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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION  Form 10-QSB (Mark One) þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended September 30, 2004 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ________ to __________ Commission File Number: 000-30874 CANEUM, INC.  Nevada
    
    33-0916900State or other jurisdiction of
    
    I.R.S. Employer I.D. No.incorporation or organization170 Newport Center Drive, Suite 220, Newport Beach, CA
    
    
    92660(Address of principal executive offices)
    
    (Zip Code)
 Issuers telephone number, including area code: (949) 273-4000 Check whether the Issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the 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 fling requirements for the past 90 days. (1) Yes
x No o      (2) Yes x No o State the number of shares outstanding of each of the Issuers classes of
common equity as of the latest practicable date: At November 9, 2004, there
were 4,192,042 shares of our common stock
outstanding.




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) FINANCIAL STATEMENTS FOR THE QUARTERS AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 2




---



CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
TABLE OF CONTENTS PageFINANCIAL STATEMENTSBALANCE SHEETS  ASSETS
    
    
    4BALANCE SHEETS  LIABILITIES AND STOCKHOLDERS EQUITY
    
    
    5STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
    
    
    6STATEMENTS OF STOCKHOLDERS EQUITY
    
    
    7STATEMENTS OF CASH FLOWS
    
    
    8NOTES TO THE FINANCIAL STATEMENTS
    
    
    9Exhibit 31.1Exhibit 31.2Exhibit 32
  3




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##### Table of Contents



ASSETS September 30,
    
    December 31,2004
    
    2003(Unaudited)CURRENT ASSETSCash and cash equivalents
    
    $
    322,168
    
    
    $
    781,387Accounts receivable
    
    
    98,091
    
    
    
    40,450Prepaid expenses and other assets
    
    
    15,000
    
    
    
    15,000Deferred Compensation
    
    
    6,850
    
    
    
    Available-for-sale equity securities (Note 3)
    
    
    31,381
    
    
    
    77,521TOTAL CURRENT ASSETS
    
    
    473,490
    
    
    
    914,358FIXED ASSETSSoftware
    
    
    100
    
    
    
    100TOTAL FIXED ASSETS
    
    
    100
    
    
    
    100OTHER ASSETSCapitalized
acquisition costs (Note 2)
    
    
    86,150
    
    
    
    TOTAL ASSETS
    
    $
    559,740
    
    
    $
    914,458
 See accompanying notes to the financial statements. 4




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LIABILITIES AND STOCKHOLDERS EQUITY September 30,
    
    December 31,2004
    
    2003(Unaudited)CURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    190,851
    
    
    $
    20,984Taxes payable
    
    
    
    
    
    
    800TOTAL CURRENT LIABILITIES
    
    
    190,851
    
    
    
    21,784COMMITMENTS AND CONTINGENCIES (Note 6)STOCKHOLDERS EQUITY (Note 7)Common stock, 100,000,000 shares authorized
at $.001 par value: 4,137,987 and 4,010,000 shares
issued, issuable and outstanding, respectively
    
    
    4,138
    
    
    
    4,010Additional paid in capital
    
    
    1,595,435
    
    
    
    1,287,665Accumulated deficit
    
    
    (1,171,207
    )
    
    
    (382,217
    )Accumulated other comprehensive loss
    
    
    (59,477
    )
    
    
    (16,784
    )TOTAL STOCKHOLDERS EQUITY
    
    
    368,889
    
    
    
    892,674TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    559,740
    
    
    $
    914,458
 See accompanying notes to the financial statements 5




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Three months ended
    
    Nine months endedSep 30,
    
    Sep 30,
    
    Sep 30,
    
    Sep 30,2004
    
    2003
    
    2004
    
    2003REVENUE
    
    $
    162,628
    
    
    $
    21,000
    
    
    $
    376,667
    
    
    $
    36,108COST OF REVENUE
    
    
    138,910
    
    
    
    27,351
    
    
    
    256,230
    
    
    
    31,101GROSS PROFIT
    
    
    23,718
    
    
    
    (6,351
    )
    
    
    120,437
    
    
    
    5,007OPERATING EXPENSES
    
    
    433,013
    
    
    
    133,318
    
    
    
