SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule 14a-6(e)
(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under {section} 240.14a-12

CYBER MERCHANTS EXCHANGE, INC.
----------------------------------------------------
(Name of Registrant as Specified in Its Charter)

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(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (4) and 0-11.

1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) (2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
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2) Form Schedule or Registration Statement No.:
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4) Date Filed:
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 12, 2003
- --------------------------------------------------------------------------------

October 6, 2003

TO OUR SHAREHOLDERS:

I am pleased to invite you to attend the annual meeting of stockholders of
Cyber Merchants Exchange, Inc. as detailed below:

DATE AND TIME Friday, December 12, 2003, at 10:00 a.m.

PLACE Cyber Merchants Exchange
4349 Baldwin Ave., Unit A
El Monte, CA. 91731

ITEMS OF BUSINESS

I. To elect six directors of the Company to serve until
the 2004 Annual Meeting of Shareholders or until their
successors are duly elected and qualified;

II. To ratify the selection of Squar, Milner, Reehl, &
Williamson as the Company's independent auditors for
the fiscal year ending 2004;

III. To transact such other business as may properly come
before the meeting or any adjournment thereof.

RECORD DATE Only shareholders of record at the close of business on
October 6, 2003, the record date for the meeting, are
entitled to receive notice of and to vote at the Annual
Meeting or any adjournments thereof.

VOTING BY PROXY To assure your representation at the meeting, you are urged
to vote your shares by designating your proxies as promptly
as possible.

All of the Company's shareholders are invited to attend the Annual
Meeting. YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE SIGN, DATE AND MAIL THE ENCLOSED PROXY CARD IN THE PRE-
ADDRESSED ENVELOPE PROVIDED WITH THIS NOTICE OR FAX IT TO (626) 636-2536. NO
ADDITIONAL POSTAGE IS REQUIRED IF THE PROXY CARD IS MAILED IN THE UNITED
STATES. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE
IN PERSON IF YOU WISH.

By Order of the Board of Directors,

/s/ Luz Jimenez
---------------------------------------
Luz Jimenez
Secretary

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 12, 2003
- --------------------------------------------------------------------------------

October 6, 2003

DEAR SHAREHOLDERS:

You are invited to attend the 2003 Annual Meeting of Shareholders of Cyber
Merchants Exchange, Inc. to be held at 10:00 a.m. Pacific Time on Friday,
December 12, 2003, at the executive offices of the Company located at 4349
Baldwin Ave., Unit A, El Monte, CA. 91731.

The accompanying Notice of the 2003 Annual Meeting of Shareholders and Proxy
Statement describe the matters to be presented at the Annual Meeting. The
Board of Directors recommends that shareholders vote in favor of each matters
presented.

Your vote is important. Whether or not you plan to attend the Annual Meeting,
please mark, sign, date and return the Proxy Card in the enclosed self-
addressed and stamped envelope, or by facsimile at (626) 636-2536, as soon as
possible. Your stock will be voted in accordance with the instructions you
have given in the Proxy Card. You may still attend the Annual Meeting and vote
in person even if you have previously voted by proxy.

I will look forward in meeting you at our Annual Meeting on December 12, 2003.

Sincerely,

/s/ Frank S. Yuan

Frank S. Yuan
Chairman of the Board and Chief Executive Officer

CYBER MERCHANTS EXCHANGE, INC.
4349 Baldwin Ave., Unit A
El Monte, CA. 91731
Tel: (626) 636-2530
Fax: (626) 636-2536

PROXY STATEMENT

DATE, TIME AND PLACE OF ANNUAL MEETING

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Cyber Merchants Exchange, Inc. (the
"Company") for use at the 2003 Annual Meeting of Shareholders to be held at the
Company, 4349 Baldwin Ave., Unit A, El Monte, CA. 91731, on December 12, 2003,
at 10:00 a.m., local time, and at any adjournments thereof, for the purposes
set forth herein and in the accompanying Notice. The record date for the
meeting is the close of business on October 6, 2003. All holders of record of
the Company's common stock on the record date are entitled to notice of the
meeting and to vote at the meeting and any meetings held upon adjournment of
that meeting. The approximate date of mailing of this Proxy statement and the
accompanying proxy is November 3, 2003.

