its ability to establish and maintain successful
foreign alliances.  If we are not able to establish and maintain such alliances,
we will not be able to implement the business plan in its current configuration,
which will affect both our revenue  stream and profit  potential.  In  addition,
ASAP  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 our  ability to provide  global  merchandise
sourcing to our clients.

We are dependent on market demand for an acceptance of our services.
-------------------------------------------------------------------

         Much of ASAP's success is dependent upon aggregating a critical mass of
subscribing overseas manufacturers and trade show attendees and establishing and
maintaining strong  relationships with clients.  If market demand and acceptance
for our  services  is not in line with  ASAP's  expectations,  it is likely that
ASAP's revenue will not meet its expectations.

We are dependent on relationships  with key apparel retailers / buyers,  and the
--------------------------------------------------------------------------------
ability to create more such relationships.
-----------------------------------------

         Our   business   model   is   retailer/buyer    -centric.    Successful
implementation  of it is predicated on our ability to create and nurture  strong
relationships  with  retailers/buyers.  If we are unable to expand and  maintain
existing   relationships,   our  revenue  and  profitably   will  not  meet  our
expectations.  Although  ASAP  believes it can create and maintain the necessary
relationships, there is no guarantee that it will.

We depend on the reliability and continuity of our services.
------------------------------------------------------------

         As a  member  of the  service  industry,  ASAP is  dependent  upon  the
continued reliability of its trade show, software and hardware. Although we have
reliable  systems  in place,  and have not had any  problems  providing  quality
service,  there is no  guarantee  that ASAP will be able to  continue to provide
reliable services.

We depend upon key members of management.
-----------------------------------------

         The  implementation  of our  business  plan and our  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
ASAP. In addition, there is no guarantee that ASAP 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 ASAP.

INTELLECTUAL PROPERTY PROTECTION

         ASAP has one patent pending that pertains to business processes: Global
Financial Platform.

         ASAP's  GFP  eliminates  the need for  letters  of credit  by  allowing
overseas  suppliers ship  merchandise to  pre-approved  retailers/buyers  in the
United States.  ASAP pioneered this process by establishing  the first tri-party
agreement  with CIT and Bank  SinoPac in  Taiwan.  In  essence,  it is the first
workable   international   factoring   mechanism.   Overseas   suppliers,   U.S.
retailers/buyers,  international

                                       10

<PAGE>

banks and CIT are linked to ASAP's GFP.  Through this  arrangement,  each of the
tri-party  participants plays an integral role. First, CIT guarantees the credit
worthiness of the U.S.  retailers/buyers.  Secondly,  Bank SinoPac provides cash
advances  up to 80% and acts as the conduit  for  foreign  suppliers  to receive
payment.  Through  ASAP's  GFP,  U.S.  retailers/buyers  can  purchase  overseas
merchandise,  just as they purchase  domestic  merchandise,  with open terms and
without the need to open letters of credit.  Overseas suppliers ship merchandise
to  pre-approved  retailers  without  payment  risk and  receive  up to 80% cash
advance when they ship the merchandise.

         In addition,  ASAP has trademarked the following trade names: C-Me(TM),
Cyber Merchants Exchange(TM), ASAP Global SouRCING Show(TM), ASAP(TM); DEPS(TM);
FOCASTING(TM); and Internet Sourcing Network(TM).

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

         The Company leases its corporate  headquarters  located at 4349 Baldwin
Avenue,  Suite A, El Monte,  California  91731.  Its  telephone  number is (626)
636-2530.  The lease commenced on March 15, 2003, and expires on March 31, 2006.
Subsequently,  ASAP has entered  into a new lease for these  premises  effective
June 28, 2005. The Company has no further  obligations  under the old lease. The
new lease  commenced  on June 28,  2005,  and  expires  on June 30,  2007.  ASAP
currently leases  approximately  7,000 square feet at an average monthly rent of
approximately $4,990.

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

         None

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

         At the 2005 Annual  Meeting of the Company's  Stockholders  held on May
16, 2005 (the "Meeting"), four proposals were submitted. No other proposals were
put before the meeting. The proposals and voting results were as follows:

         To  approve a one for eight and  one-half  reverse  stock  split of the
         Company's common stock:

            FOR: 3,943,504      AGAINST: 7,170        ABSTAIN: 77,150

         To approve the transfer of all assets and liabilities of the Company to
         ASAP Show, Inc., a wholly owned subsidiary of the Company:

            FOR: 3,948,304      AGAINST: 2,370        ABSTAIN: 77,150

         To approve the distribution of 8,500,000 shares of common stock of ASAP
         Show, Inc.,  representing  all of the outstanding  shares of ASAP Show,
         Inc., to the shareholders of the Company on a pro rata basis:

            FOR: 3,948,429      AGAINST: 2,245        ABSTAIN: 77,150

         To approve the sale of 7,000,000  shares of common stock of the Company
         for $425,000 to Keating  Reverse  Merger Fund,  LLC  (subsequent to our
         annual meeting,  our board of directors  approved certain amendments to
         the SPA pursuant to which KI Equity  Partners II, LLC replaced  Keating
         Reverse Merger Fund,  LLC as the purchaser,  the number of shares to be
         purchased was changed to 7,104,160  shares,  and the purchase price was
         reduced to $415,000):

            FOR: 3,948,196      AGAINST: 2,478        ABSTAIN: 77,150

         No other matters were  submitted to the Company's  shareholders  at the
         annual meeting.

                                       11

<PAGE>

PART II

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

         The  Company's  common  stock is traded on the NASDAQ  Over-the-Counter
Bulletin  Board  ("OTC-BB")  under the symbol  "CMXG." 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, 2003 through May 31, 2005. The prices have been been adjusted for the one for
eight and one-half reverse split which was effective July 18, 2005.

         July 1, 2003 to June 30, 2004:    High*                   Low*
                                           -----------------------------
                  First Quarter            $ 2.13                  $2.13
                  Second Quarter           $ 3.57                  $3.57
                  Third Quarter            $ 2.55                  $2.55
                  Fourth Quarter           $ 2.13                  $2.13

         July 1, 2004 to May 31, 2005:     High*                   Low*
                                           -----------------------------
                  First Quarter            $ 2.13                  $1.19
                  Second Quarter           $ 1.53                  $0.94
                  Third Quarter            $ 1.28                  $1.11
                  Fourth Quarter           $ 1.28                  $1.11

         * The source of the high and low  closing  sales price  information  is
Commodity   Systems,   Inc.   and  can  be  found   on   Yahoo's   Web-site   at
http://finance.yahoo.com.  These quotations reflect inter-dealer prices, without
retail   mark-up,   mark-down  or  commission  and  may  not  represent   actual
transactions.

HOLDERS OF RECORD

         On August 25, 2005, the Company's  issued and outstanding  common stock
totaled 1,014,880  shares,  held by approximately 190 shareholders of record and
by  indeterminate  number of additional  shareholders  through nominee or street
name accounts with brokers.

DIVIDENDS

         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.

PENNY STOCK

         The Company's  securities  are subject to the  Securities  and Exchange
Commission's  "penny stock" rules.  The penny stock rules may affect the ability
of owners of the Company's  shares to sell them.  There may be a limited  market
for penny stocks due to the  regulatory  burdens on  broker-dealers.  The market
among dealers may not be active. Investments in penny stocks often are unable to
sell  stock  back to the  dealer  that  sold them the  stock.  The  mark-ups  or
commissions  charged by the  broker-dealers  might be greater than any profit an
investor may make. Because of large spreads that market makers quote,  investors
may be unable to sell the stock immediately back to the dealer at the same price
the dealer sold the stock to the investor.

         The  Company's  securities  are  also  subject  to the  Securities  and
Exchange  Commission rule that imposes special sales practice  requirements upon
broker-dealers that sell such securities to other than established  customers or
accredited investors. For purposes of the rule, the phrase "accredited investor"
means,  in general  terms,  institutions  with assets  exceeding  $5,000,000  or
individuals  having net worth in

                                       12

<PAGE>

excess of $1,000,000 or having an annual income that exceeds  $200,000 (or that,
combined with a spouse's income, exceeds $300,000).  For transactions covered by
the rule, the broker-dealer  must make a special  suitability  determination for
the purchaser and receive the purchaser's  written  agreement to the transaction
prior to the sale.  Consequently,  the rule may affect the ability of purchasers
of the Company's securities to buy or sell in any market.

RECENT SALES OF UNREGISTERED SECURITIES

         Effective May 31, 2005,  the Company  issued  120,862  shares of C-Me's
common stock (on a  post-Reverse  Split basis) as a stock bonus to all employees
and directors.  The Company relied upon Section 4(2) of the Securities Act as an
exemption from registration.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
------------------------------------------------------------------

         The  following  discussion  of the  financial  condition and results of
operations  of the  Company  should be read in  conjunction  with the  Company's
audited  consolidated  financial  statements and the related notes thereto which
are  included  elsewhere  in this report for the  11-month  period ended May 31,
2005.  Certain  statements  contained  herein  may  constitute   forward-looking
statements,  as  discussed  at the  beginning  of Part I of this  Report on Form
10-KSB.  The Company's  actual results could differ  materially from the results
anticipated  in the  forward-looking  statements  as a result  of a  variety  of
factors,  including those discussed in the Company's filings with the Securities
and Exchange Commission

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         Effective for the fiscal year ending in 2005,  the Company  changed its
fiscal year end from June 30 to May 31. The following table presents comparative
information for the eleven-months ended May 31, 2005 and 2004.

                                     5/31/05       5/31/04
                                   ----------    -----------
                                                 (Unaudited)

Revenues, net                      $1,793,155    $ 1,754,826
                                   ==========    ===========
Loss from operations               $ (463,063)   $  (532,628)
                                   ==========    ===========
Income taxes                       $      800    $       800
                                   ==========    ===========
Loss per share-basic and diluted   $    (0.54)   $     (1.44)
                                   ==========    ===========

11-MONTH PERIOD ENDED MAY 31, 2005, COMPARED TO YEAR ENDED JUNE 30, 2004

         The following  discussion sets forth  information for the eleven months
ended May 31, 2005,  compared with the twelve  months ended June 30, 2004.  This
information  has been  derived in part from the audited  consolidated  financial
statements of the Company contained elsewhere in this Form 10-KSB.

REVENUES

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

         During  the  eleven  months  ended  May  31,  2005,   the  Company  had
transaction sales of $315,493 compared to $1,352,601 for the year ended June 30,
2004.  Net  revenues  from  transaction  sales  (after  reduction  for  cost  of
transaction  sales) for the eleven  months  ended May 31, 2005 were  $68,307,  a
decrease of $39,894  from  $108,201 in the year ended June 30,  2004.  The gross
profit margin of transaction  sales for the eleven months ended May 31, 2005 was
21.7%,  compared  to 8.0% for the year ended  June 30,  2004.  Management  put a
majority of its resources and manpower to its trade show  development  for 2005,
which is the reason why the  transaction  sales  declined  in the eleven  months
ended May 31,  2005,  compared  with the year ended June 30,  2004.  Even though
transaction sales gross revenue declined,  management focused on more profitable
transactions.  The Company  expects this net revenue

                                       13

<PAGE>

percentage to grow, as it begins to fully utilize its overseas  sourcing network
and its trade show buyers/attendees relationships.

Trade Shows
-----------

ASAP GLOBAL SOURCING SHOW
-------------------------

         The ASAP Global Sourcing Show segment derives revenue  principally from
the sale of exhibit space,  sponsorship and conference attendance fees generated
at its events. In 2005, approximately 95% of our trade show revenue was from the
sale of exhibit space.  Events are generally held on a semi-annual  basis in Las
Vegas,  Nevada.  At many of our trade  shows,  a  portion  of  exhibit  space is
reserved and partial payment is received as much as 90 days in advance.  Cash is
collected  in  advance  of an event  and is  recorded  on our  balance  sheet as
deferred  revenue.  Revenue and related  direct event expenses are recognized in
the month in which the event is held.

         Trade show business is seasonal,  with revenue  typically  reaching its
highest levels during the first and third quarters of each fiscal year,  largely
due to the timing of the ASAP Global  Sourcing  shows held  February  and August
each year. In 2005,  approximately  64% of our  tradeshow  revenue was generated
during the first quarter  (August show) and  approximately  36% during the third
quarter  (February show).  Because event revenue is recognized when a particular
event is held, we also experience fluctuations in quarterly revenue based on the
movement of annual trade show dates from one quarter to another.