    894,959
    
    
    
    198,432LOSS FROM OPERATIONS
    
    
    (409,295
    )
    
    
    (139,669
    )
    
    
    (774,522
    )
    
    
    (193,425
    )OTHER INCOME (EXPENSE)Other income
    
    
    
    
    
    
    11,784
    
    
    
    37,834
    
    
    
    11,784Realized losses from the sales of securities
    
    
    (42,994
    )
    
    
    (5,540
    )
    
    
    (53,689
    )
    
    
    (5,540
    )Dividend income
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    Interest income
    
    
    334
    
    
    
    191
    
    
    
    2,165
    
    
    
    222Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (979
    )TOTAL OTHER INCOME (EXPENSE)
    
    
    (42,660
    )
    
    
    6,435
    
    
    
    (13,668
    )
    
    
    5,487LOSS BEFORE INCOME TAX
    
    
    (451,955
    )
    
    
    (133,234
    )
    
    
    (788,190
    )
    
    
    (187,938
    )INCOME TAX EXPENSE
    
    
    (800
    )
    
    
    
    
    
    
    (800
    )
    
    
    NET LOSS
    
    $
    (452,755
    )
    
    $
    (133,234
    )
    
    $
    (788,990
    )
    
    $
    (187,938
    )LOSS PER COMMON SHARE
    
    
    (0.11
    )
    
    
    (0.04
    )
    
    
    (0.20
    )
    
    
    (0.09
    )SHARES USED IN EARNINGS PER SHARE CALCULATIONSWEIGHTED AVERAGE COMMON SHARES
    
    
    4,037,987
    
    
    
    3,220,115
    
    
    
    4,023,608
    
    
    
    2,031,724OTHER COMPREHENSIVE INCOME (LOSS)NET LOSS
    
    $
    (452,755
    )
    
    $
    (133,234
    )
    
    $
    (788,990
    )
    
    $
    (187,938
    )OTHER COMPREHENSIVE INCOME (LOSS):Unrealized
(loss)/gain on available-for-sale securities (Note 3)
    
    
    (242
    )
    
    
    3,380
    
    
    
    (42,693
    )
    
    
    3,380COMPREHENSIVE LOSS
    
    $
    (452,997
    )
    
    $
    (129,854
    )
    
    $
    (831,683
    )
    
    $
    (184,558
    )
 See accompanying notes to the financial statements 6




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CANEUM, INC.  
  
 Common Stock

    
    Additional
Paid-in
    
    Accumulated
    
    Accumulated
other comprehensive
    
    Total
StockholdersShares
    
    Amount
    
    Capital
    
    deficit
    
    (loss)
    
    EquityBALANCE, December 31, 2003
    
    
    4,010,000
    
    
    $
    4,010
    
    
    $
    1,287,665
    
    
    $
    (382,217
    )
    
    $
    (16,784
    )
    
    $
    892,674Net loss for the nine months
ended September 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (788,990
    )
    
    
    
    
    
    
    (788,990
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    83,199
    
    
    
    
    
    
    
    
    
    
    
    83,199Issue of stock for administrative services
    
    
    5,000
    
    
    
    5
    
    
    
    3,745
    
    
    
    
    
    
    
    
    
    
    
    3,750Issue of stock for legal services
    
    
    21,014
    
    
    
    21
    
    
    
    15,739
    
    
    
    
    
    
    
    
    
    
    
    15,760Issue of stock for legal services
    
    
    1,973
    
    
    
    2
    
    
    
    5,187
    
    
    
    
    
    
    
    
    
    
    
    5,189Shares issued in connection with a
private placement at $2.00 per share
    
    
    100,000
    
    
    
    100
    
    
    
    199,900
    
    
    
    
    
    
    
    
    
    
    
    200,000Other comprehensive (loss) for
the nine months ended September 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,693
    )
    
    
    (42,693
    )BALANCE, September 30, 2004, (unaudited)
    
    
    4,137,987
    
    
    $
    4,138
    
    
    $
    1,595,435
    
    
    $
    (1,171,207
    )
    
    $
    (59,477
    )
    
    $
    368,889
 See accompanying notes to the financial statements 7




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
 
 Nine months endedSep 30,
    
    Sep 30,2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (788,990
    )
    