PROXY INFORMATION

A proxy form is enclosed. Whether or not you plan to attend the meeting
in person, please date, sign and return the enclosed proxy card, as promptly as
possible, in the postage prepaid envelope provided to insure that your shares
will be voted at the meeting. You may revoke your proxy at any time prior to
its use by filing with the Secretary of the Company an instrument revoking it
or a duly executed proxy bearing a later date, or by attending the meeting and
voting in person. Unless you instruct otherwise in the proxy, any proxy, if
not revoked, will be voted at the meeting:

I. To elect six directors of the Company to serve until the 2004 Annual
Meeting of Shareholders or until their successors are duly elected
and qualified;

II. To ratify the selection of Squar, Milner, Reehl, & Williamson, LLP
as the Company's independent auditors for the fiscal year ending
2004; and

III. To transact such other business as may properly come before the
meeting or any adjournment thereof.

RECORD DATE AND VOTING

RECORD DATE

The record date for the Special Meeting is the close of business on
October 6, 2003. If the shareholders of record on October 6, 2003 present, in
person or represented by their proxies, at the meeting hold a majority of the
Company's outstanding stock entitled to vote, a quorum will exist for the
transaction of business at the meeting. Shareholders of record, who abstain
from voting, including brokers holding their customers' shares who cause
abstentions to be recorded, are counted as present for quorum purposes.

SHAREHOLDER LIST

At least 10 days before the Annual Meeting, the officer or agent in
charge of the stock transfer books for the shares of the corporation will make
a complete list of the shareholders entitled to vote at the meeting arranged in
alphabetical order, with the address and number of shares held by each
shareholder. The list will be kept on file at the principal offices of the
Company and will be subject to inspection by any shareholder at any time during
usual business hours. The list will be present for inspection at the Annual
Meeting.

PROXIES

Each shareholder entitled to vote at the Annual Meeting may vote by
proxy executed in writing by the shareholder or by his or her duly authorized
attorney-in-fact, but no proxy can be voted or acted upon after six months from
its date, unless the proxy provides for a longer period. The proxy must be
filed with the Inspector of Elections of the Company before or at the time of
the Annual Meeting.

The following constitute valid means by which a shareholder may
authorize another person to act for him or her as proxy:

(1) A shareholder may execute a writing authorizing another person or
persons to act for him or her as proxy. The proxy may be limited to specific
proposals. Execution may be accomplished by the signing of the writing by the
shareholder or his or her authorized officer, director, employee or agent or by
causing his or her signature to be affixed to the writing by any reasonable
means including, but not limited to, a facsimile signature.

(2) A shareholder may authorize another person or persons to act for
him or her as proxy by transmitting or authorizing the transmission of a
telegram, cablegram or other means of electronic transmission to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be
the holder of the proxy. The transmission must either set forth or be
submitted with information from which it can be determined that it was
authorized by the shareholder.

The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other persons representing
beneficial owners of shares for their reasonable out-of-pocket expenses
regarding these solicitations. Certain of the Company's directors, officers
and regular employees, without additional compensation, may solicit proxies
personally or by telephone, electronic mail, facsimile or telegram. The
Company will pay no additional compensation to its officers, directors and
employees for these activities.

DATE AND TIME OF OPENING AND CLOSING OF THE POLLS

The date and time of the opening of the polls for the Annual Meeting of
the Shareholders of the Company shall be 10:00 a.m. on December 12, 2003. The
time of the closing of the polls for voting shall be announced at the Annual
Meeting. No ballot, proxies or votes, nor any revocations or changes to a
vote, shall be accepted after the closing of the polls unless a court of
equity, upon application by a shareholder, determines otherwise.

VOTING

The Inspector of Elections will tabulate votes cast by proxy or in
person at the Annual Meeting with the assistance of the Company's transfer
agent. The Inspector of Elections will also determine whether a quorum is
present. Each shareholder of record at the close of business on October 6,
2003, is entitled to one vote for each share then held on each matter submitted
to a vote of shareholders. Brokers holding shares of record for their
customers generally are not entitled to vote on certain matters unless their
customers give them specific voting instructions. If the broker does not
receive specific instructions, the broker will note this on the proxy form or
otherwise advise the Company that it lacks voting authority.

The voting requirements for the election of directors and any other
proposals to be considered by the shareholders at the Annual Meeting are as
follows:

I. ELECTION OF DIRECTORS

o A shareholder submitting a Proxy may vote for all or any of the
nominees for election to the Board of Directors or may withhold his or
her vote from all or any of such nominees. Directors are elected by a
plurality of votes.

o If a submitted proxy is properly signed but unmarked in respect of the
election of directors to the board, the proxy agents named in the
proxy will vote all the shares represented thereby for the election of
all of the nominees for director.

o All of the nominees have agreed to serve the Company as a director if
elected. However, should any nominee become unwilling or unable to
serve if elected, the Proxy Agents named in the Proxy will exercise
their voting power in favor of such other person as the Board of
Directors of the Company may recommend.

o In accordance with California corporations law and the Company's
Bylaws, the election of a nominee to the Board requires a quorum
consisting of a majority of the Company's issued and outstanding
shares entitled to vote, and a favorable vote by a plurality of the
Company's issued and outstanding shares entitled to vote for the
nominee. An abstention from voting on this matter by a shareholder,
while included for purposes of calculating a quorum for the meeting,
has no effect on the election of nominees to the Board. In addition,
although broker "non-votes" will be counted for purposes of attaining
a quorum, they will have no effect on the vote for nominees.

