Part I

Item 1.  Description of Business

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

Our Company

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

Overview

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

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