         ASAP Global  Sourcing  Show revenues  totaled  $1,427,439 in the eleven
months ended May 31,  2005,  compared to  $1,663,274  in the year ended June 30,
2004, a decrease of $235,835 or 14% compared to the prior period.  This decrease
was due to a slight  decrease  in number  of  exhibitors  compared  to the prior
period. Another reason for decreasing exhibitors is because of the Men's Apparel
Guild in California's  ("MAGIC")  establishment  of its Sourcing Zone,  which is
held at the same time as our shows.  Management believes the competing show will
make it difficult to have significant growth.

CHINA BUYING TRIP
-----------------

         China Buying Trip revenues totaled $259,907 for the eleven months ended
May 31, 2005. This is the first year that it is incorporated  into the Company's
business  model.  Management is planning to establish  semi-annual  China Buying
Trips, to South and South East Asia Countries, in May and November of each year.

MATERIAL WORLD
--------------

         Material  World revenues  totaled  $37,502 for the period ended May 31,
2005.  This is the first year that the Company acted as Material  World's Global
Pavilion Agent.  Management also entered into a similar  agreement with Material
World for its  September  2005 New York show.  The Company  records the revenues
earned from Material World as tradeshow  revenue in its  consolidated  financial
statements.

OPERATING EXPENSES

         General and  administrative  expenses consist  primarily of ASAP Global
Sourcing  show  production  costs,  attendee  marketing  programs,   exhibitors'
promotion  costs,  and payroll  related  expenses.  General  and  administrative
expenses  decreased by $34,379 or 2% to  $1,512,972  for the eleven month period
ended  May 31,  2005 from  $1,547,351  in the year  ended  June 30,  2004.  Such
increase was  primarily  attributed  to there only being eleven months of fiscal
2005 compared to twelve months in fiscal 2004.

         Stock based  compensation  increased by $126,953 from fiscal 2004. Such
an increase is due to the Company  issuing  120,862 shares of common stock (on a
post-Reverse  Split basis) to certain

                                       14

<PAGE>

employees and directors as a stock bonus, which was valued at $133,553 (based on
the estimated fair value on the date of grant).

         Payroll and related  benefit  expense  decreased  by $149,972 or 20% to
$609,693 due to our continued cost cutting efforts in lowering our headcount and
there were only eleven months in fiscal 2005 compared to twelve months in fiscal
2004.

OTHER EXPENSE (INCOME)

         Under the  equity  method of  accounting,  the loss in  overseas  joint
ventures  was  $9,341  for the year ended  June 30,  2004.  Each  joint  venture
incurred significant development costs and amortization of the software acquired
from the Company associated with infrastructure development and market branding.
The Company invested in the joint ventures with proceeds received from the sales
of its ISN  software to the  respective  joint  ventures.  The revenue  from the
software   sold  was  amortized   over  a  3-year  period  using   straight-line
amortization  method and offset by negative  goodwill.  These joint ventures had
net losses  since  inception  and were formed  during the  Internet  boom with a
business model to attract subscribers to join the Company's ISN services.  Since
the Company's core business model changed from attracting  paid  subscribers for
its ISN  services  to  organizing  trade  shows and  transaction  sales,  it was
determined by the management that the investment was permanently impaired and as
a result,  the Company recorded an impairment charge of $720,460 during the year
ended June 30, 2004.  In addition,  interest  increased by $23,286 due to higher
borrowings during the year, such borrowings were used in our operations.

NET LOSS

         The net loss for the eleven  months  ended May 31,  2005  decreased  by
$792,495 or 62% to $478,068  from  $1,270,563  for the year ended June 30, 2004.
The decrease is mainly due to no impairment write-down on investment in overseas
joint ventures and a reduction of operating  expenses of  approximately  $64,000
and only eleven  months of  operations  in the eleven month period ended May 31,
2005.

         Net loss per share decreased by $0.91 or 63% to $0.54 per share for the
eleven  month  period  ended May 31, 2005 from $1.45 for the year ended June 30,
2004.

LIQUIDITY AND CAPITAL RESOURCES

         The  Company's  working  capital  deficit  increased  from a deficit of
$536,088  at June 30,  2004 to $880,583  at May 31,  2005,  primarily  due to an
increase in the line-of-credit from a shareholder of approximately  $155,000 and
an increase in accounts payable and accrued expenses of approximately  $201,000.
During the eleven  month  period  ended May 31,  2005,  the  Company had average
monthly general and administrative  expenses  (excluding  non-cash  compensation
expenses) of approximately  $127,000,  excluding ASAP show production  costs, as
compared to $137,000 for fiscal year ended June 30, 2004. During the next twelve
months,  the Company will focus on the ASAP Global  Sourcing show,  buying trips
and Material World trade show business  model to generate more revenues.  At May
31, 2005, the Company has current assets of approximately $236,000. With the net
revenue from the ASAP Global Sourcing show,  buying trips and Material World and
continuing   support  from  its  major   shareholder   to  provide  a  revolving
line-of-credit,  management  believes  the Company  will have enough net working
capital to sustain its business for another 12 months.

         The  Company  accepted  a  revolving  line-of-credit  (the  "Line")  on
September  15,  2004  from  Frank  Yuan,  the  Company's  CEO and a  significant
shareholder,  and his spouse,  Vicky Yuan, which expires on February 1, 2006 and
provides  for  borrowings  up to a maximum  of  $500,000.  The Line  carries  an
interest rate of 8.0% per annum. The Line contained  financial and non-financial
covenants, which the Company was in compliance with at May 31, 2005. The balance
as of May 31, 2005 was  $395,000,  with accrued

                                       15

<PAGE>

and unpaid  interest of $12,623.  The balance of the Line at August 18, 2005 was
$470,000, with accrued and unpaid interest of $ 7,133.

         The  forecast  of the  period  of  time  through  which  the  Company's
financial   resources   will  be  adequate  to  support  its   operations  is  a
forward-looking  statement that involves risks and uncertainties.  The Company's
actual  funding  requirements  may differ  materially as a result of a number of
factors,  including  unknown expenses  associated with the cost of continuing to
implement the Company's international  electronic trading business and ASAP Show
expansion.

         The Company has no  commitments  to make capital  expenditures  for the
fiscal year ending in the next twelve months.

         Over  the next two to five  years,  the  Company  plans  to  utilize  a
combination of internally generated funds from operations and potential debt and
equity financing to fund its long-term growth.

         The Report of Independent  Registered Public Accounting Firm on our May
31, 2005 consolidated  financial  statements  includes an explanatory  paragraph
stating that the Company has incurred recurring losses and has a working capital
deficit of $880,583 at May 31, 2005,  and that these factors  raise  substantial
doubt  about our  ability  to  continue  as a going  concern.  The  consolidated
financial  statements do no include any  adjustments  that might result from the
outcome of this uncertainty.

CRITICAL ACCOUNTING POLICIES

         The  preparation  of financial  statements  and related  disclosures in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make judgments,  assumptions and estimates that
affect the amounts reported in the our consolidated financial statements and the
accompanying  notes.  The  amounts of assets  and  liabilities  reported  on our
balance sheet and the amounts of revenues and expenses  reported for each of our
fiscal  periods are affected by estimates and  assumptions,  which are used for,
but not  limited  to,  the  accounting  for  revenue  recognition,  stock  based
compensation  and the valuation of deferred  taxes.  Actual results could differ
from  these  estimates.   The  following   critical   accounting   policies  are
significantly  affected by  judgments,  assumptions  and  estimates  used in the
preparation of the financial statements:

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

         Securities and Exchange  Commission Staff  Accounting  Bulletin ("SAB")
No. 101, "REVENUE  RECOGNITION," outlines the basic criteria that must be met to
recognize  revenue  and provide  guidance  for  presentation  of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the Securities and Exchange Commission. SAB 101 was amended and replaced by
SAB 104.  Management  believes that the  Company's  revenue  recognition  policy
conforms to SAB 104.

         Net revenues  include amounts earned under product  transaction  sales,
buying trips,  subscriptions and trade show fees. Product  transaction  revenues
are  recorded  in  accordance  with EITF  99-19  "REPORTING  REVENUE  GROSS AS A
PRINCIPAL  VERSUS NET AS AN Agent." The Company  recognizes  net  revenues  from
product transaction sales when title to the product passes to the customer,  net
of factoring fees. For all product transactions with its customers,  the Company
acts as a principal,  takes title to all products sold upon shipment,  and bears
inventory risk for return products that the Company is not able to return to the
supplier,   although  these  risks  are  mitigated  through   arrangements  with
factories, shippers and suppliers. Due to the Company not bearing credit risk on
all transactions, the Company records a portion of their revenue on a net basis.
However,  for financial  reporting  purposes the Company presents the details of
gross  transaction  sales  and  related  costs  of  sales  in  the  accompanying
consolidated  statements of  operations  for all net  transactions.  The Company
recognizes  revenue from the ASAP Global Sourcing shows, which generates revenue
through exhibitor booth sales, corporate sponsorship and advertising. The buying
trip  generates  revenue  through the  participating  buyers paying the Company.
Company  officials guide clients  through  various foreign  countries in Asia to
meet its local  apparel  manufacturers

                                       16

<PAGE>

and share a portion of exhibition net revenues and revenue is recognized ratably
over the duration of the buying trip. The Company also receives  commissions for
booths sold for the Material World shows foreign  exhibitors net exhibitors fees
income. Trade show and conference revenue is recognized in the accounting period
in which the event is  conducted.  The  Company  also  recognizes  revenue  from
monthly  subscription fees.  Subscriber fees represent revenue generated through
one-time,  non-refundable setup fees and monthly hosting fees.  Subscription and
subscriber fees are recognized as revenue after the services have been provided.

Deferred Tax Asset Valuation
----------------------------

         The Company  accounts  for income  taxes under  Statement  of Financial
Accounting Standard ("SFAS") No. 109,  "ACCOUNTING FOR INCOME TAXES." Under SFAS
No. 109,  deferred tax assets and  liabilities are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences  are  expected to be  recovered  or settled.  Management  provides a
valuation  allowance for significant  deferred tax assets when it is more likely
than not that such assets will not be recovered.

Stock Based Compensation
------------------------

         Financial  Accounting  Standards Board ("FASB")  Interpretation  No. 44
("FIN 44"),  "ACCOUNTING FOR CERTAIN TRANSACTIONS  INVOLVING STOCK COMPENSATION,
AN  INTERPRETATION  OF APB 25" clarifies the  application  of APB 25 for (a) the
definition  of employee  for  purposes of applying  APB 25, (b) the criteria for
determining  whether  a  plan  qualifies  as a  noncompensatory  plan,  (c)  the
accounting  consequence for 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 1, 2000,
but certain  provisions  cover specific  events that occur after either December
15, 1998, or January 12, 2000.  The adoption of certain other  provisions of FIN
44 prior  to June 30,  2000 did not  have a  material  effect  on the  financial
statements.

         Under Accounting  Principles Board ("APB") Opinion No. 25,  "ACCOUNTING
FOR STOCK ISSUED TO EMPLOYEES," the intrinsic  value based method,  compensation
expense is the excess,  if any, of the fair value of the stock at the grant date
or other  measurement  date over the amount an employee  must pay to acquire the
stock.  Compensation  expense, if any, is recognized over the applicable service
period, which is usually the vesting period.

         SFAS No.  123,  "ACCOUNTING  FOR  STOCK-BASED  COMPENSATION,"  if fully
adopted,  changes the method of accounting for employee stock-based compensation
plans to the fair value based method. For stock options and warrants, fair value
is  determined  using an option  pricing model that takes into account the stock
price at the grant date, the exercise price,  the expected life of the option or
warrant,   stock  volatility  and  the  annual  rate  of  quarterly   dividends.
Compensation  expense, if any, is recognized over the applicable service period,
which is usually the vesting period. The adoption of the accounting  methodology
of SFAS 123 is optional and the Company has elected to continue  accounting  for
stock-based  compensation  issued to employees using APB 25; however,  pro forma
disclosures,  as the Company adopted the cost recognition requirement under SFAS
123, are required to be presented.

         SFAS 148,  "ACCOUNTING  FOR  STOCK-BASED  COMPENSATION - TRANSITION AND
DISCLOSURE, AN AMENDMENT OF FASB STATEMENT NO. 123," was issued in December 2002
and is  effective  for fiscal years  ending  after  December 15, 2002.  SFAS 148
provides  alternative  methods of transition for a voluntary  change to the fair
value based method of  accounting  for  stock-based  employee  compensation.  In
addition,  this Statement amends the disclosure requirements of Statement 123 to
require prominent  disclosures in both annual and interim  financial  statements
about the method of accounting for  stock-based  employee  compensation  and the
effect of the method used on reported results.