    $
    (187,938
    )Adjustments to reconcile net loss to net
cash used by operating activities:Stock-based compensation expense
    
    
    83,199
    
    
    
    Expenses paid by stock issuance
    
    
    24,699
    
    
    
    26,050Loss on sale of securities
    
    
    53,689
    
    
    
    5,540Receipt of stock for services
    
    
    (32,500
    )
    
    
    Increase in accounts receivable
    
    
    (57,641
    )
    
    
    (21,000
    )Increase in prepaid and other assets
    
    
    
    
    
    
    (15,000
    )Increase in deferred compensation
    
    
    (6,850
    )Decrease in interest receivable
    
    
    
    
    
    
    144Decrease in interest payable
    
    
    
    
    
    
    10,842Increase in accounts payable
    
    
    169,067
    
    
    
    NET CASH FLOWS USED BY OPERATING ACTIVITIES
    
    
    (555,327
    )
    
    
    (181,362
    )CASH FLOWS FROM INVESTING ACTIVITIESCapitalized acquisition costs
    
    
    (86,150
    )
    
    
    Purchases of available-for-sale securities
    
    
    (266,366
    )
    
    
    (421,465
    )Proceeds from available-for-sale securities
    
    
    248,624
    
    
    
    397,663Payments on related party note
    
    
    
    
    
    
    1,250NET CASH FLOWS USED BY INVESTING ACTIVITIES
    
    
    (103,892
    )
    
    
    (22,552
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of common stock for cash
    
    
    200,000
    
    
    
    836,600Payments on notes payable
    
    
    
    
    
    
    (23,087
    )NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES
    
    
    200,000
    
    
    
    813,513NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (459,219
    )
    
    
    609,599CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
    
    
    781,387
    
    
    
    CASH AND CASH EQUIVALENTS, END OF THE YEAR
    
    $
    322,168
    
    
    $
    609,599SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the period for interest
    
    $
    
    
    
    $
    979Cash paid for income taxes
    
    $
    1,600
    
    
    $
    
 See accompanying notes to the financial statements 8




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NOTE 1  Corporate History Caneum, Inc. (the Company) was incorporated in Nevada on March 1, 2000,
as Saiph Corporation for the purpose of seeking and consummating a merger or
acquisition with a business entity organized as a private corporation,
partnership, or sole proprietorship. On March 5, 2003 the Company filed
Amended Articles of Incorporation changing its name to SaiphT Corporation. On
July 21, 2003, the Company changed its name to Caneum, Inc. The Company currently provides a broad variety of business process
outsourcing, software development and information technology consulting
services. The Company also intends to acquire and grow companies in the
software and information technology sectors. Prior to 2003, the Company had not conducted any significant operations,
and its activities focused primarily on financing activities, organizational
efforts, and seeking a merger target. Although the Company earned its initial
operating revenues in the quarter ended March 31, 2003, such revenues were not
significant, and as a result, the Companys prior period financial statements
have been presented as a development stage enterprise in accordance with the
guidance provided in Statement of Financial Accounting Standards No. 7. As the
result of the revenues earned during the quarter and year ended December 2003,
management no longer considers the Company to be a development stage
enterprise. The condensed financial statements have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. In the opinion of the Company, all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position of
the Company as of September 30, 2004, and the results of its operations for the three and nine months ended September 30, 2004, and September 30, 2003, have been made.
The results of its operations for such interim period are not necessarily
indicative of the results to be expected for the entire year. These condensed
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Companys annual report on Form
10-KSB for the year ended December 31, 2003. NOTE 2  Significant Accounting Policies Revenue Recognition The Company derives its revenue primarily from the sale of services.
Revenue is recognized as services are performed in accordance with the
provisions of SEC Staff Accounting
Bulletin No. 104, Revenue Recognition. The Company recognizes revenue when
there is 9