II. RATIFICATION OF BOARD'S SELECTION OF INDEPENDENT AUDITORS

o A shareholder submitting a Proxy may vote for or against or abstain
from voting for ratification of the Board's selection of independent
auditors for the fiscal year ending June 30, 2004.

o If a submitted proxy is properly signed but unmarked in respect of the
ratification of the selection of independent auditors, the proxy
agents named in the proxy will vote all the shares represented thereby
for ratification of the independent auditors.

o In accordance with California corporations law and the Company's
Bylaws, a proposal submitted to the shareholders of the Company
requires a quorum consisting of a majority of the Company's issued and
outstanding shares entitled to vote, and a favorable vote of a
majority of the Company's issued and outstanding shares entitled to
vote on the proposal. An abstention from voting on this matter by a
shareholder, while included for purposes of calculating a quorum for
the meeting, has no effect on the ratification of the selection of
independent auditors. In addition, although broker "non-votes" will be
counted for purposes of attaining a quorum, they will have no effect
on the vote for ratification of the selection of independent auditors.

ANNUAL REPORT

The Annual Report of the Company for the fiscal year ended June 30, 2003
accompanies this Proxy Statement. Shareholders are encouraged to read the
Annual Report in connection with the information contained herein.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

As of October 6, 2003, the Company had 7,472,673 shares of its common
stock issued and outstanding. Each share of record on October 6, 2003, will be
entitled to one vote at the Annual Meeting.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of October 6, 2003 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.

PRINCIPAL STOCKHOLDERS

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AMOUNT AND PERCENTAGE
NATURE OF OF COMMON SHARES
NAME BENEFICIAL OWNER OUTSTANDING
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(I) DIRECTORS AND EXECUTIVE OFFICER
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Frank S. Yuan - CEO and Chairman (1) 3,185,000 42.62%
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James Vandeberg, Director (2) 15,315 .20%
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Deborah Shamaley, Director (3) 335,000 4.48%
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Charles Rice, Director (4) 95,000 1.27%
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Mary B. McNabb, Director (5) 55,000 .74%
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Don C. McNabb, Director (6) 10,000 .13%
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Luz Jimenez - Controller (7) 42,500 0.57%
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(II) ALL DIRECTORS AND OFFICERS AS A GROUP 3,737,815 50.01%
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TOTAL OUTSTANDING SHARES 7,472,673 100.00%
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(1) Includes 2,450,000 shares of common stock held. Also, includes 530,000
shares of vested stock options.

(2) Includes 15,315 shares of vested stock options.

(3) Includes 300,000 shares of common stock held. Also, includes 5,000 shares
of vested stock options.

(4) Includes 60,000 shares of common stock held. Also, includes 5,000 shares of
vested stock options.

(5) Includes 55,000 shares of vested stock options.

(6) Includes 10,000 shares of vested stock options.

(7) Includes 15,000 shares of common stock held. Also, includes 27,500 shares
of vested stock options.

CHANGE IN CONTROL

The Company is not aware of any arrangement that would upset the control
mechanisms currently in place. Although it is conceivable that a third party
could attempt a hostile takeover of the Company, the Company has not received
notice of any such effort.

ELECTION OF DIRECTORS - NOMINEES

At the Annul Meeting, six directors, who will constitute the entire
Board of Directors, are to be elected to serve until the next Annual Meeting of
Shareholders or until their successors shall be elected and shall qualify. All
nominees have consented to being named as nominees and have agreed to serve if
elected.

The table below sets forth certain information with respect to the
nominees for election as directors of the Company to serve until the 2004
Annual Meeting of Shareholders. The Board of Directors has no reason to
believe that the six nominees will be unwilling or unable to serve.

NAME OF NOMINEE AGE POSITIONS HELD
--------------- --- --------------
Charles Rice 61 Director since 1996
Deborah Shamaley 45 Director since 1996
Donald McNabb 61 Director since 2002
Mary McNabb 54 Director since 2001
James Vandeberg 59 Director since 2001
Frank S. Yuan 55 Chairman of the Board since 1996
Chief Executive Officer since 1996

There are no family relationships among any of the director and executive
offices, except for the following: Nominees Donald and Mary McNabb are husband
and wife.