                                       17

<PAGE>

NEW ACCOUNTING PRONOUNCEMENTS

         In  December  2004,  the FASB  issued  SFAS  No.  123  (revised  2004),
"Share-Based  Payment" ("Statement 123(R)") to provide investors and other users
of financial statements with more complete and neutral financial  information by
requiring that the compensation cost relating to share-based payment transaction
be recognized in financial  statements.  The cost will be measured  based on the
fair value of the  equity or  liability  instruments  issued.  Statement  123(R)
covers a wide range of share-based  compensation  arrangements  including  share
options,  restricted share plans,  performance-based  awards, share appreciation
rights,  and employee  share  purchase  plans.  Statement  123(R)  replaces SFAS
No.123,  and  supersedes  APB 25. SFAS  No.123,  as  originally  issued in 1995,
established a  fair-value-based  method of accounting  for  share-based  payment
transactions  with employees.  However,  that Statement  permitted  entities the
option  of  continuing  to apply  the  guidance  in APB No.  25,  as long as the
footnotes to financial  statements disclosed what net income would have been had
the preferable  fair-value-based  method been used.  Public entities (other than
those  filing as small  business  issuers)  will be required to apply  Statement
123(R) as of the first  interim  period for the fiscal year ending May 31, 2007.
The Company is in the process of evaluating  whether the adoption of SFAS 123(R)
will have a significant impact on the Company's overall results of operations or
financial position.

         In  December  2004,  the  FASB  issued  SFAS  No.  153,  "EXCHANGES  OF
NONMONETARY  ASSETS,  AN  AMENDMENT  OF  APB  OPINION  NO.  29,  ACCOUNTING  FOR
NONMONETARY  TRANSACTIONS."  APB Opinion No. 29 is based on the  principle  that
exchanges of  nonmonetary  assets should be measured  based on the fair value of
the assets exchanged.  The guidance in that Opinion,  however,  included certain
exceptions to that principle.  This statement amends Opinion 29 to eliminate the
exception for nonmonetary exchanges of similar productive assets and replaces it
with a general  exception  for the exchanges of  nonmonetary  assets that do not
have commercial  substance,  that is, if the future cash flows of the entity are
not expected to change significantly as a result of the exchange. The provisions
of this statement are effective for  nonmonetary  asset  exchanges  occurring in
fiscal periods  beginning  after June 15, 2005. We anticipate  that SFAS No. 153
will not have a material impact on our financial statements.

         In May 2003,  the FASB  issued SFAS No.  150,  "ACCOUNTING  FOR CERTAIN
FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY." SFAS
No. 150 established  standards for how a company classifies and measures certain
financial  instruments with  characteristics of both liabilities and equity, and
is effective for public  companies as follows:  (i) in November  2003,  the FASB
issued FASB issued FASB Staff Position  ("FSP") FAS 150-03 ("FSP 150-3"),  which
defers indefinitely (a) the measurement and classification  guidance of SFAS No.
150 for all manditorily redeemable  non-controlling  interest in (and issued by)
limited-life  consolidated  subsidiaries,  and (b)  SFAS No.  150's  measurement
guidance for other types of manditorily  redeemable  non-controlling  interests,
provided  they  were  created  before  November  5,  2003;  (ii)  for  financial
instruments  entered into or modified  after May 31, 2003,  that are outside the
scope of FSP 150-3: and (iii)  otherwise,  at the beginning of the first interim
period  beginning  after June 15, 2003. The Company  adopted SFAS No. 150 on the
aforementioned  effective dates. The adoption of this pronouncement did not have
a material impact on the Company's results of operations or financial condition.

RECENT ACCOUNTING PRONOUNCEMENTS

         The  Company  continues  to  assess  the  effects  of  recently  issued
accounting  standards.  The impact of all recently adopted and issued accounting
standards has been disclosed in the footnotes to the Company's audited financial
statements, note 1.

                                       18

<PAGE>

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

         The Company's audited  Financial  Statements are set forth beginning on
page F-1 in this Form 10-KSB.

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

         None.

ITEM 8A. EVALUATION OF CONTROLS AND PROCEDURES
----------------------------------------------

         Under the  supervision  and with the  participation  of our management,
including  our Chief  Executive  Officer  ("CEO")  and Chief  Financial  Officer
("CFO"),  we  evaluated  the  effectiveness  of the design and  operation of our
disclosure  controls and  procedures (as defined in Rule 13a-15(e) and 15d-15(e)
of the Exchange Act as of a date (the "Evaluation Date") within 90 days prior to
filing the Company's May 31, 2005 Form 10-KSB.  Based upon that evaluation,  our
CEO and CFO concluded  that,  as of May 31, 2005,  our  disclosure  controls and
procedures  were  effective  in  timely  alerting  management  to  the  material
information  relating to us (or our  consolidated  subsidiaries)  required to be
included  in our  periodic  filings  with the SEC.  Based on their  most  recent
evaluation as of the  Evaluation  Date,  our CEO and the CFO have also concluded
that  there  are no  significant  deficiencies  in the  design or  operation  of
internal controls over financial  reporting,  at the reasonable assurance level,
which are reasonably likely to adversely affect our ability to record,  process,
summarize and report financial information, and such officers have identified no
material weaknesses in our internal controls over financial reporting.

Changes in Controls and Procedures
----------------------------------

         There were no  significant  changes made in our internal  controls over
financial  reporting  during the two month  period  ended May 31, 2005 that have
materially  affected  or  are  reasonably  likely  to  materially  affect  these
controls. Thus, no corrective actions with regard to significant deficiencies or
material weaknesses were necessary.

Limitations On the Effectiveness of Internal Control
----------------------------------------------------

         Our management,  including the CEO, does not expect that our disclosure
controls and procedures or our internal  control over  financial  reporting will
necessarily  prevent all fraud and material errors.  An internal control system,
no matter how well  conceived and  operated,  can provide only  reasonable,  not
absolute,  assurance that the objectives of the control system are met. Further,
the design of a control  system must  reflect  the fact that there are  resource
constraints,  and the benefits of controls must be considered  relative to their
costs.  Because of the inherent  limitations on all internal control systems, no
evaluation of controls can provide  absolute  assurance  that all control issues
and instances of fraud,  if any,  within the Company have been  detected.  These
inherent  limitations  include the realities that judgements in  decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally,  controls  can be  circumvented  by the  individual  acts  of some
persons,  by collusion of two or more people,  and/or by management  override of
the control.  The design of any system of internal control is also based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance  that any design will  succeed in achieving  its stated goals under
all  potential  future  conditions.  Over time,  controls may become  inadequate
because of changes in  circumstances,  and/or the degree of compliance  with the
policies and procedures may deteriorate.  Because of the inherent limitations in
a cost effective internal control system,  financial reporting misstatements due
to error or fraud may occur and not be detected on a timely basis.

ITEM 8B. OTHER INFORMATION
--------------------------

         None.

                                       19

<PAGE>

PART III

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

         Each of the following  persons is a director and executive  officers of
the  Company  as of May 31,  2005.  They will  resign  once the  closing  of the
Investment by KI Equity occurs.  The new director will be Kevin R. Keating,  who
will appoint such other directors as necessary.

         NAME                 AGE        POSITIONS HELD WITH COMPANY
         ----                 ---        ---------------------------
         Charles Rice          62        Director since 1996

         Deborah Shamaley      46        Director since 1996

         James Vandeberg       61        Director since 2001

         Frank S. Yuan         56        Chairman of the Board since 1996;
                                         Chief Executive Officer since 1996

         There  are no  family  relationships  among  any of the  directors  and
executive officers.

         The following sets forth certain  biographical  information  concerning
each director and executive officer:

         CHARLES RICE. Charles Rice, Senior International and Domestic buyer, is
retired  from Sears  Roebuck and  Montgomery  Ward.  His 30 plus years of buying
experience,  reputation,  contacts  and  product  sourcing  knowledge  bring the
Company  tremendous  benefits and a head start in the retail industry.  Mr. Rice
holds a B.S. degree in business and economics from the University of Delaware.

         DEBORAH SHAMALEY.  Deborah Shamaley,  a chain store and apparel-jobbing
entrepreneur,  has 20 years of retail and  wholesale  apparel  experience.  Mrs.
Shamaley  co-founded  The Apparel Group  ("TAG").  TAG imported and sold women's
apparel  wholesale  to more than 1,800  retailers  including  Nordstrom's,  J.C.
Penney's,  Sears, and Burlington Coat Factory.  TAG also owned and operated a 23
apparel store-chain under the name $11.99 Puff. Ms. Shamaley sold the company in
1996. Currently,  Mrs. Shamaley is a franchise partner of a full service Italian
restaurant  chain called "Johnny  Carino's  Country  Italian," for 25 locations.
Mrs. Shamaley has also been involved in Shamaley Ford car dealership, one of the
largest in El Paso, Texas since 1995.

         JAMES  VANDEBERG.  James  Vandeberg  has been an  attorney  in  private
practice specializing in corporate finance for the past 11 years. He brings more
than 20 years of Corporate Counsel and Secretary  experience to the Company.  He
has  significant  experience  advising  both  internet  and retail  companies on
securities, financings, mergers and acquisitions, and general corporate matters,
including  IPO's, SEC compliance,  and investor  relations'  issues.  His retail
experience  includes 14 years as Corporate  Counsel and  Secretary at the former
Carter  Hawley  Hale  Stores,  a holding  company for the  multi-billion  dollar
department  and specialty  retail  stores which  operated  under the names:  The
Broadway,  Neiman Marcus,  Contempo  Casuals,  Emporium,  Weinstock's,  Bergdorf
Goodman, Holt Renfrew - Canada,  Waldenbooks,  John Wanamaker,  Thalhimers,  and
Sunset House. In addition,  Mr.  Vandeberg  serves on the board of directors for
Information Highway.com, Inc. (OTC: BB IHWY), IAS Communications,  Inc. (OTC: BB
IASCA),  and REGI US, Inc.  (OTC:  BB RGUS).  He received his B.A. in accounting
from the University of Washington and his J.D. from New York University.

                                       20

<PAGE>

         FRANK S. YUAN. Combining decades of experience in the apparel, banking,
real estate,  insurance  and computer  industries,  Frank Yuan has developed and
started multiple new ventures in his 30 plus years as an immigrant in the United
States.  Before the Company, Mr. Yuan founded  multi-million dollars of business
in men's apparel private label & wholesale  company,  a "Knights of Round Table"
sportswear  line, a "Uniform Code" sweater line, and men's clothing retail store
chain. Mr. Yuan also founded UNI-Fortune, a real-estate development company, and
co-founded United National Bank,  Evertrust Bank, Western Cities Title Insurance
Company and  Serv-American  National Title  Insurance.  Mr. Yuan received a B.A.
degree in  economics  from  Fu-Jen  Catholic  University  in Taiwan and a M.B.A.
degree from Utah State University.

                          BOARD MEETINGS AND COMMITTEES

         The Board of  Directors  has,  as  standing  committees,  an  Executive
Committee,  a Compensation  Committee and an Audit Committee.  During the fiscal
year ended May 31,  2005,  the Board of Directors  held one regular  meeting and
four special meetings.  All directors attended 80% or more of the total meetings
of the Board and committees of the Board on which they served.

         The  Executive  Committee  consists  of Frank  Yuan,  Charles  Rice and
Deborah Shamaley. The Executive Committee has authority to take any action other
than appointment of auditors,  election and removal of directors and appointment
of officers, which can be taken only by the entire Board. During the fiscal year
ended May 31, 2005, the Executive Committee held one meeting.

         The Compensation Committee consists of Deborah Shamaley, Frank Yuan and
Charles  Rice.  The  principal  functions of the  Compensation  Committee are to
establish the compensation of executive officers, review management organization
and development, review significant employee benefit programs and administer the
Company's Stock Option Plans. The Compensation Committee held one meeting during
the fiscal year ended May 31, 2005.

AUDIT COMMITTEE REPORT

         The Audit  Committee  held two meetings  during  fiscal year 2005.  The
consolidated  financial  statements of the Company for fiscal year ended May 31,
2005,  have been  audited  by Corbin and Company as the  Company's  independent
auditors.

         The  Company  does  not  have a  Nominations  Committee.  The  Board of
Directors,  as a whole,  identifies and screens candidates for membership on the
Company's Board.