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persuasive evidence of an arrangement, title and risk of loss have
passed, delivery has occurred or the services have been rendered, the sales
price is fixed or determinable and collection of the related receivable is
reasonably assured. The Company records all shipping and handling fees billed
to customers as revenue, and related costs as cost of sales, when incurred, in
accordance with Emerging Issues Task Force (EITF) 00-10 Accounting for
Shipping and Handling Fees and Costs. During the quarter and nine months ended September 30, 2004, the Company had three customers that each accounted for at least 10% of the Companys revenue. As of
September 30, 2004, six customers, each accounted for at least 10% of accounts
receivable. Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents. At September 30, 2004, the
Company had no amounts on deposit that exceeded federally insured limits. Investments Marketable securities held by the Company which meet the criteria for
classification as available-for-sale are carried at fair value, net of a market
discount, if any, to reflect any restrictions on transferability. Unrealized
holding gains and losses on securities classified as available-for-sale are
carried net of income taxes as a component of Accumulated Other Comprehensive
Income (Loss). Stock-Based Compensation The Company accounts for employee stock-based compensation using the
intrinsic value method provided in Accounting Practice Bulletin Opinion No. 25,
and interpretations thereof. When stock options are granted to employees with
exercise prices less than the fair value of the underlying common stock at the
date of the grant, the difference is recognized as compensation expense and is
recorded over the vesting period of the options. The Company accounts for non-employee stock-based compensation using the
fair value method provided by Statement of Financial Accounting Standards
(SFAS) No. 123, as amended by SFAS No. 148. When stock options are granted
to non-employees, the Company estimates the fair value of the award and
recognizes related expenses over the performance period as prescribed by EITF
96-18. In accordance with SFAS No. 123 and SFAS No. 148, the Company has adopted
the fair value pro-forma disclosure provisions for employee stock options. 10




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Stock-Based Compensation (continued) As of September 30, 2004, the Company has one stock-based compensation
plan, which is described more fully in Note 5. The following table illustrates
the effect on net loss and net loss per share had the Company applied the fair
value recognition provisions of SFAS No. 123 to employee stock options. Three months ended
    
    Three months ended
    
    Nine months ended
    
    Nine months endedSept. 30, 2004
    
    Sept. 30, 2003
    
    Sept. 30, 2004
    
    Sept. 30, 2003Net loss, as reported
    
    $
    (452,755
    )
    
    $
    (133,234
    )
    
    $
    (788,990
    )
    
    $
    (187,938
    )Stock based compensation
deducted in arriving at net
loss as reported
    
    
    61,949
    
    
    
    0
    
    
    
    83,199
    
    
    
    0(390,806
    )
    
    
    (133,234
    )
    
    
    (705,791
    )
    
    
    (187,938
    )Stock-based compensation
determined under fair value
method
    
    
    (165,886
    )
    
    
    (50,416
    )
    
    
    (394,048
    )
    
    
    (100,832
    )Net loss, pro-forma
    
    
    (556,602
    )
    
    
    (183,650
    )
    
    
    (1,099,839
    )
    
    
    (288,770
    )Net loss per share, as reported
    
    
    (0.11
    )
    
    
    (0.04
    )
    
    
    (0.20
    )
    
    
    (0.09
    )Net loss per share, pro-forma
    
    
    (0.14
    )
    
    
    (0.06
    )
    
    
    (0.27
    )
    
    
    (0.14
    )
 The fair value of each stock option grant has been estimated on the date
of grant using the Black-Scholes option-pricing model, assuming no expected
dividends and the following weighted average assumptions: 2004
    
    2003Volatility
    
    
    148.92
    %
    
    
    45.33
    %Risk-free Interest Rate
    
    
    4.00
    %
    
    
    6.00
    %Expected life of options
    
    4-5 years
    
    5 years
 The Black-Scholes model, as well as other currently accepted option
valuation models, was developed to estimate the fair value of freely-tradable,
fully-transferable options without vesting restrictions, which significantly
differ from the Companys stock options plans. These models also require
highly subjective assumptions, including future stock price volatility and
expected time until exercise, which greatly affect the calculated fair value on
the grant date. 11