The following text sets forth certain biographical information concerning
each nominee:

CHARLES RICE. Charles Rice, Senior International and Domestic buyer,
retired from Sears Robuck and Montgomery Wards. His 30+ years of buying
experience, reputation, contacts & product sourcing knowledge bring the Company
tremendous benefits and 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.

DONALD C. MCNABB, Sr. Donald C. McNabb, Sr., brings more than 34 years
experience in international manufacturing, marketing and law. As founder and
President of Quadri Corporation, a manufacturer of computer memory systems,
McNabb lead the company into becoming the worlds leading manufacturer of
military memory systems. Quadri maintained sales offices throughout Europe with
manufacturing facilities in Mexico, Hong Kong and Korea. McNabb founded Safari
Arms that became the ninth largest pistol manufacturer in the US and the largest
manufacturer of custom parts in the world. Safari pioneered the use of
investment casting in firearm manufacturing and developed a world wide marketing
organization. Subsequent to Safari Don McNabb established a real estate
brokerage firm in California and Arizona specializing in commercial properties
and tax deferred exchanges. McNabb now practices law with offices in San Diego
and Phoenix. McNabb attended Capitol Institute, Arizona State University, and
graduated Summa Cum Laude with a Juris Doctorate from Western Sierra School of
Law. He also holds national designations in both commercial and international
real estate.

MARY MCNABB. Mary McNabb was recently the Executive Vice President of
Merchandising and Marketing at Factory 2-U Stores (F2U), an extreme value, brand
name, in-season family clothing and home products store chain. F2U has over 270
stores with annual sales just under 600 million. McNabb oversaw all aspects of
the

Merchandising, and Marketing for the stores from 1990 until 2001. In the 11
years Mary spent with F2U the company grew from 90 stores to 270 stores and from
approximately $85 million in sales to almost $600 million. She has also held
executive level merchandising and marketing positions at One Price Clothing
Stores, and Yellow Front Stores. McNabb has traveled the Far East extensively to
source and produce products. She began her career at J.W. Robinson's department
store where she entered their Executive Training Program. In 1969, McNabb
graduated from Becker College in Worcester, Massachusetts with a degree in
Business.

JAMES VANDEBERG. James Vandeberg 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 IPOs, 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,
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.

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+ years as an immigrant in the U.S.
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.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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 from July 1, 2001, to June 30,
2003, all reports were filed on a timely basis.

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 June 30, 2003, the Board of Directors held four regular meetings and
three 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 Mary
McNabb. 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 June 30, 2003, the Executive Committee held three meetings.

The Compensation Committee consists of Deborah Shamaley, Mary McNabb 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 to administer
the Company's Stock Option Plan. The Compensation Committee held two meetings
during the fiscal year ended June 30, 2003.

AUDIT COMMITTEE REPORT

The Audit Committee held Four (4) meetings during fiscal year 2003. The
consolidated financial statements of the Company for fiscal year ended June 30,
2003, have been examined by Squar, Milner, Reehl & Williamson, LLP as

the Company's independent auditors. The Audit Committee has appointed Squar,
Milner, Reehl & Williamson, LLP as the Company's independent auditors for the
fiscal year ending June 30, 2004.

The Audit Committee hereby reports as follows:
(1) The Audit Committee has reviewed and discussed the audited
consolidated financial statements with management and the
independent auditors;
(2) The Audit Committee has discussed with Squar, Milner, Reehl &
Williamson, LLP, the Company's independent auditors for fiscal year
2003, the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended, modified or supplemented;
(3) The Audit Committee has received the written disclosure and letter
from Squar, Milner, Reehl & Williamson, LLP, required by
Independence Standards Board Standard No. 1 and has discussed with
Squar, Milner, Reehl & Williamson, LLP, their independence; and
(4) In reliance on the foregoing review and discussions, the Audit
Committee recommended to the Company's Board of Directors that the
audited consolidated financial statements be included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 2003, for filing with the Securities and Exchange
Commission.
The following table sets forth the fees paid by the Company for
professional services rendered by Squar, Milner, Reehl & Williamson, LLP, for
audit of the annual fiscal statements for fiscal years 2003 and 2002 and fees
billed for other services rendered by Squar, Milner, Reehl & Williamson, LLP:

Type of Services Rendered 2002 2003
------------------------- ---- ----
Audit Fees $ 34,350 $ 43,000
Audit-Related Fees $ 3,500 $ 3,500
Tax Fees $ 0 $ 0
All Other Fees $ 0 $ 0

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.

(1) Audit Committee

The Audit Committee is governed by a written charter, a copy of which charter
accompanies this Proxy Statement 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 Donald McNabb
are other members of the audit committee.