         The Audit Committee is governed by a written  charter,  a copy of which
charter was filed with the Company's  Proxy  Statement for the annual meeting of
shareholders  on May 16,  2005 as  Appendix A (Page  A-1).  The Audit  Committee
selects our independent auditors, reviews the results and scope of the audit and
other  services  provided by our  independent  auditors,  reviews our  financial
statements  for each  quarterly  period and reviews and  evaluates  our internal
control functions. The Audit Committee was established by the directors of Cyber
Merchants  Exchange,  Inc. on August 9, 2000.  Charles  Rice serves as the Audit
Committee Chairman.  Mr. Rice is an independent audit committee member according
to the definition  used by NASDAQ for audit  committee  independence,  and is an
audit committee qualified financial expert. James Vandeberg and Deborah Shamaley
are other members of the audit committee.

         Directors and officers of the Company are required by Section 16 of the
Securities  Exchange  Act of 1934  to  report  to the  Securities  and  Exchange
Commission  their  transactions  in, and beneficial  ownership of, the Company's
common stock,  including any grants of options to purchase  common stock. To the
best of the  Company's  knowledge,  for the period July 1, 2004 to May 31, 2005,
all reports were filed on a timely basis.


                                       21

<PAGE>

CODE OF ETHICS

         For the period  ended May 31,  2005,  the  Company  did not have formal
written values and ethical  standards.  However,  the Company's  management does
communicate values and ethical standards during company wide meetings.

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

                COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

         The following  table sets forth the  compensation  we have paid to each
executive  officer and all executive  officers as a group, for the eleven months
ended May 31, 2005,  annual  compensation,  including salary and bonuses paid by
the Company to the Chief Executive Officer. No other executive officers received
more than $100,000 in the 11-month  period ended May 31, 2005.  The Company does
not  currently  have a  long-term  compensation  plan  and does  not  grant  any
long-term compensation to its executive officers or employees.

         The table does not  reflect  certain  personal  benefits,  which in the
aggregate are less than ten percent of the named executive  officer's salary and
bonus. No other  compensation  was granted for the 11-month period ended May 31,
2005.

SUMMARY COMPENSATION TABLE
--------------------------

<TABLE>
<CAPTION>
                                                                       Long Term Compensation
                                                                       -----------------------------  ------------
                            Annual Compensation                        Awards                         Payouts
--------------------------  -----------------------------------------  -----------------------------  ------------  ---------------
Name                                                    Other                         Securities
and                                                     Annual         Restricted     Underlying
Principal                                               Compensation   Stock          Options/        LTIP          All Other
Position         Year       Salary ($)     Bonus ($)    ($)            Award(s) ($)   SARs (#) (1)    Payouts ($)   Compensation ($)
--------------------------  -----------------------------------------  -----------------------------  ------------  ---------------
<S>              <C>        <C>            <C>          <C>             <C>             <C>             <C>          <C>
Yuan, Frank      2005       $137,500           N/A      $0              $42,943(2)        N/A             N/A        $0
(CEO)            2004       $150,000           N/A      $0                  N/A         185,000           N/A        $0
                 2003       $150,000           N/A      $0                  N/A          5,000            N/A        $0
                 2002       $150,000           N/A      $0                  N/A          5,000            N/A        $0
--------------------------  -----------------------------------------  -----------------------------  ------------  ---------------
</TABLE>

      (1)   Consists of grants of stock options under the C-Me's 1996, 1999, and
            2001 Stock Option Plans. All the stock options were cancelled during
            fiscal 2005.

      (2)   Consists of value of stock bonus.

COMPENSATION OF DIRECTORS
-------------------------

         All  outside  directors  are  reimbursed  for any  reasonable  expenses
incurred in the course of  fulfilling  their  duties as directors of the Company
and do not receive any payroll.

         The Company has  compensated its directors with stock options for their
service as directors.  Prior stock options granted and vested under C-Me's 1996,
1999 and 2001 Stock Option Plans were cancelled during fiscal 2005. The value of
the Stock Bonus issued to the  directors of the Company  effective  May 31, 2005
approximated $93,000.

         In order to provide  incentive  compensation  for ASAP's  employees and
directors,  ASAP intends to adopt a stock option plan for  employees and members
of the Board of  Directors.  There will be  2,000,000  shares of common stock of
ASAP available for grant  pursuant to such plan.  There are no current plans for
the issuance of stock options.

                                       22

<PAGE>

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

         The  following   table  sets  forth  as  of  August  25,  2005  certain
information  known to the Company  regarding  the  beneficial  ownership  of the
Company's  common stock,  and as adjusted to reflect the share ownership for (i)
each executive  officer or director of the Company who beneficially owns shares;
(ii) each  shareholder  known to the Company to beneficially own five percent or
more of the  outstanding  shares of its common  stock;  and (iii) all  executive
officers and  directors as a group.  The Company  believes  that the  beneficial
owners of the common stock listed below, based on information  furnished by such
owners,  have sole  investment  and voting  power with  respect to such  shares,
subject to community  property laws where applicable.  The individuals listed in
the table are accessible at the following address: 4349 Baldwin Ave., Unit A, El
Monte,  and CA. 91731. As of August 25, 2005, there were 1,014,880 shares of the
Company's common stock issued and outstanding.

<TABLE>
<CAPTION>
                             PRINCIPAL STOCKHOLDERS
---------------------------------------------------------------------------------------
                                            AMOUNT AND NATURE OF   PERCENTAGE OF COMMON
NAME                                          BENEFICIAL OWNER      SHARES OUTSTANDING
---------------------------------------------------------------------------------------
<S>                                             <C>                     <C>
(I) DIRECTORS AND EXECUTIVE OFFICERS
---------------------------------------------------------------------------------------
Frank S. Yuan - CEO and Chairman                   341,334               33.6%
---------------------------------------------------------------------------------------
James Vandeberg, Director                           10,000                1.0%
---------------------------------------------------------------------------------------
Deborah Shamaley, Director                          50,294                5.0%
---------------------------------------------------------------------------------------
Charles Rice, Director                              22,058                2.2%
---------------------------------------------------------------------------------------
Luz Jimenez - Controller                             7,765                0.8%
---------------------------------------------------------------------------------------
(II) ALL DIRECTORS AND OFFICERS AS A GROUP         431,451               42.6%
---------------------------------------------------------------------------------------
</TABLE>

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

         The Company had a revolving $500,000 line of credit with Frank Yuan and
Vicky  Yuan.  The line of credit  bears  interest at 8% per annum and expires in
February 2006. The line of credit has been terminated and assumed by ASAP.

ITEM 13. EXHIBITS
-----------------

EXHIBIT NUMBER    DESCRIPTION
--------------    -----------
2.1*****          Amended and  Restated  Securities  Purchase  Agreement,  dated
                  August 25, 2005

2.2*****          Transfer and Assumption Agreement dated as of May 31, 2005

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

                                       23

<PAGE>

EXHIBIT NUMBER    DESCRIPTION
--------------    -----------
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*             1996 World Wide Magic Net, Inc. Stock Option Plan

10.5****          1999 Stock Option Plan

10.6****          2001 Stock Option Plan

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

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

10.9****          Software Sales Agreement to C-Me Taiwan

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

10.11****         Joint Venture Agreement with Vickem Patana Co., Ltd.

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

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

21.1              List of Subsidiaries

31.1              Rule 13a-14(a)  Certification of Chief Executive  Officer 31.2
                  Rule 13a-14(a) Certification of Chief Financial Officer

32.1              Section 1350 Certification of Chief Executive Officer

32.2              Section 1350 Certification of Chief Financial Officer

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

**       Filed on January 27, 2000 as an exhibit to a report by the Company on a
         Form 8-A and incorporated herein by reference.

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

****     Filed on September  29, 2000 as an exhibit to the  Company's  report on
         Form 10-KSB for the fiscal  year ended June 30,  2000 and  incorporated
         herein by reference.

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

                                       24

<PAGE>

ITEM 13b. REPORTS ON FORM 8-K
-----------------------------

A report on a form 8-K was filed May 19, 2005 relating to Item 5.03 change in
fiscal year.


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

         The  following  table  sets  forth  the fees  paid by the  Company  for
professional services rendered for the audits of the annual financial statements
and fees billed for other services rendered by its principal accountants:

Type of Services Rendered                        2005           2004
-------------------------                        ----           ----
Audit Fees                                      39,000         41,000
Audit-Related Fees                              14,900         3,500
Tax Fees                                           0             0
All Other Fees                                     0             0

         Audit related  services  include fees incurred  during the period ended
May 31, 2005 related to the Company's distribution of the ASAP shares.

Pre-approval Policies and Procedures
------------------------------------

         The  Audit  Committee  has sole  authority  to  approve  any  audit and
significant  non-audit services to be performed by its independent  accountants.
Such approval is required prior to the related services being performed.

                                       25

<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/ Frank S. Yuan
           ---------------------------------------
           Frank S. Yuan
           Chief Executive Officer and Director

      Date: August 26, 2005
            --------------------------------------

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: August 26, 2005
           ----------------------------------------              ---------------
           Frank S. Yuan
           Chief Executive Officer and Director

      By:  /s/ Charles Rice                                Date: August 26, 2005
           ----------------------------------------              ---------------
           Charles Rice
           Director

      By:  /s/ Deborah Shamaley                            Date: August 26, 2005
           ----------------------------------------              ---------------
           Deborah Shamaley
           Director

      By:  /s/ James Vandeberg                             Date: August 26, 2005
           ----------------------------------------              ---------------
           James Vandeberg
           Director

                                       26

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

---------

Reports of Independent Registered Public Accounting Firms              F-1 - F-2

Financial Statements

         Consolidated Balance Sheet as of May 31, 2005                       F-3

         Consolidated Statements of Operations for the eleven month
         period ended May 31, 2005 and the year ended June 30, 2004          F-4

         Consolidated Statements of Shareholders' Deficit for the eleven
         month period ended May 31, 2005 and the year ended June 30, 2004    F-5

         Consolidated Statements of Cash Flows for the eleven month
         period ended May 31, 2005 and the year ended June 30, 2004          F-6

         Notes to Consolidated Financial Statements                          F-7

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------

TO THE BOARD OF DIRECTORS
CYBER MERCHANTS EXCHANGE, INC.

We have audited the accompanying  consolidated  balance sheet of CYBER MERCHANTS
EXCHANGE,  INC. and  subsidiary  (the  "Company")  as of May 31,  2005,  and the
related consolidated  statements of operations,  shareholders' deficit, and cash
flows for the  eleven-month  period then  ended.  These  consolidated  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the financial  position of CYBER  MERCHANTS
EXCHANGE,  INC.  and  subsidiary  as of May 31,  2005,  and the results of their
operations  and their  cash  flows for the  eleven-month  period  then  ended in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated  financial  statements,  the Company has incurred recurring losses,
and has a working  capital  deficit of $880,583 and a  shareholders'  deficit of
$869,215 at May 31, 2005. These factors,  among others,  raise substantial doubt
about the Company's ability to continue as a going concern.  Management's  plans
in regard to these matters are described in Note 1. The  consolidated  financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of asset carrying  amounts or the amount and  classification  of
liabilities  that might  result  should the  Company be unable to  continue as a
going concern.

/s/ Corbin & Company, LLP
Irvine, CA
August 18, 2005

                                      F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Cyber Merchants Exchange, Inc.

We have audited the accompanying statements of operations, shareholders' deficit
and cash flows of Cyber  Merchants  Exchange,  Inc. (the "Company") for the year
ended June 30, 2004. These financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  results  of  operations  and cash  flows of Cyber
Merchants  Exchange,  Inc. for the year ended June 30, 2004 in  conformity  with
accounting principles generally accepted in the United States of America.