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Fair Value of Financial Instruments SFAS No. 107, Disclosures About Fair Value of Financial Instruments,
requires management to disclose the estimated fair value of certain assets and
liabilities defined by SFAS No. 107 as financial instruments. Financial
instruments are generally defined by SFAS No. 107 as cash and cash equivalents,
evidence of ownership interest in equity, or a contractual obligation that both
conveys to one entity a right to receive cash or other financial instruments
from another entity and imposes on the other entity the obligation to deliver
cash or other financial instruments to the first entity. At September 30, 2004
and December 31, 2003, management believes that the carrying amounts of cash
and cash equivalents, investments in securities and accounts payable
approximate fair value because of the short maturity of these financial
instruments. Accounting For Income Taxes The Company follows SFAS No. 109, Accounting for Income Taxes, which
requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in the
financial statements or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the differences between the
financial statements and the tax bases of assets and liabilities using enacted
rates in effect for the year in which the differences are expected to reverse.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized. Earnings (Loss) Per Share Basic earnings (loss) per share includes no dilution and is computed by
dividing earnings (loss) available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted earnings
per share reflect the potential dilution of securities that could share in the
earnings of an entity. Such shares are not included when there is a loss as
the effect would be anti-dilutive. Use of Estimates The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements
and revenues and expenses during the reporting period. In these financial
statements, assets, liabilities and earnings involve extensive reliance on
managements estimates. Actual results could differ from those estimates. 12




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NOTE 3  Available-for-Sale Equity Securities At September 30, 2004, the Company had $31,381 of available-for-sale
equity securities and such values were determined based on quoted market
prices. These equity securities had an aggregate unrealized loss of $59,477,
and an aggregate cost basis of $90,858 as of September 30, 2004. NOTE 4  Related Party Transactions During the quarter ended September 30, 2004, the Company had outstanding
into the following transactions with entities whose principals and/or directors
are shareholders of the Company: Revenue As
more fully described in Note 8 the Company has entered into an
agreement to purchase Pipeline Software, Inc. Caneums income for the quarter
ended September 30, 2004 includes revenues of $102,318 derived from Pipeline
Software, Inc., $72,000 for key employees now on employment contracts at
Caneum and the remaining $30,318 for outsourced services provided by Caneum. Rent The Company subleases space from Cygni Capital, LLC whose principal is a
shareholder of the Company. The current rent is $1,400 per month. The total
rent expense was $5,500 for the quarter ended September 30, 2004 and $1,500 for
the quarter ended September 30, 2003. This agreement is on a month-to-month
term. Management Services Agreement The Company has retained Cygni Capital, LLC whose principal is a
shareholder of the Company to perform certain management services. These
services include, but are not limited to reception, telephone, janitorial,
bookkeeping and general office services. The current service agreement is for
$450 per month. The total expense pursuant to this agreement was $1,350 for
the quarter ended September 30, 2004 and $4,000 for the quarter ended September
30, 2003. This agreement is on a month-to-month term. 13




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Consulting Services The Company had retained Cygni Capital, LLC whose principal is a
shareholder of the Company to perform certain consulting services. These
services are professional in nature and include, but are not limited to
document preparation and consulting services. The current agreement is $5,000
per month. The total expense pursuant to this agreement was $15,000 for the
quarter ended September 30, 2004 and $9,000 for the quarter ended September 30,
2003. This agreement is on a month-to-month term. Jason Daggett (a former Director) is the President of Monico Capital, which has a one year agreement through July 2005 to provide
Investor Relations and Public Relations services at $7500 per month. Cygni Capital, LLC (above) owns a 50% non-managing interest in
Monico Capital and Mr. Daggett is a Vice-President and minority non-managing member of Cygni Capital, LLC. NOTE 5  Stock Plan On December 18, 2002, the Companys Board of Directors and shareholders
adopted the 2002 Stock Option/Stock Issuance Plan (the
Plan). The Plan was approved by shareholders effective
June 12, 2004. The purpose of
the Plan is to provide eligible persons an opportunity to acquire a proprietary
interest in the Company and as an incentive to remain in the service of the
Company. There are 3,000,000 shares of common stock authorized for nonstatutory and
incentive stock options and stock grants under the Plan, which are subject to
adjustment in the event of stock splits, stock dividends, and other situations.
On March 10, 2004, the Board of Directors authorized an amendment to the Plan
to increase the number of shares of common stock under the plan to 7,500,000,
subject to shareholder approval within twelve months following the date of this
amendment. The Plan will continue in effect until all of the stock available for
grant or issuance has been acquired through exercise of options or grants of
shares, or until December 1, 2010, whichever is earlier. The Plan may also be
terminated in the event of certain corporate transactions such as a merger or
consolidation or the sale, transfer or other disposition of all or
substantially all of our assets. The purchase price under each option is established by the plan
administrator. Additionally, the plan administrator will fix the terms of each
option, but no option can be granted for a term in excess of 10 years. Stock
issued under the Plan may vest immediately or upon terms established by the
plan administrator, provided that at least 20 percent of the total shares
subject to a vesting schedule will fully vest in each calendar year on the
anniversary date of the issuance of the shares. A summary of option grants made under the Plan as of September 30, 2004 is presented below: 14