(2) 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.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

COMPENSATION OF NAMED 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 fiscal year
ended June 30, 2003, annual compensation, including salary and bonuses paid by
the Company to the CEO. No other executive officers received more than $100,000
in the fiscal year ended June 30, 2003. 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 each Named Executive Officer's salary and
bonus. No other compensation was granted for this fiscal year ended June 30,
2003.

SUMMARY COMPENSATION TABLE

Long Term Compensation
-----------------------------
Annual Compensation Awards Payouts
- -----------------------------------------------------------------------------------------------------------------------
Securities
Name Other Restricted Underlying
and Annual Stock Options LTIP All Other
Principal Compen- Award(s) SAR (#) Payouts Compensa-
Position Year Salary ($) Bonus ($) sation($) ($) (1) ($) sation ($)
- -----------------------------------------------------------------------------------------------------------------------

Yuan, Frank 2003 $150,000 N/A $0 N/A 5,000 N/A $0
(CEO) 2002 $150,000 N/A $0 N/A 5,000 N/A $0
2001 $ 71,000 N/A $0 N/A 0 N/A $0
- -----------------------------------------------------------------------------------------------------------------------

(1) Consists of grants of stock options under the Company's 1996, 1999,
and 2001 Stock Option Plans.

The following table sets forth certain information concerning grants of
stock options pursuant to the 1996, 1999, and 2001 Stock Option Plans to each
Named Executive Officer during the year ended June 30, 2003.

OPTION / SAR GRANTS IN LAST FISCAL YEAR

- ----------------------------------------------------------------------------------------------------
% of Total
Number of Options /
Securities SARS
Underlying Granted to
Options / SARS Employees in Exercise or Base
Name Granted Fiscal Year (1) Price ($/Sh) Expiration Date
- ----------------------------------------------------------------------------------------------------

Yuan, Frank (CEO) 5,000 3% $0.24 12/09/12
- ----------------------------------------------------------------------------------------------------

(1) Options to purchase an aggregate of 1,121,252 shares of Common Stock were
granted to employees, including the Named Executive Officers, during the fiscal
year ended June 30, 2003. Stock options granted are under the terms of the
1996, 1999, and 2001 Stock Option Plans. Generally, vesting of granted stock
options are based on the following schedule: 25% of grant vests 6 months after
the grant, then at 4.16% per month, to be completely vested in two years.

The following table sets forth certain information concerning exercises
of stock options pursuant to the 1996 and/or 1999 Stock Option Plans by each
Named Executive Officer during the year ended June 30, 2003and stock options
held at year end.

AGGREGATED OPTION / SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION / SAR VALUES

- -------------------------------------------------------------------------------------------------------
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options / SARs Options / SARs
At FY-End (#) at FY-End ($)
Shares Acquired Exercisable / Exercisable /
Name On Exercise (#) Value Realized ($) Unexercisable Unexercisable *
- -------------------------------------------------------------------------------------------------------

Yuan, Frank (CEO) 0 $0 533,746/1,254 $237/$37
- -------------------------------------------------------------------------------------------------------

* On June 30, 2003, the average of the high and low price of the stock trading
on the OTC BB was $0.25.

THE 1996 STOCK OPTION PLAN

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

During the year ended June 30, 1999, the Company granted 15,000 options
under 1996 Plan to a non-employee director at exercise price of $0.40 per share.
During the year ended June 30, 2000, the Company granted 70,000 options under
the 1996 Plan to all directors for their service for the year ended June 30,
1999 and 35,000 options to four employees as incentive at exercise price of
$0.40 per share.

THE 1999 STOCK OPTION PLAN

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

During the year ended June 30, 2003 the Company granted a total of
50,000 options to employees, directors, officers, consultants, attorneys,
finders, and outside sales representatives. The exercise price of options
granted was $0.24 (the fair market value of the Company's common stock on the
date of grant). The Company applies APB Opinion No. 25 "Accounting for Stock
Issued to Employees" and related interpretations in accounting for its stock
option plans. As a result, the Company recognized non-cash stock-based
compensation expense of $0 for the year ended June 30, 2003.

THE 2001 STOCK OPTION PLAN

The Company's 2001 stock option plan ("2001 Plan") provides for the
granting of of stock options to employees, officers, director, and other
entities who have made contributions to the Company. The Company has reserved
2,000,000 shares of common stock for issuance under the 2001 Plan. The Board of
Directors determines the terms and conditions of granting stock options.
Generally, the vesting period is two years, allocated as follows: the first 25%
of options granted are exercisable after the first six months of employment,
then 4.16% are vested each month thereafter. The 2001 Plan provides for the
useful life of the options granted to be 10 years starting from the date of
grant. The options granted expire within three months after the termination of
employment.