/s/ Squar, Milner, Reehl & Williamson, LLP

Newport Beach, California
September 3, 2004

                                      F-2

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.
                           CONSOLIDATED BALANCE SHEET
                                  MAY 31, 2005

ASSETS

Current assets:
   Cash                                                           $     69,866
   Accounts receivable                                                 100,893
   Prepaid expenses                                                     64,754
                                                                  ------------
Total current assets                                                   235,513

   Other assets                                                         11,368
                                                                  ------------

Total assets                                                      $    246,881
                                                                  ============

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
   Accounts payable and accrued expenses                          $    421,480
   Deferred revenue                                                    186,993
   Loan payable                                                        100,000
   Line-of-credit and interest payable to shareholder                  407,623
                                                                  ------------
   Total current liabilities                                         1,116,096
                                                                  ------------

Commitments and contingencies

Shareholders' deficit:
   Preferred stock, no par value, 10,000,000 shares authorized,
     no shares issued and outstanding                                       --
   Common stock, no par value; 40,000,000 shares
     authorized; 1,014,880 shares issued and outstanding            10,128,940
   Additional paid-in capital                                        3,631,061
   Accumulated deficit                                             (14,629,216)
                                                                  ------------

Total shareholders' deficit                                           (869,215)
                                                                  ------------

Total liabilities and shareholders' deficit                       $    246,881
                                                                  ============

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

                                      F-3
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
   FOR THE ELEVEN-MONTH PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

                                                   05/31/2005     06/30/2004
                                                  -----------    -----------
Revenues:
   Transaction apparel sales                      $   315,493    $ 1,352,601
   Cost of transaction sales                          247,186      1,244,400
                                                  -----------    -----------
   Net revenue from transaction sales                  68,307        108,201
   Tradeshow revenue                                1,464,941      1,663,274
   Buying trip                                        259,907             --
                                                  -----------    -----------

Net revenue                                         1,793,155      1,771,475
                                                  -----------    -----------

Operating expenses:
   General and administrative                       1,512,972      1,547,351
   Payroll and related benefits                       609,693        759,665
   Stock-based compensation                           133,553          6,600
   Depreciation and amortization                           --          6,902
                                                  -----------    -----------
Total operating expenses                            2,256,218      2,320,518
                                                  -----------    -----------
Loss from operations                                 (463,063)      (549,043)
                                                  -----------    -----------
Other expense (income):
   Equity in net losses in investments in
      overseas joint ventures                              --          9,341
   Impairment write-down on investments in
       overseas joint ventures                             --        720,460
   Interest expense (income), net                      14,205         (9,081)
                                                  -----------    -----------
Total other expense                                    14,205        720,720
                                                  -----------    -----------
Loss before income taxes                             (477,268)    (1,269,763)

Income taxes                                              800            800
                                                  -----------    -----------
Net loss                                          $  (478,068)   $(1,270,563)
                                                  ===========    ===========
Basic and diluted net loss available to common
   shareholders per share                         $     (0.54)   $     (1.45)
                                                  ===========    ===========
Weighted-average number of common shares
   outstanding  basic and diluted                     879,499        879,138
                                                  ===========    ===========

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

                                      F-4

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

<TABLE>
<CAPTION>
                               Common Stock                    Additional                       Total
                               ---------------------------     Paid-In         Accumulated      Shareholders'
                               Shares          Amount          Capital         Deficit          Deficit
                               ------------    ------------    ------------    ------------     ------------
<S>                            <C>             <C>             <C>             <C>              <C>
     Balance, June 30, 2003         879,138    $  9,995,387       3,624,461    $(12,880,585)    $    739,263

   Stock-based compensation
        for warrants issued              --              --           6,600              --            6,600

                   Net loss              --              --              --      (1,270,563)      (1,270,563)
                               ------------    ------------    ------------    ------------     ------------

     Balance, June 30, 2004         879,138       9,995,387       3,631,061     (14,151,148)        (524,700)

Issuance of common stock as
               compensation         120,862         133,553              --              --          133,553

   Issuance of common stock
      for fractional shares
          and round lots in
    connection with reverse
                      split          14,880              --              --              --               --

                   Net loss              --              --              --        (478,068)        (478,068)
                               ------------    ------------    ------------    ------------     ------------

      Balance, May 31, 2005       1,014,880    $ 10,128,940    $  3,631,061    $(14,629,216)    $   (869,215)
                               ============    ============    ============    ============     ============
</TABLE>

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

                                      F-5

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

<TABLE>
<CAPTION>
                                                                     ---------------------------
                                                                     05/31/05        06/30/04
                                                                     -----------     -----------
<S>                                                                  <C>             <C>
Cash flows from operating activities:
   Net loss                                                          $  (478,068)    $(1,270,563)
   Adjustments to reconcile net loss to net cash used in
     operating activities:
      Depreciation and amortization                                           --           6,902
      Accrued interest                                                    12,623              --
      Equity in losses on investments in overseas joint ventures              --           9,342
      Impairment write-down on investment in overseas joint
         ventures                                                             --         720,460
      Compensation expense for warrants granted                               --           6,600
      Estimated fair value of common stock issued as compensation        133,553              --
      Changes in operating assets and liabilities:
          Accounts receivable                                            (84,831)         73,739
           Inventory                                                          --         189,364
           Prepaid expenses and other assets                              (6,333)        (32,049)
          Accounts payable and accrued expenses                          200,710         (52,357)
          Deferred revenue                                                22,248         (42,194)
                                                                     -----------     -----------
Net cash used in operating activities                                   (200,098)       (390,756)
                                                                     -----------     -----------
Cash flows from investing activities:
   Proceeds from maturity of certificates of deposit                          --         100,000
                                                                     -----------     -----------
Cash flows from financing activities:
   Proceeds from loan payable                                            100,000              --
   Proceeds from borrowings on line-of-credit from shareholder           495,000         252,000
   Repayments of borrowings on line-of-credit from shareholder          (352,000)             --
                                                                     -----------     -----------
Net cash provided by financing activities                                243,000         252,000
                                                                     -----------     -----------
Net increase (decrease) in cash                                           42,902         (38,756)

Cash, beginning of period                                                 26,964          65,720
                                                                     -----------     -----------
Cash, end of period                                                  $    69,866     $    26,964
                                                                     ===========     ===========
Supplemental disclosure of cash flow information:
   Cash paid during the period:
     Interest                                                        $     3,196     $       528
                                                                     ===========     ===========
     Income taxes                                                    $       800     $       800
                                                                     ===========     ===========
</TABLE>

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

                                      F-6
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

         Cyber Merchants  Exchange ("C-Me" or the "Company") was incorporated in
July 1996 under the laws of the State of California.  In July 1999,  C-Me raised
approximately  $3.2 million  through its initial  public  offering.  On June 30,
2000,  the Company  raised an  additional  $6.3  million in a private  placement
offering  subscribed  by 30 high  net-worth  Chinese  investors.  The Company is
currently  listed on the Over The Counter  Bulletin Board under the symbol CMXG,
and is a fully reporting public company.

         C-Me's  value to global  suppliers  and  buyers  in the  manufacturing,
wholesaling  and  retailing  clothing  business lies in its  capabilities  as an
intermediary for the industry. The Company believes it has built a foundation to
meet today's ever-changing international trading landscape.

         The Apparel Sourcing Association Pavilion Trade Show ("ASAP Show") is a
natural  extension of C-Me's core business on-line model.  ASAP Show is a global
apparel and textile sourcing show that brings leading  manufacturers from around
the world to one  venue to meet,  greet and sell to  buyers.  In the past  eight
years,  C-Me has created a comprehensive  base of manufacturers  from around the
world. Through C-Me's network, the Company believes that a significant number of
international  manufacturers  will  exhibit at the ASAP Show twice a year in Las
Vegas, Nevada.

         Effective for fiscal 2005, the Company changed its fiscal year end from
June 30 to May 31. The following table presents information for the eleven month
periods ended May 31, 2005 and 2004:

                          5/31/05          5/31/04
                         ----------     ------------
                                         (UNAUDITED)

Revenues, net            $1,793,155     $ 1,754,826
                         ==========     ===========
Loss from  operations    $ (463,063)    $  (532,628)
                         ==========     ===========
Income tax               $      800     $       800
                         ==========     ===========
Loss per share           $    (0.54)    $     (1.44)
                         ==========     ===========

REORGANIZATION

         The  shareholders  have approved a  reorganization  of the Company (the
"Reorganization"), summarized as follows:

         1. The Company entered into an amended and restated Securities Purchase
         Agreement  ("SPA")  with KI  Equity  Partners  II,  LLC  ("KI  Equity")
         effective as of August 25, 2005;

         2. The Company issued a stock bonus to current  shareholders of 120,862
         shares of the Company's  common stock,  on a post-Reverse  Split basis,
         effective May 31, 2005 (the "Stock Bonus");

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

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

                                      F-7
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         Transfer and Assumption Agreement ("Transfer Agreement");

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

         6. The sale of  7,104,160  shares of common  stock of the Company to KI
         Equity for $415,000 (the "Investment").

See Note 2 for further details of the Reorganization

GOING CONCERN

         The accompanying  consolidated  financial statements have been prepared
assuming  that the Company  will  continue as a going  concern.  The Company has
incurred significant losses since inception. The Company's losses are continuing
and  are  expected  to  continue  until  such  time  as the  Company  is able to
sufficiently expand its existing operations.

         At  May  31,  2005,   the  Company  has  an   accumulated   deficit  of
approximately  $14,629,000,  negative working capital of approximately  $881,000
and a lack of profitable  operational  history. The Company hopes to continue to
increase  revenues from the continued  growth of their ASAP Show. In the absence
of significant  increases in revenues,  the Company  intends to fund  operations
through  additional  debt and  equity  financing  arrangements.  The  successful
outcome of future  activities cannot be determined at this time and there are no
assurances that if achieved,  the Company will have sufficient  funds to execute
its intended business plan or generate positive operating results.

         The  Company's  success is dependent  upon numerous  items,  certain of
which are the  successful  growth of revenues from its products and services and
its  ability to obtain new  customers/exhibitors  in order to achieve  levels of
revenues  adequate to support the Company's  current and future cost  structure,
for which there is no assurance.  Unanticipated  problems,  expenses, and delays
are  frequently   encountered  in  establishing   and   maintaining   profitable
operations.  These  include,  but are not limited to,  competition,  the need to
develop customer support capabilities and market expertise,  setbacks in product
development,  technical difficulties, market acceptance and sales and marketing.
The  failure  of the  Company  to meet  any of  these  conditions  could  have a
materially  adverse effect on the Company and may force the Company to reduce or
curtail  operations.  No assurance  can be given that the Company can achieve or
maintain profitable operations.

         The Company  believes it will have adequate cash to sustain  operations
until it  achieves  sustained  profitability.  However,  until the Company has a
history of maintaining  revenue levels  sufficient to support its operations and
repay its working capital deficit, the Company may require additional financing.
Sources  of  financing  could  include  capital  infusions,   additional  equity
financing  or debt  offerings.  There can be no  assurance  that funding will be
available on acceptable  terms, if at all, or that such funds, if raised,  would
enable the Company to achieve or sustain profitable operations.

                                      F-8
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

REVERSE STOCK SPLIT

         On July 18,  2005,  the Company  effected a one for eight and  one-half
(1-for-8.5) reverse stock split of its outstanding common stock. All information
regarding  common stock,  stock options,  warrants and related per share amounts
has been restated within these consolidated  financial statements to reflect the
reverse stock split.  In connection  with the reverse split,  the Company issued
14,880 shares for  fractional  shares and round lots,  which are reflected as an
issuance of shares in fiscal 2005 in the accompanying statement of shareholders'
deficit.

RECLASSIFICATIONS

Certain prior period information has been reclassified to conform to the current
period presentation.

PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the accounts
of Cyber Merchants Exchange, inc. and its wholly owned subsidiary.  All material
intercompany transactions and balances have been eliminated in consolidation.

USE OF ESTIMATES

         The  preparation of financial  statements in conformity with accounting
principles  generally accepted in the United States of America ("GAAP") 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  consolidated  financial  statements and the reported amounts of
revenues and expenses during the reporting  periods.  Among the more significant
estimates included in these consolidated  financial statements are the estimated
allowance for doubtful  accounts,  valuation of stock based compensation and the
valuation allowance for deferred income tax assets.  Actual results could differ
from those estimates.

RISKS AND UNCERTAINTIES

         The  Company   operates  in  a  highly   competitive   trade  show  and
high-technology  environment that is subject to government  regulation and rapid
change.   The  Company's   operations  are  subject  to  significant   risk  and
uncertainties  including financial,  operational and other risks associated with
the business, including the potential risk of business failure.

                                      F-9
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

CURRENT VULNERABILITY DUE TO CERTAIN CONCENTRATIONS

         Certain  financial   instruments,   principally   accounts  receivable,
potentially  subject the Company to credit risks.  The Company  performs ongoing
credit evaluations of its customers but does not require collateral. The Company
maintains an allowance  for doubtful  receivables  and sales  returns based upon
factors surrounding the credit risk of specific customers, historical trends and
the Company's estimate of future product returns.  As of the balance sheet date,
no  allowance  is required nor provided  against  these  receivables,  which are
deemed to be collectible in the normal course of business.  Although the Company
expects to collect amounts due, actual collections may differ from the estimated
amounts.

         There were no significant sales  concentrations for fiscal 2005 or 2004
nor accounts receivable concentrations at May 31, 2005.

INVESTMENTS IN OVERSEAS JOINT VENTURES

          Investments  in overseas  joint  ventures were accounted for under the
equity method (see Note 4). All such investment balances were fully impaired and
written off during fiscal 2004.