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Weighted AverageCommon Stock Options Granted
    
    
    
    
    
    Exercise PriceOutstanding at December 31, 2002
    
    
    0
    
    
    $
    0.00Granted during 2003
    
    
    3,037,500
    
    
    $
    0.56Outstanding at December 31, 2003
    
    
    3,037,500
    
    
    $
    0.56Granted during the quarter ended March
31,2004
    
    
    750,000
    
    
    $
    0.75Outstanding at March 31, 2004
    
    
    3,787,500
    
    
    $
    0.59Granted during the quarter ended June
30, 2004
    
    
    1,105,000
    
    
    $
    0.75Outstanding at June 30, 2004
    
    
    4,892,500
    
    
    $
    0.63Granted during the quarter ended
September 30, 2004
    
    
    388,000
    
    
    $
    2.51Outstanding at September 30, 2004
    
    
    5,280,500
    
    
    $
    0.77
 Weighted AverageExercise PriceOptions exercisable September 30, 2004
    
    
    2,112,708
    
    
    $
    0.59
 Exercise Price
    
    Number Vested$0.50
    
    
    100,000$0.55
    
    
    1,604,166$0.75
    
    
    408,542$2.40
    
    
    0$2.44
    
    
    0$3.00
    
    
    0
 15




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##### Table of Contents



NOTE 6  Commitments and Contingencies Employment Contracts On October 28, 2003, the Companys Compensation Committee approved
employment agreements with the Companys President, Sukhbir Singh Mudan, Alan
S. Knitowski, the Companys Chairman, and Robert F. Mitro, the Companys
Vice-Chairman. The following description sets forth the material individual
terms of these agreements:  
    
    Sukhbir Singh Mudan. The initial period of the employment
agreement for Mr. Mudan is three years. Mr. Mudan is required to
devote not less than 75% of his business time to the business of the
Company, and his base salary is $120,000 per annum. Mr. Mudan
received options to purchase 1,000,000 shares at $0.55 per share as
additional compensation for entering into the agreement.
    
    Alan S. Knitowski. Mr. Knitowski is required to devote his
best efforts to performing well all duties that the Company may
reasonably assign to him from time to time during the term of the
agreement, but he will not be required to devote in excess of 25% of
his business time and effort to providing these services. His base
salary is $120,000 per annum and he received options to purchase
1,000,000 shares at $0.55 per share as additional compensation for
entering into the agreement.
    
    Robert F. Mitro. Mr. Mitro is required to devote his best
efforts to performing well all duties that the Company may
reasonably assign to him from time to time during the term of the
agreement, but he will not be required to devote in excess of 25% of
his business time and effort to providing these services. His base
salary is $60,000 per annum and he received options to purchase
750,000 shares at $0.55 per share as additional compensation for
entering into the agreement. On March 17, 2004, the Compensation Committee approved an employment
agreement with the Companys Executive Vice-President, Gary D. Allhusen. The
initial period of the employment agreement for Mr. Allhusen is three years and
he is required to devote 100% of his business time to the business of the
Company. Mr. Allhusens base salary is $120,000 per annum and he received
options to purchase 750,000 shares at $0.75 per share as additional
compensation for entering into the agreement. In June 2004, the Compensation Committee approved an employment agreement
with the Companys Director of Technical Services, Charlie Sundling. The
initial period of the employment agreement for Mr. Sundling is two years and he
is required to devote 90% of his business time to the business of the Company.
Mr. Sundlings base salary is $120,000 per annum and he received options to
purchase 500,000 shares at $0.75 per share as additional compensation for
entering into the agreement. 16