During the year ended June 30, 2003, the Company granted options to
purchase an aggregate of 140,000 shares of restricted common stock under the
2001 Plan, at exercise prices of $0.24 per share (estimated fair market value of
the Company's common stock on the date of grant), to various employees of the
Company. The options vest through December 2004 and are exercisable through
December 2012.

COMPENSATION OF DIRECTORS

All directors are reimbursed for any reasonable expenses incurred in the
course of fulfilling their duties as directors of C-Me.

C-Me has also compensated its directors with stock options for their
service as directors. During the fiscal year ended June 30, 2003, C-Me directors
received the following nonqualified stock options from the 2001 Stock Option
Plan for their service as directors.

DIRECTOR OPTIONS
-------- --------
Don McNabb 10,000
Mary McNabb 5,000
Charles Rice 5,000
James Vandeberg 5,000
Deborah Shamalay 5,000
Frank Yuan 5,000

C-Me anticipates granting additional stock options to its directors as
compensation for their service as directors.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In fiscal year 2000, the Company received proceeds of approximately
$1,000,000 through the issuance of 111,000 shares of its restricted common
stock. The shares were purchased by Abest Tech. Company, Ltd. d.b.a. ABNet.tw
("ABNet"). The Company, in turn, acquired 1,500,000 shares of ABNet,
representing 15% of the outstanding common stock of ABNet, for $1,000,000. The
net result of the transaction was an investment in ABNet of $1,000,000, which
represents the then estimated fair value of the ABNet's common stock issued. The
Company accounted for the investment in ABNet under the cost method as it had
only a 15% interest and had no ability to significantly influence the decisions
of management. For the year ended June 30, 2002, the Company recognized an
impairment loss of $21,762, based on management's assessment of the operations
and future revenue of ABNet. In June 2002, the Company entered into an agreement
whereby the Company returned the 1,500,000 shares of ABNet common stock and in
turn ABNet returned the 111,000 shares of the Company's common stock, (which was
then freely trading) which the Company then cancelled. The Company accounted for
the transaction as a disposition of the investment in ABNet by recording the
estimated fair value of the company's common stock returned in the amount of
$36,630 (based on the market price at the date of disposition) as a reduction in
common stock and a loss on disposition of investment of $792,729 for the
remainder of the net book value of the related investment.

As of June 30, 2003 and 2002, the Company recognized an investment loss
from Global Purchasing Dotcom, Inc. (a joint venture, which the Company owns an
equity interest approximating 50%) of approximately $100,000 and $116,000,
respectively, based on the Company's equity ownership percentage.

During fiscal year ended June 30, 2002, the Company invested $21,338, for
a total equity interest approximating 47% and accounts for this investment under
the equity method. For the years ended June 30, 2003 and 2002, the Company
recognized an investment loss from E-Southeast Asia, Inc. of approximately
$65,000 and $185,000, respectively, based on the Company's equity ownership
percentage. Management together with the joint venture partners decided to close
the operations as of June 30, 2003. The Company's net investment at June 30,
2003 was zero.

For the years ended June 30, 2003 and 2002, the Company recognized an
investment loss from C-Me Taiwan, Inc. (a joint venture, which the Company owns
an equity interest approximating 40%) of approximately $27,000 and $100,000,
respectively, based on the Company's equity ownership percentage.

EQUITY COMPENSATION PLANS

- --------------------------------------------------------------------------------------------------
(A) (B) (C)

Number of Weighted- Remaining
Securities to be Average Available for
Issued Upon Exercise Price of Future Issuance
Exercise of Outstanding Under Equity
Outstanding Options, Compensation
Options, Warrants and Plans (Excluding
Warrants and Rights Securities
Plan Category Rights Reflected in
Column (A))
(#) (#) (#)
- --------------------------------------------------------------------------------------------------

Equity Compensation 1,581,885 $ 3.14 1,540,015
Plans Approved by
Security Holders
- --------------------------------------------------------------------------------------------------
Equity Compensation 869,119 $ 4.90 N/A
Plans not Approved
by Security Holders
- --------------------------------------------------------------------------------------------------
Total 2,451,004 $ 3.76 1,540,015
- --------------------------------------------------------------------------------------------------

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has appointed Squar, Milner, Reehl, & Williamson
LLP, Newport Beach, California, as independent certified public accountants to
act as the Company's auditors for the fiscal year ending June 30, 2004. Unless
otherwise specified, the shares of common stock represented by the proxies
solicited hereby will be voted "FOR" the proposal to appoint Squar, Milner,
Reehl, & Williamson LLP as the Company's auditors.