PROPERTY AND EQUIPMENT

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

         Property and equipment was fully depreciated at June 30, 2004.

REVENUE RECOGNITION

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"),  "Revenue Recognition" which outlines
the basic  criteria that must be met to recognize  revenue and provide  guidance
for  presentation of revenue and for disclosure  related to revenue  recognition
policies in  financial  statements  filed with the SEC. SAB 101 has been amended
and replaced by SAB 104.  Management  believes the Company's revenue recognition
policies conform to SAB 104.

         Net revenues  include  amounts earned under  transaction  sales,  trade
shows, Buying Trips, Material World and subscription fees.

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

         Transaction  revenues are recorded in accordance  with Emerging  Issues
Task Force Issue No.  ("EITF")  99-19  "Reporting  Revenue  Gross as a Principal
versus net as an Agent."  The  Company  recognizes  net  revenues  from  product
transaction  sales  when title to the  product  passes to the  customer,  net of
factoring  fees. For all product  transactions  with its customers,  the Company
acts as a principal,  takes title to all products sold upon shipment,  and bears
inventory risk for return products that the Company is not able to return to the
supplier,   although  these  risks  are  mitigated  through   arrangements  with
factories, shippers and suppliers.

                                      F-10
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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

Trade Shows
-----------

         Trade Shows generate revenue through exhibitor booths sales,  corporate
sponsorship,  and advertising.  Such revenue is typically  collected in advance,
deferred and then  recognized at the time of the related trade show. The Company
organizes two trade shows per year in February and August in Las Vegas.

Buying Trips
------------

         Buying  Trips  generate  revenue  through  the   participating   buyers
("Buyers") paying for the Company's assistance during the travel through various
foreign  countries  in Asia to meet local  apparel  manufacturers.  The  Company
receives  a  portion  of  exhibition  net  revenues  collected  by  the  oversea
government's  trade promotion  agencies located in the various cities which were
visited by the Buyers (we do not share any losses,  if any).  The first May 2005
ASAP China Buying  Trip's  revenue is  recognized  ratably  during the period in
which the event is conducted.  Management is planning to conduct buying trips to
China in May and to Southeast Asia countries in November each year.

Material World
--------------

         The Company shares Material World's foreign  exhibitors' net exhibitors
fees income which are derived through Company  introduction  (we do not share in
losses,  if any).  Material  World's net revenue is recognized in the accounting
period in which the event is conducted.  Material World conducts two trade shows
per year, i.e. April and September.

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

         The Company also  recognizes  revenue from monthly  subscription  fees.
Subscriber fees represent revenue  generated  through  one-time,  non-refundable
setup fees and  monthly  hosting  fees.  Subscription  and  subscriber  fees are
recognized as revenue after the services have been provided.  Subscription  fees
were insignificant for fiscal 2005 and 2004.

         In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101 ("SAB 101"),  "Revenue Recognition" which outlines
the basic  criteria that must be met to recognize  revenue and provide  guidance
for  presentation of revenue and for disclosure  related to revenue  recognition
policies in  financial  statements  filed with the SEC. SAB 101 has been amended
and replaced by SAB 104.  Management  believes the Company's revenue recognition
policies conform to SAB 104.

                                      F-11
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Income Taxes
------------

         The Company  accounts  for income  taxes under  Statement  of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." Under SFAS
No. 109,  deferred tax assets and  liabilities are recognized for the future tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences  are expected to be recovered or settled.  A valuation  allowance is
provided  for  significant  deferred  tax assets when it is more likely than not
those assets will not be recovered.

Stock-based Compensation
------------------------

         The Company accounts for stock-based  compensation  issued to employees
using the intrinsic  value based method as  prescribed by Accounting  Principles
Board Opinion ("APB") No. 25,  "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES." Under
the intrinsic  value based method,  compensation  is the excess,  if any, of the
fair  value of the stock at the grant  date or other  measurement  date over the
amount an  employee  must pay to acquire  the stock.  Compensation,  if any,  is
recognized  over the  applicable  service  period,  which is usually the vesting
period.

         SFAS  No.  123,  "ACCOUNTING  FOR  STOCK-BASED  COMPENSATION"  if fully
adopted,  changes the method of accounting for employee stock-based compensation
plans to the fair value based method. For stock options and warrants, fair value
is  determined  using an option  pricing model that takes into account the stock
price at the grant date, the exercise price,  the expected life of the option or
warrant and the annual rate of quarterly  dividends.  Compensation  expense,  if
any, is recognized  over the  applicable  service  period,  which is usually the
vesting period.

         SFAS No. 148, "ACCOUNTING FOR STOCK-BASED COMPENSATION - TRANSITION AND
DISCLOSURE, AN AMENDMENT OF FASB STATEMENT NO. 123," was issued in December 2002
and is effective for fiscal years ending after  December 15, 2002.  SFAS No. 148
provides  alternative  methods of transition for a voluntary  change to the fair
value method of accounting for stock-based employee  compensation.  In addition,
this  Statement  amends the disclosure  requirements  of SFAS No. 123 to require
prominent  disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results.

         The adoption of the accounting  methodology of SFAS No. 123 is optional
and the Company has elected to continue accounting for stock-based  compensation
issued to employees using APB No. 25; however, pro forma disclosures,  as if the
Company  adopted  the cost  recognition  requirements  under SFAS No.  123,  are
required to be presented.

                                      F-12
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         At  May  31,  2005,   the  Company  has  three   stock-based   employee
compensation  plans (see Note 7).  During the fiscal  periods ended May 31, 2005
and June 30, 2004, no stock option-based  compensation expense was recognized in
the accompanying  statements of operations for options issued to employees below
market  value  pursuant  to APB No.  25. No other  stock  option-based  employee
compensation cost is reflected in the 2005 and 2004  consolidated  statements of
operations,  as all other options granted in 2005 and 2004 under those plans had
exercise  prices  equal to or greater  than the market  value of the  underlying
common stock on the dates of grant.

         The  following  table  illustrates  the effect on net loss and loss per
share if the Company had applied the fair value  recognition  provisions of SFAS
No. 123 to stock-based employee compensation:

                                               Eleven Month
                                               Period ended     Year ended
                                                 05/31/05        06/30/04
                                               -----------     -----------
Net loss, as reported                          $  (478,068)    $(1,270,563)
    Deduct: total stock-based employee
    compensation expense determined under
    fair value based method for all awards         (67,000)        (57,000)
                                               -----------     -----------
    Pro-forma net loss                         $  (545,068)    $(1,327,563)
                                               ===========     ===========
Basic and diluted net loss per share:
    As reported                                $     (0.54)    $     (1.45)
                                               ===========     ===========

    Pro-forma                                  $     (0.62)    $     (1.51)
                                               ===========     ===========

Loss Per Share
--------------

Under SFAS No. 128,  "Earnings  per Share,"  basic loss per share is computed by
dividing  net loss  available  to common  shareholders  by the  weighted-average
number  of  common  shares  assumed  to be  outstanding  during  the  period  of
computation.  Diluted  earnings per share is computed  similar to basic loss per
share  except  that the  denominator  is  increased  to  include  the  number of
additional  common  shares  that would have been  outstanding  if the  potential
common shares had been issued and if the additional  common shares were dilutive
(totaling   zero  and  67,706  shares  at  May  31,  2005  and  June  30,  2004,
respectively,  based on the  Treasury  Stock  method).  Because  the Company has
incurred net losSES, basic and diluted loss per share are the same as additional
potential common shares would be anti-dilutive.

Fair Value
----------

         SFAS No. 107, "Disclosures About Fair Value of Financial  Instruments,"
requires  disclosure of fair value information about financial  instruments when
it is practicable to estimate that value.  The carrying amounts of the Company's
cash,  accounts  receivable,   accounts  payable,  accrued  expenses,   deferred
revenues, loan payable and the line-of-credit from shareholder approximate their
fair values due to the short-term maturities of those financial instruments.

                                      F-13
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising
-----------

         The Company  expenses the cost of advertising  when incurred as general
and administrative  expenses.  Advertising expenses were approximately  $154,900
and $79,000 for fiscal 2005 and 2004, respectively.  The advertisement costs are
primarily to promote ASAP Global  Sourcing Show  awareness and to attract buyers
to attend the show.

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

         SFAS No. 131,  "Disclosures About Segments of an Enterprise and Related
Information" dictates the way public companies report information about segments
of their  business in their annual  financial  statements  and requires  them to
report  selected  segment  information  in their  quarterly  reports  issued  to
shareholders.  It also requires  entity-wide  disclosures about the products and
services an entity provides, the material countries in which it holds assets and
reports revenues and its major customers (see Note 9).

Accounting for Web Site Development Costs
-----------------------------------------

         EITF No. 00-2,  "Accounting for Web Site Development Costs" states that
for specific web site development costs, the accounting for such costs should be
accounted for under Statement of Position 98-1 ("SOP 98-1"), "Accounting for the
Costs of Computer  Software  Developed or Obtained  for Internal  Use." Web site
maintenance  costs  incurred  and  expensed  under  general  and  administrative
expenses in the accompanying  statements of operations were insignificant to the
Company for the periods ended May 31, 2005 and June 30, 2004.

Recent Accounting Pronouncements
--------------------------------

         In December 2004,  the Financial  Accounting  Standards  Board ("FASB")
issued SFAS No. 123 (revised 2004),  "Share-Based  Payment" ("Statement 123(R)")
to provide investors and other users of financial  statements with more complete
and neutral  financial  information  by  requiring  that the  compensation  cost
relating  to  share-based   payment   transaction  be  recognized  in  financial
statements.  The cost will be measured  based on the fair value of the equity or
liability   instruments  issued.   Statement  123(R)  covers  a  wide  range  of
share-based compensation arrangements including share options,  restricted share
plans,  performance-based  awards, share appreciation rights, and employee share
purchase plans.  Statement  123(R) replaces SFAS No.123,  and supercedes APB No.
25. SFAS No.123,  as originally issued in 1995,  established a  fair-value-based
method of  accounting  for  share-based  payment  transactions  with  employees.
However, that Statement permitted entities the option of continuing to apply the
guidance  in APB No.  25,  as  long as the  footnotes  to  financial  statements
disclosed  what net income would have been had the  preferable  fair-value-based
method been used.  Public  entities  (other than those filing as small  business
issuers)  will be required  to apply  Statement  123(R) as of the first  interim
period for the fiscal year ending May 31, 2007. The Company is in the process of
evaluating whether the adoption of SFAS 123(R) will have a significant impact on
the Company's overall results of operations or financial position.

                                      F-14
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         In  December  2004,  the  FASB  issued  SFAS  No.  153,  "Exchanges  OF
NONMONETARY  ASSETS,  AN  AMENDMENT  OF  APB  OPINION  NO.  29,  ACCOUNTING  FOR
NONMONETARY  TRANSACTIONS."  APB No. 29 is based on the principle that exchanges
of  nonmonetary  assets should be measured based on the fair value of the assets
exchanged. The guidance in that Opinion, however, included certain exceptions to
that principle.  This statement amends APB No. 29 to eliminate the exception for
nonmonetary  exchanges  of  similar  productive  assets and  replaces  it with a
general  exception  for the  exchanges  of  nonmonetary  assets that do not have
commercial  substance,  that is, if the future  cash flows of the entity are not
expected to change significantly as a result of the exchange.  The provisions of
this statement are effective for nonmonetary asset exchanges occurring in fiscal
periods  beginning after June 15, 2005. We anticipate that SFAS No. 153 will not
have a material impact on our financial statements.

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  FOR CERTAIN
FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH LIABILITIES AND EQUITY." SFAS
No. 150 established  standards for how a company classifies and measures certain
financial  instruments with  characteristics of both liabilities and equity, and
is effective for public  companies as follows:  (i) in November  2003,  the FASB
issued FASB issued FASB Staff Position  ("FSP") FAS 150-03 ("FSP 150-3"),  which
defers indefinitely (a) the measurement and classification  guidance of SFAS No.
150 for all manditorily redeemable  non-controlling  interest in (and issued by)
limited-life  consolidated  subsidiaries,  and (b)  SFAS No.  150's  measurement
guidance for other types of manditorily  redeemable  non-controlling  interests,
provided  they  were  created  before  November  5,  2003;  (ii)  for  financial
instruments  entered into or modified  after May 31, 2003,  that are outside the
scope of FSP 150-3: and (iii)  otherwise,  at the beginning of the first interim
period  beginning  after June 15, 2003. The Company  adopted SFAS No. 150 on the
aforementioned  effective dates. The adoption of this pronouncement did not have
a material impact on the Company's results of operations or financial condition.