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##### Table of Contents



In June 2004, the Compensation Committee approved an employment agreement
with the Companys Director of Professional Services, Raju Patel. The initial
period of the employment
agreement for Mr. Patel is two years and he is required to devote 100% of his
business time to the business of the Company. Mr. Patels base salary is
$120,000 per annum and he received options to purchase 500,000 shares at $0.75
per share as additional compensation for entering into the agreement. NOTE 7  Common Stock As of September 30, 2004 the Company had received subscriptions of
$200,000 in connection with a private placement of $1,000,000. The private
placement was for 500,000 common shares at $2.00 per share. NOTE 8 Acquisition On July 8, 2004, the Company entered into a merger agreement with Pipeline
Software, Inc., a California corporation. The agreement provides for Pipeline
to be merged with and into the Company. Under the terms of the agreement the
shareholders of Pipeline will receive 1,000,000 shares of the Companys common
stock payable over a period of two years, with 500,000 being issued pro rata to
the shareholders of Pipeline at the effective time of the merger, 250,000 being
issued to these shareholders on the first anniversary date, and 250,000 on the
second anniversary date. Shareholders of Pipeline will also receive pro rata a
cash payment of $50,000 per month for the first ten months following the
closing of the merger. In addition to customary closing conditions, closing
will be subject to the approval of the shareholders of both companies and the
audit of the financial statements of Pipeline. Closing is further conditioned
upon Pipeline having a positive net income for the year ended December 31,
2003, having at least $700,000 of gross revenue and positive net income for the
period from January 1, 2004, until June 30, 2004, and having $300,000 in cash
and current accounts receivable at the effective time of the merger, less
accounts payable. The closing of the transaction is subject to SEC review and
disposition of the original conditions. Management believes that the agreement
will be finalized in the fourth quarter. Item 2. Managements Discussion and Analysis and Plan of Operation The following discussion should be read in conjunction with our financial
statements and related notes thereto as filed with the Securities and Exchange
Commission. Background Prior to December 2002 we had no operating history. We are currently a
global provider of business process and information technology outsourcing
products and services across vertical industries including technology, energy,
government, education and healthcare. We provide a suite of business strategy
and planning capabilities to assist customers with their make versus buy 17




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decisions in the areas of data, network, product development, product
maintenance and support,
and fulfill our services onshore, in-region (NAFTA), and offshore, depending on
the business goals and objectives of our global customers. In parallel, we are
opportunistically pursuing accretive acquisitions within our core outsourcing
products and services suite in order to broaden our core capabilities, expand
our customer base and supplement our organic growth. On July 8, 2004, we entered into a merger agreement with Pipeline
Software, Inc., a California corporation. The agreement provides for Pipeline
to be merged with and into our company. Under the terms of the agreement the
shareholders of Pipeline will receive 1,000,000 shares of our common stock
payable over a period of two years, with 500,000 being issued pro rata to the
shareholders of Pipeline at the effective time of the merger, 250,000 being
issued to these shareholders on the first anniversary date, and 250,000 on the
second anniversary date. Shareholders of Pipeline will also receive pro rata a
cash payment of $50,000 per month for the first ten months following the
closing of the merger. In addition to customary closing conditions, closing
will be subject to the approval of the shareholders of both companies and the
audit of the financial statements of Pipeline. Closing is further conditioned
upon Pipeline having a positive net income for the year ended December 31,
2003, having at least $700,000 of gross revenue and positive net income for the
period from January 1, 2004, until June 30, 2004, and having $300,000 in cash
and current accounts receivable at the effective time of the merger, less
accounts payable. The closing date has been delayed to allow for the SEC to
complete their review of the transaction. Subject to the SEC review and
disposition of the contingencies management expects the merger to be completed
in the fourth quarter. Rolling forward, we intend to grow in two ways: first, through the further
sales and marketing of our business process and information technology
outsourcing services, and second, through the acquisition of other business
process and information technology outsourcing companies that add to our core
capabilities and our available customer base to sell outsourcing products and
services. Critical Accounting Policies Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and potentially result in materially
different results under different assumptions and conditions. There were no
changes to our critical accounting policies for the quarter ended June 30,
2004. We derive our revenue primarily from the sale of services. Revenue is
recognized as services are performed in accordance with all applicable revenue
recognition criteria. For these transactions we apply the provisions of SEC
Staff Accounting Bulletin No. 104, Revenue Recognition. We recognize revenue
when there is persuasive evidence of an arrangement, title and risk of loss
have passed, delivery has occurred or the services have been rendered, the
sales price is fixed or determinable and collection of the related receivable
is reasonably assured. We record all shipping and handling fees billed to
customers as revenue, and related costs as cost of sales, when incurred, in
accordance with EITF 00-10 Accounting for Shipping and Handling 18