Representatives of Squar, Milner, Reehl, & Williamson are expected to be
present at the meeting and will have an opportunity to make a statement if they
wish to do so, and will be available to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE APPOINTMENT OF SQUAR,
MILNER, REEHL, & WILLIAMSON LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDING JUNE 30, 2004.

SHAREHOLDER PROPOSALS

In order to be considered for inclusion in the Company's proxy materials
for the 2004 annual meeting of shareholders, the Company must receive written
notice of any shareholder proposal by June 30, 2004. The Company did not receive
notice of any shareholder proposal or nominations of persons for election to the
Board of Directors relating to the 2003 Annual Meeting. All proposals and
nominations should be directed to the Company's principal executive offices at
4349 Baldwin Ave., Unit A, El Monte, CA. 91731, Attention: Manager of Investor
Relations.

OTHER MATTERS

A copy of the Company's 2003 Annual Report is included with this Proxy
Statement.

All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Any Proxy in which no direction is specified will be voted in
favor of each of the nominees and ratification of the Board's selection of
independent auditors.

The Board of Directors does not intend to bring any matters before the
Annual Meeting other than as stated in this Proxy Statement and is not aware
that any other matters will be presented for action at the meeting. Should any
other matters be properly presented, the person named in the enclosed form of
Proxy will vote the Proxy with respect thereto in accordance with their best
judgment, pursuant to the discretionary authority granted by the Proxy.

Copies of the Company's Annual Report on Form 10-KSB for the year ended
June 30, 2003, as filed with the Securities and Exchange Commission will be
provided to stockholders without charge upon request to the Manager of Investor
Relations, Cyber Merchants Exchange, Inc., 4349 Baldwin Ave., Unit A, El Monte,
CA. 91731. Toll-free 1.888.564.6263.

By Order of the Board of Directors,

/s/ Frank S. Yuan
-------------------------------------------------
Frank S. Yuan
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER

October 6, 2003

APPENDIX A

AUDIT COMMITTEE CHARTER
OF
CYBER MERCHANTS EXCHANGE, INC.

This Audit Committee Charter ("Charter") is the duly adopted governing
document of the Cyber Merchants Exchange, Inc. ("Company") audit committee
("Committee"), a duly constituted committee of the Company's Board of Directors
("Board").

1. RESPONSIBILITIES OF THE COMMITTEE. The scope of the Committee's
responsibilities shall include the following:

1.1. GENERAL OVERSIGHT. To assist the Board in fulfilling its
oversight responsibilities by reviewing the financial information
which will be provided to the shareholders and others, the systems
of internal controls which management and the Board have
established, and the audit process;

1.2. INDEPENDENT AUDITORS. To select, evaluate, and, where
appropriate, replace the independent auditor (or to nominate the
independent auditor to be proposed for shareholder approval in any
proxy statement);

1.3. STATEMENT ON INDEPENDENCE. To ensure receipt from the
independent auditors of a formal written statement delineating all
relationships between the auditor and the Company, consistent with
Independence Standards Board Standard 1;

1.4. ASSESSMENT OF INDEPENDENCE. To actively engage in a
dialogue with the auditor with respect to any disclosed
relationships or services that may impact the objectivity and
independence of the auditor; and

1.5. OVERSIGHT OF INDEPENDENCE. To take, or recommend that the
full Board take, appropriate action to oversee the independence of
the independent auditor.

2. COMPOSITION OF THE COMMITTEE. Subject to subsections 2.1 through 2.3,
the Committee shall be comprised of at least three members, each such
member being an independent director, and each of whom is able to read
and understand fundamental financial statements, including a company's
balance sheet, income statement, and cash flow statement or will become
able to do so within a reasonable period of time after his or her
appointment to the audit committee.

2.1. INDEPENDENT DIRECTORS. Independent directors are not
officers of the Company and are, in the view of the Board, free of
any relationship that would interfere with the exercise of
independent judgment. The following persons shall not be
considered independent:

a. A director who is employed by the Company or any of
its affiliates for the current year or any of the past
three years;

b. A director who accepts any compensation from the
Company or any of its affiliates in excess of $60,000
during the previous fiscal year, other than compensation
for Board service, benefits under a tax-qualified
retirement plan, or non-discretionary compensation;

c. A director who is a member of the immediate family of
an individual who is, or has been in any of the past three
years, employed by the Company or

any of its affiliates as an executive officer. Immediate
family includes a person's spouse, parents, children,
siblings, mother-in-law, father- in-law, brother-in-law,
sister-in-law, son-in-law, daughter-in-law, and anyone who
resides in such person's home;

d. A director who is a partner in, or a controlling
shareholder or an executive officer of, any for-profit
business organization to which the Company made, or from
which the Company received, payments (other than those
arising solely from investments in the Company's
securities) that exceed 5% of the Company's or business
organization's consolidated gross revenues for that year,
or $200,000, whichever is more, in any of the past three
years;

e. A director who is employed as an executive of another
entity where any of the Company's executives serve on that
entity's compensation committee.