         Other recent  accounting  pronouncements  issued by the FASB (including
its Emerging  Issues Task Force),  the  American  Institute of Certified  Public
Accountants,  and the  Securities  and  Exchange  Commission  did not or are not
believed by  Management to have a material  impact on the  Company's  present or
future financial statements.

NOTE 2 - REORGANIZATION

Securities Purchase Agreement
-----------------------------

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

                                      F-15
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 2 - REORGANIZATION (CONTINUED)

Stock Bonus
-----------

         The Company issued  120,862  shares (on a post-Reverse  Split basis) to
certain key employees and directors of the Company  effective May 31, 2005.  The
Stock Bonus was not subject to shareholder  approval.  The individuals receiving
the Stock Bonus previously had stock options in the Company which were cancelled
as  part of the  Stock  Bonus  and  Reorganization.  In  addition,  the  Company
terminated all of its stock option plans, and all outstanding stock options were
cancelled.  In addition,  the employees  have not received any  significant  pay
increases in recent years.  Directors  have never been paid fees for services on
the  Board.  The  intent of the  issuance  of the Stock  Bonus was to  partially
compensate these individuals for their significant  contributions to the Company
since  employees did not receive any  significant  pay increases in recent years
and outside directors were never paid for services on the Board.

Reverse Split
-------------

         After the issuance of the Stock Bonus, the Company had 8,500,000 shares
outstanding at May 31, 2005. The Company effected the one-for-eight and one-half
share Reverse Split on a record date of July 18, 2005.  The Reverse Split allows
for special treatment of certain  shareholders to preserve round lot (100 shares
or more)  shareholders,  which the Company believes will make it more attractive
for a subsequent business combination with an operating company. Under the terms
of the Reverse Split,  shareholders  holding between 100 and 850 shares received
100 shares after the Reverse  Split.  Shareholders  holding less than 100 common
shares were not affected by the Reverse Split. No special treatment was given to
shareholders  holding  more than 850 shares;  however,  they will receive a full
common share for any  fractional  share  interest  created by the Reverse Split.
There are no tax  consequences to shareholders as a result of the Reverse Split.
Upon giving  effect to the Reverse  Split,  the  Company  has  1,014,880  shares
outstanding as of August 25, 2005.

Asap Show, Inc.
---------------

         The Company  formed ASAP on  December 1, 2005.  ASAP is a wholly  owned
subsidiary of the Company and owns all  8,626,480  shares of ASAP's common stock
currently  outstanding.  The officers and  directors of ASAP are the same as the
officers and directors of the Company.

         Since the Transfer, ASAP continued to focus on operating the trade show
business previously operated by the Company. The Investment contemplated as part
of the  Reorganization  will be used to pay the  liabilities of the Company that
were assumed by ASAP under the Transfer Agreement. ASAP will continue to operate
its trade  show  twice a year in Las  Vegas,  four  shows in China,  and  manage
Material  World  Global  Pavilion  in  Miami,  FL and New  York.  As part of the
Transfer  Agreement,  ASAP has assumed a revolving  $500,000 line of credit from
Frank  Yuan and his wife (the "Yuan  Line of  Credit").  Frank Yuan and his wife
consented to the  assumption of the Yuan Line of Credit and released the Company
from  any and all  liabilities  thereunder.  The  Yuan  Line  of  Credit  has an
outstanding  balance  as of  August  18,  2005 of  $477,133,  including  accrued
interest  of $7,133,  bears  interest  at 8% per annum,  and expires in February
2006.  With the payment of liabilities  with the  Investment,  the expected cash
flow generated  from the trade shows and the Yuan Line of Credit,  ASAP believes
it will  have  sufficient  cash  resources  to grow  its  business  and meet the
liabilities  and  obligations  with respect to its  operations  through at least
December 2005.

                                      F-16
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 2 - REORGANIZATION (CONTINUED)

As a further condition of the Investment,  the Company and ASAP entered into the
Transfer  Agreement  effective  May 31,  2005  whereby  all of the assets of the
Company were transferred to ASAP and all liabilities,  obligations and contracts
of the Company  (known and  unknown,  fixed or  contingent  or  otherwise)  were
assumed by ASAP  ("Assumed  Liabilities").  In  exchange  the  Company  received
8,626,480  shares  of  ASAP  common  stock.  Any  third  party  consents  to the
assumption of contracts by ASAP will be obtained prior to closing of the SPA and
the  Investment.  ASAP and Frank  Yuan have  agreed  to  indemnify  and hold the
Company  harmless from any loss,  costs or damages  incurred by the Company with
respect to the Assumed Liabilities  ("Indemnity  Claims"). As a condition of the
Investment, the Company must have no liabilities,  obligations, debts, contracts
or agreements of any kind or nature.

         In order to provide  incentive  compensation  for ASAP's  employees and
directors,  following the Distribution,  ASAP will adopt a stock option plan for
employees and members of the Board of Directors.  There will be 2,000,000 shares
of common stock of ASAP  available for grant pursuant to such stock option plan.
There are no current plans for the issuance of stock options.

Distribution
------------

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

         Immediately prior to the Distribution, ASAP will file a Form 10-SB with
the  Securities  and Exchange  Commission  (the "SEC") to register the shares of
ASAP's common stock under Section 12(g) of the Securities  Exchange Act of 1934,
as  amended   ("Exchange  Act"),  which  will  subject  ASAP  to  the  reporting
requirements of the Exchange Act. The  Distribution  will be paid to U. S. Stock
Transfer  Corporation  as  depository  agent for ASAP's  shareholders.  The ASAP
shares  will be held by the  depository  agent until such time as the Form 10-SB
has become  effective and all comments  from the SEC have been cleared.  At that
time,  the  certificates  representing  ASAP  shares  will be  disbursed  by the
depository  agent to ASAP's  shareholders.  Following  disbursement  of the ASAP
shares,  ASAP intends to make available  information that will allow a broker to
file a Form  15c2-11 to post a  quotation  and  obtain a trading  symbol for the
shares  of ASAP  on the  OTC BB.  The  ASAP  shares  distributed  as part of the
Distribution will be freely tradable, subject to certain restrictions applicable
to insiders and  affiliates,  once the Form 10-SB has become  effective  and all
comments of the SEC have been cleared.

         The distribution will be taxable to the Company's shareholders.

                                      F-17
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 2 - REORGANIZATION (CONTINUED)

Investment
----------

         The  closing  of the  transactions  contemplated  by the  SPA  and  the
Investment will occur after the  Distribution.  Pursuant to the Investment,  the
Company will issue  7,104,160  shares of common stock to KI Equity for $415,000.
The proceeds of the  Investment  will be used to satisfy  liabilities  that were
assumed  by ASAP  as part of the  Transfer  and  any  other  liabilities  of the
Company,  which will be applied to all third party  liabilities which existed at
May 31, 2005 and any remaining  funds being  transferred  to ASAP,  less $50,000
which the Company will hold in reserve for a period of six months  following the
closing of the SPA to satisfy any Indemnity Claims.

Accounting Treatment
--------------------

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

      o     the  accounting  spinnor  (legal  spinnee,  ASAP) is larger than the
            accounting spinnee (legal spinnor, C-ME);

      o     the fair value of the accounting  spinnor (legal spinnee) is greater
            than that of the accounting spinnee (legal spinnor);

      o     the accounting spinnor (legal spinnee) retains the senior management
            of the formerly combined entity; and

      o     the accounting spinnor (legal spinnee) retains senior management.

NOTE 3 - AGREEMENT WITH CIT

         On October 19, 2000,  the Company and CIT Commercial  Services  ("CIT")
entered into a factoring agreement.  Under the agreement,  the Company sells and
assigns to CIT certain accounts receivable, as defined, arising from transaction
sales.  CIT  assumes  the credit risk on a  non-recourse  basis on each  account
approved. For each sales transaction assigned to CIT for collection, CIT charges
1.5% of the  assigned  invoice  value as their  factoring  fee.  The  amount  of
factoring  fees  incurred  by the  Company  during  fiscal  2005 and  2004  were
insignificant.  CIT and the  Company  cancelled  the  factoring  and  commission
agreement by mutual  consent and  released  each  other's  responsibilities  and
liabilities  thereunder.  ASAP  management  will enter a similar  factoring  and
commission agreement with CIT when ASAP has more resources ready to promote this
GFP business.

NOTE 4 - INVESTMENTS IN OVERSEAS JOINT VENTURES

         On December 22, 1999,  the Company  entered into an agreement to form a
joint  venture in Taiwan named C-Me  Technology  Co.,  Ltd.  ("C-Me  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  software back from the
Company,  see below) for a 30%  interest in February  2000 and accounts for this
investment under the equity method. The Company invested an additional  $200,000
for an  additional  10% interest in May 2001.  For the year ended June 30, 2004,
the Company  recognized an  investment  loss in the  accompanying  statements of
operations  from  this  joint  venture  of  approximately  $4,000,  based on the
Company's equity ownership percentage.

         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
corporation,  which  focused on  implementing  several  targeted  businesses  in
China's  e-commerce market. The Company invested $400,000 during the fiscal year
ended June 30, 2000 (which was used to purchase  software  back from the Company
(see below)).  During the fiscal year ended June 30, 2001, the Company  invested
an  additional  $600,000  for a total  interest  of 50% and  accounted  for this
investment  under the  equity  method,  as it has no  ability  to  significantly
influence the  decisions of  management.  For the year ended June 30, 2004,  the
Company  recognized  an  investment  loss  in  the  accompanying  statements  of
operations  from this joint  venture of $5,000,  based on the  Company's  equity
ownership percentage.

                                      F-18
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 4 - INVESTMENTS IN OVERSEAS JOINT VENTURES (CONTINUED)

         The Company invested in the joint ventures with proceeds  received from
the sale of its Internet  Sourcing  Network  ("ISN")  software to the respective
joint  ventures.  The revenue from the software sold was amortized over a 3-year
straight-line  amortization  method and offset by negative  goodwill.  These two
joint  ventures  had net  losses  since  inception  and were  formed  during the
Internet  boom with a business  model to attract  paid  subscribers  to join the
company's ISN services.  Since the  Company's  core business  model changed from
attracting paid  subscribers for its ISN services to organizing  trade shows and
transaction  sales,  it was determined by the management that the investment was
permanently  impaired  and  as a  result,  the  Company  has  written  off  such
investments in full, totaling approximately $720,000 for the year ended June 30,
2004.

During  fiscal years 2002 and 2003,  the Company  entered into  agreements  with
third parties to form joint ventures in Bangladesh,  Korea, Hong Kong, Indonesia
and Sri Lanka named C-Me Bangladesh,  C-Me Korea, C-Me Hong Kong, C-Me Indonesia
and  C-Me  Sri  Lanka,  respectively,  in  which  all  will  use  the  Company's
proprietary  web-based   communication  systems  to  facilitate  the  front  end
merchandise sourcing. The Company is not required to invest money into the joint
ventures.  Per the joint  venture  agreements,  the  Company is to  provide  its
technology  and all costs to operate the joint  ventures are to be funded by the
third party joint venture  partners.  Profits are first to be distributed to the
joint venture  partners until the joint venture  partners are reimbursed for all
costs  paid by the third  parties  on behalf  of the  joint  ventures,  then all
profits will be allocated on a 50% basis to each partner. As of May 31 2005, the
joint ventures are not  operational.  Certain of employees of the joint ventures
are promoting the ASAP Show as independent contractors.  The joint ventures have
ceased operations with no further liability for the Company.

         As of and  for  the  year  ended  June  30,  2004,  the  investment  in
respective joint ventures are summarized as follows:

                                   C-Me Taiwan      GP.com         Total
-------------------------------------------------------------------------
Net investment at July 1, 2003      $ 129,729     $ 600,072     $ 729,801

Equity in loss of joint ventures       (4,298)       (5,043)       (9,341)
Impairment  write-down  in joint
   ventures                          (125,431)     (595,029)     (720,460)
                                    ---------     ---------     ---------
Net investment at June 30, 2004     $      --     $      --     $      --
                                    =========     =========     =========

                                      F-19
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 5 - LINE-OF-CREDIT FROM STOCKHOLDER AND LOAN PAYABLE

         In February 2005,  the Company  borrowed  $100,000 for working  capital
purposes from a related party. The note was non-interest bearing and was paid in
full in June 2005.

