Cathay Merchant Group, Inc. Update

  
    
  
  
    
      Cathay Merchant Group, Inc. (AMEX: CMQ) (the “Company”) 
      -- on February 27, 2007, the Company received notice from the American 
      Stock Exchange (“Amex”) 
      indicating that the Company is not in compliance with Section 704 of the 
      Amex Company Guide (the “Guide”), 
      which requires a listed company to hold meetings of its shareholders 
      annually to elect directors and take action on other corporate matters. 
      The Company was afforded the opportunity to submit a plan of compliance 
      to Amex by March 13, 2007, that demonstrates the Company’s 
      ability to regain compliance with Section 704 of the Guide by May 29, 
      2007. If the Company does not submit a plan or if the plan is not 
      accepted by Amex, the Company may be subject to delisting procedures as 
      set forth in Section 1010 and Part 12 of the Guide.