2.2. FINANCIAL EXPERIENCE. At least one member of the Committee
shall have past employment experience in finance or accounting,
requisite professional certification in accounting, or any other
comparable experience or background which results in the
individual's financial sophistication, including being or having
been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities.

2.3. SPECIAL CIRCUMSTANCES. One director who is not independent
as defined in subsection 2.1 and is not a current employee or an
immediate family member of such employee, may be appointed to the
Committee, if the Board, under exceptional and limited
circumstances, determines that membership on the Committee by the
individual is required by the best interests of the Company and
its shareholders, and the Board discloses, in the next annual
proxy statement subsequent to such determination, the nature of
the relationship and the reasons for that determination.

3. SPECIFIC DUTIES OF THE COMMITTEE. In meeting its responsibilities, the
Committee is expected to:

3.1. ACCOUNTABILITY OF INDEPENDENT AUDITOR. Communicate to the
independent auditor its ultimate accountability to the Board and
the Committee, as representatives of the shareholders.

3.2. SPECIFIC RESPONSIBILITIES. Accomplish its specific
responsibilities set forth in subsections 1.2 through 1.5;

3.3. GENERAL OVERSIGHT. In connection with its general
oversight responsibility,

a. Provide an open avenue of communication between the
independent auditor and the Board;

b. Review and update the Committee's Charter annually;

c. Inquire of management and the independent auditor
about significant risks or exposures and assess the steps
management has taken to minimize such risk to the Company;

d. Consider, in consultation with the independent
auditor, the audit scope and plan of the independent
auditor;

e. Consider with management and the independent auditor
the rationale for employing audit firms other than the
principal independent auditor;

f. Consider and review with the independent auditor:

1. The adequacy of the Company's internal
controls including computerized information system
controls and security; and

2. Any related significant findings and
recommendations of the independent auditor together
with management's responses thereto;

g. Review with management and the independent auditor at
the completion of the annual examination:

1. The Company's annual financial statements and
related footnotes;

2. The independent auditor's audit of the
financial statements and its report thereon;

3. Any significant changes required in the
independent auditor's audit plan;

4. Any serious difficulties or disputes with
management encountered during the course of the
audit; and

5. Other matters related to the conduct of the
audit which are to be communicated to the Committee
under generally accepted auditing standards;

h. Consider and review with management:

1. Significant findings during the year and
management's responses thereto;

2. Any difficulties encountered in the course of
the audit, including any restrictions on the scope of
the independent auditor's work or access to required
information; and

3. Any changes required in the planned scope of
the independent auditor's plan;

i. Review filings with the SEC and other published
documents containing the Company's financial statements and
consider whether the information contained in these
documents is consistent with the information contained in
the financial statements;

j. Review policies and procedures with respect to
officers' expense accounts and perquisites, including their
use of corporate assets, and consider the results of any
review of these areas by the independent auditor;

k. Review legal and regulatory matters that may have a
material impact on the financial statements, related
Company compliance policies, and programs and reports
received from regulators;

l. Meet with the independent auditor and management in
separate executive sessions to discuss any matters that the
Committee or these groups believe should be discussed
privately with the Committee;

m. Report Committee actions to the Board with such
recommendations as

the Committee may deem appropriate;

n. Prepare a letter that complies with Item 7 of
Schedule 14A under the Securities Exchange Act of 1934 for
inclusion in the annual report and/or proxy statement that
describes the Committee's composition and responsibilities,
and how they were discharged;

o. Meet in connection with each regularly scheduled
meeting of the Board or more frequently as circumstances
require, and the Committee may ask members of management or
others to attend the meeting and provide pertinent
information as necessary; and

p. Perform such other functions as assigned by law, the
Company's articles of incorporation or bylaws, or the
Board.

4. MISCELLANEOUS. The duties and responsibilities of a member of the
Committee are in addition to those duties set out for a member of the
Board. Meetings of the Committee shall be noticed and conducted in
accordance with the provisions of the Company's articles of
incorporation and bylaws governing committees. This Charter may be
amended from time to time by act of the Committee, subject to the
provisions of the Company's articles of incorporation and bylaws
governing committees.

[LOGO CYBER MERCHANTS EXCHANGE]

CYBER MERCHANTS EXCHANGE