         The Company has an unsecured revolving line-of-credit (the "Line") from
Frank Yuan,  the Company's  Chief  Executive  Officer and a significant  Company
shareholder,  and his spouse,  Vicky Yuan,  which  expires in February  2006 and
provides  for  borrowings  up to a maximum  of  $500,000.  The Line  carries  an
interest  rate of 8.0% per annum.  The balance as of May 31, 2005 was  $395,000,
with accrued and unpaid  interest of $12,623.  The balance as of August 18, 2005
was  $470,000,  with accrued and unpaid  interest of $ 7,133.  The Line has been
assumed by ASAP. Yuan released the Company from any liability under the Line.

NOTE 6 - INCOME TAXES

    Income tax expense for the period ended May 31, 2005 and year ended June 30,
2004 differed from the amounts  computed by applying the U.S. Federal income tax
rate of 34 percent to the loss before income taxes as a result of the following:

                                                     2005         2004
                                                  ---------   -----------
Computed "expected" tax benefit                   $(162,000)  $  (432,000)

Adjustment in income taxes resulting from:
    Change in valuation allowance                   183,000       522,800
    Deferred revenue                                  8,000       (14,000)
    State and local income taxes, net of
       federal effect                               (28,200)      (76,000)
                                                  ---------   -----------

                                                  $     800   $       800
                                                  =========   ===========

The tax effects of temporary  differences that give rise to significant portions
of the deferred tax assets at May 31, 2005 are presented below:

Deferred tax assets:
    Net operating loss carry forwards                         $ 4,413,000
    Stock compensation expense                                  1,240,000
    Other                                                          64,000
                                                              -----------
Total                                                           5,717,000

    Less valuation allowance                                   (5,717,000)
                                                              -----------
    Net deferred tax assets                                   $        --
                                                              ===========

                                      F-20
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 6 - INCOME TAXES (CONTINUED)

         As of May 31, 2005, the Company had Federal and state net tax operating
loss carry forwards of  approximately  $11,520,000  and $5,760,000  available to
offset future taxable income, respectively. The carry forwards expire in varying
amounts through 2024.  Based on the  Reorganization  (see note 2), the Company's
tax operating loss carryforwards will be significantly  limited, if available at
all.

NOTE 7 - SHAREHOLDERS' DEFICIT

Preferred Stock
---------------

         The Company is authorized  to issue up to  10,000,000  shares of no par
value preferred stock. As of May 31, 2005, no preferred stock has been issued.

Common Stock
------------

         As described in Note 2, in May 2005, the Company declared a Stock Bonus
of 120,862 shares of common stock (on a post-reverse split basis) to certain key
employees and directors of the Company,  which were valued at $133,553 (based on
the estimated  fair value of the common stock on the  effective  date of grant).
The Stock  Bonus was  issued to the  employees  and  directors  on July 7, 2005,
effective May 31, 2005.

Options
-------

         The Company has previously compensated its directors and employees with
stock options for their  services.  In connection with the  Reorganization  (see
Note 1),  effective May 31, 2005, the Company has cancelled all stock options by
mutual agreement with the holders thereof and terminated all of its stock option
plans.  In order to  provide  incentive  compensation  for these  directors  and
employees, following the Distribution,  ASAP will adopt a new stock option plan,
which will have 2,000,000 shares of common stock of ASAP available for grant

         The  Company's  1996 Stock Option Plan (the "1996  Plan")  provided for
granting of stock options to employees and non-employee  directors.  The Company
had 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 were exercisable after
the employee's first year of employment.  The remaining options were exercisable
after the end of the employee's  third year of employment.  The options  granted
would have expired within three months after the termination of employment.

                                      F-21
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 7 - SHAREHOLDERS' DEFICIT (CONTINUED)

         The  Company's  1999 stock option plan (the "1999  Plan")  provided for
granting of stock options to employees,  officers, directors, and other entities
who have made  contributions to the Company.  The Company had reserved 2,500,000
shares of common stock for issuance  under the 1999 Plan. The Board of Directors
determined the terms and conditions of granting  stock options.  Generally,  the
vesting  period was 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 until fully vested.  The 1999 Plan provided for the
useful  life of the  options  granted to be 10 years  starting  from the date of
grant.  The options  granted  would have  expired  within three months after the
termination of employment.

         The Company's 2001 stock option plan ("2001 Plan")  provided for grants
of stock options to employees,  officers,  director, and other entities who have
made contributions to the Company.  The Company had reserved 2,000,000 shares of
common stock for issuance under the 2001 Plan. The Board of Directors determined
the terms and  conditions for granting  stock  options.  Generally,  the vesting
period was 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 until fully vested.  The 2001 Plan provided for the useful life
of the  options  granted  to be 10 years  starting  from the date of grant.  The
options  granted would have expired within three months after the termination of
employment.

         For the year ended June 30,  2004,  the  Company,  pursuant to the 1999
plan,  granted  options to purchase an aggregate of 34,118  shares of restricted
common stock, at an exercise price of $1.70 per share (estimated to be in excess
of the fair market value of the Company's common stock on the date of grant), to
various  employees  of the  Company.  The  options  would  have  vested  through
September 2005 and were  exercisable  through  September 2013. In addition,  the
Company,  pursuant to the 2001 plan,  granted  options to purchase an  aggregate
38,824 shares of restricted  common stock, at exercise prices ranging from $1.70
to $4.34 per  share  (estimated  to be the fair  market  value of the  Company's
common stock on the dates of grant),  to various  employees of the Company.  The
options would have vested through  September 2005 and were  exercisable  through
September 2013.

         No  compensation  expense  was  recorded  during  fiscal  2005 and 2004
related to stock option activity.

                                      F-22
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 7 - SHAREHOLDERS' DEFICIT (CONTINUED)

         A summary of changes in stock  options  during each period is presented
below (on a post-reverse split basis):

                                            Weighted Average
                        Stock Options        Exercise Price
                        ------------------------------------
Balance, July 1, 2003      186,104               $26.69
Options granted             72,941                 3.66
Options cancelled           (9,579)               13.60
                          --------               ------

Balance, June 30, 2004     249,466                19.98

Options granted                 --                   --
Options cancelled         (249,466)               19.98
                          --------               ------

Balance, May 31, 2005           --                   --
                          ========               ======

         The fair value of the stock options  granted during the year ended June
30,  2004 was  approximately  $57,000  as  determined  using the  Black  Scholes
option-pricing model. The pricing assumptions used were as follows:

                                               YEAR ENDED
                                              JUNE 30, 2004
                                              -------------

          Discount rate - bond yield rate            3.50%

          Volatility                                  291%

          Expected life                            3 years

          Expected dividend yield                       --
                                              ============

Warrants
--------

         On May  25,  2000,  the  Company  entered  into a joint  marketing  and
cooperation agreement with Factory 2-U. As a part of the agreement,  the Company
granted  Factory 2-U a warrant that allowed Factory 2-U to purchase up to 10% of
the issued and  outstanding  shares of the  Company's  common stock  immediately
after its June 2000 private placement at the same price at which the shares were
sold in the private  placement.  The maximum  shares  Factory 2-U could purchase
were 98,602  shares at $41.46 per share.  In  accordance  with SFAS No. 123, the
Company  recognized  an expense of $684,738  in fiscal 2000 for the  granting of
this warrant. The warrant expired unexercised on May 25, 2005.

                                      F-23
<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 7 - SHAREHOLDERS' DEFICIT (CONTINUED)

         In April  2003,  the  Company  issued a  Private  Placement  Memorandum
("PPM") offering qualified investors 8% convertible  preferred shares ("Shares")
and warrants  ("Warrants"),  collectively  the  "Units",  in exchange for a cash
investment in the Company for an aggregate of  $1,250,000.  The Company  offered
125 Units  priced at $10,000 per Unit.  Each Unit  consists of 20,000  shares of
preferred stock with an 8% annual dividend and 588 Warrants,  to purchase common
stock at $4.25 per share, immediately exercisable for a term of five years. This
convertible stock offering did not have any commitments or investments as of May
31, 2005 and was closed  effective  May 31,  2005.  The Company  entered into an
agreement with C.K. Cooper & Company  ("CKCC"),  a NYSD member investment banker
based in Irvine,  California as its placement agent and financial consultant for
the PPM.  As of May 31,  2005,  the  Company  issued  a total of 3,529  warrants
exercisable at $2.38 and the related expense was not  significant.  The warrants
were cancelled in April 2005.

         The  following  represents  a summary of warrants  outstanding  for the
period ended May 31, 2005 and year ended June 30, 2004 (on a post-reverse  split
basis):

<TABLE>
<CAPTION>
                                            Period Ended                      Year Ended
                                  ------------------------------------------------------------
                                            05/31/2005                        06/30/2004
                                  --------------------------         -------------------------
                                                   Weighted                           Weighted
                                                    Average                            Average
                                   Warrants          Price           Warrants           Price
                                  --------           ------          --------           ------
<S>                               <C>                <C>             <C>                <C>
Outstanding, beginning of year     102,249           $40.89           102,249           $40.88
   Granted                              --               --             2,353           $ 2.38
   Exercised                            --               --                --               --
   Cancelled/Forfeited/Expired    (102,249)          $40.89            (2,353)          $68.00
                                  --------           ------          --------           ------
Outstanding, end of year                --           $   --           102,249           $40.89
                                  ========           ======          ========           ======
Exercisable, end of year                --           $   --           102,249           $40.89
                                  ========           ======          ========           ======
</TABLE>

<PAGE>

                         CYBER MERCHANTS EXCHANGE, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
             PERIOD ENDED MAY 31, 2005 AND YEAR ENDED JUNE 30, 2004

NOTE 8 - COMMITMENTS AND CONTINGENCIES

Operating Lease
---------------

         The Company leases office space under a non-cancelable  operating lease
agreement.  The lease provides for monthly lease payments  approximating  $5,900
and expires on March 31 2006. Future minimum lease payments under non-cancelable
operating leases as of May 31, 2005 approximate the following:

Year Ending May 31,
-------------------
       2006                                                    $ 59,000

         Rent  expense for the period ended May 31, 2005 and year ended June 30,
2004 was approximately $65,000 and $70,000, respectively.

         On June 28, 2005,  ASAP Show,  Inc.  entered a new lease agreement with
the same  landlord for two years lease  starting July 1 2005 and expires on June
30, 2007 for monthly lease payments  approximating $4,990. In the meantime,  the
lease  agreement  signed with Cyber Merchants  Exchange,  Inc dated February 11,
2003 was voided.

Litigation
----------

         The  Company  may be  involved  from  time to time in  various  claims,
lawsuits,   disputes  with  third  parties,  actions  involving  allegations  or
discrimination or breach of contract actions incidental in the normal operations
of the business.  The Company is currently  not involved in any such  litigation
which  management   believes  could  have  a  material  adverse  effect  on  its
consolidated financial position or consolidated results of operations.

                                      F-24
<PAGE>

NOTE 9 - BUSINESS SEGMENTS

         Reportable business segments for the period ended May 31, 2005 and year
ended June 30, 2004 were as follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
                                                              2005            2004
                                                          -----------     -----------
<S>                                                       <C>             <C>
Net sales from operations:
          Transaction sales, net                          $    68,307     $   108,201
          ASAP Global Sourcing Show and Material World      1,464,941       1,663,274
          China Buying Trip                                   259,907              --
                                                          -----------     -----------
                                                          $ 1,793,155     $ 1,771,475
                                                          ===========     ===========
Income (loss) from operations:
          Transaction sales                               $  (263,194)    $  (155,733)
          ASAP Global Sourcing Show and Material World       (416,966)       (393,310)
          China Buying trip                                   217,097              --
                                                          -----------     -----------
                                                          $  (463,063)    $  (549,043)
                                                          ===========     ===========
Depreciation and amortization:
          Transaction sales                               $        --     $     6,902
          ASAP Global Sourcing Show and Material World             --              --
          China Buying trip                                        --
                                                          -----------     -----------
                                                          $        --     $     6,902
                                                          ===========     ===========
Identifiable assets:
          Transaction sales                               $   115,061
          ASAP Global Sourcing Show and Material World        101,611
          China Buying trip                                    30,209
                                                          -----------
                                                          $   246,881
                                                          ===========
</TABLE>

         Net sales as reflected above consist of sales to unaffiliated customers
only as there were no  significant  intersegment  sales  during the eleven month
period  ended May 31,  2005 and the year  ended  June 30,  2004.  There  were no
significant capital expenditures during fiscal 2005 or 2004.

         There was no  significant  concentration  on net segment  sales for the
eleven months ended May 31, 2005 and year ended June 30, 2004.

         ASAP Global Sourcing Show revenue relates  exclusively to the Company's
Las Vegas, Nevada trade shows.

                                      F-25