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Fees and
Costs. Cost of services consists primarily of payments to third-party vendors and
contractors. General and administrative expenses consist primarily of overhead
in managing the pilot programs and marketing expenses for future projects, and
due diligence costs in reviewing acquisition targets. Corporate overhead
expenses relate to salaries and benefits of personnel responsible for corporate
activities, including acquisitions, administrative, and reporting
responsibilities. We record these expenses when incurred. Results of Operations During the quarter ended September 30, 2004, revenues increased 674%, to
$162,628 versus $21,000 for the comparative quarter ended September 30, 2003. For
the nine months ended September 30, 2004, revenue increased 943%, to $376,667
versus $36,108 for the comparative period. The increase in revenue is due to
additional sales efforts. Additional orders have come from existing customers,
while we have also focused on adding new customers and new revenue streams. Our cost of revenue earned increased 408%, to $138,910 for the quarter
ended September 30, 2004, versus $27,351 for the comparative quarter ended
September 30, 2003. For the nine months ended September 30, 2004, cost of
revenue increased 724%, to $256,230 versus $31,101 for the comparative period.
The increased cost reflects the related increase in the volume of subcontractor
costs associated with the services provided by us to our clients. The resulting gross profit for the quarter ended September 30, 2004,
increased $23,718 versus a loss of $6,351 for the comparative quarter
ended September 30, 2004,
reflecting a current quarterly gross profit margin of 15%. The gross profit for
the nine months ended September 30, 2004 was $120,437 or 32% versus $5,007 or
14% for the comparative period. Our operating expenses for the quarter ended September 30, 2004, increased
324%, to $433,013 versus $133,318 for the quarter ended September 30, 2003. The
increased operating expenses resulted from the creation of an organization to
support the current and future activities of the company. The major components
of operating expense were payroll and related taxes, benefits and bonuses of
$232,001 and investor relations of $38,160. The increase in payroll and related benefits was a result of adding to our
technical and support staff. These additions to headcount were considered
necessary to enable us to execute our business strategy. As we seek to
communicate with the investment community, we have also incurred costs in
investor relations. For the nine months ended September 30, 2004, operating
expenses increased to $894,959 from $198,432 for the comparative
quarter ended September 30, 2003. Payroll and related taxes,
benefits and bonuses amounted to $478,405 and investor relations expense was
$69,660. Management has not yet determined the amount of revenues and expenses
estimated for 2004, but anticipate that they will increase progressively. 19




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Liquidity and Capital Resources As of September 30, 2004, cash decreased 59%, to $322,168 from $781,387 at
December 31, 2003. This is a decrease of $459,219 in cash and cash equivalents
for the nine months ended September 30, 2004. The decrease in cash and cash
equivalents consists of cash used in operations of $555,327 and cash used by
investing activities of $103,892. The Company also received $200,000 from the
sale of stock in connection with a private placement. The amount of cash and
cash equivalents used in operations and investing activities for the nine
months ended September 30, 2003, was $181,362 and $22,552, respectively.
However, during the comparative period we also raised $836,600 in private
placements and paid down notes payable of $23,087, resulting in a net increase
in cash and cash equivalents during the comparative period. Working capital decreased 68%, to $282,639 at September 30, 2004, as
compared with working capital of $892,574 at December 31, 2003. This decrease
in working capital was a result primarily of the planned use of funds generated
from prior stock offerings to support the business during its growth phase
offset by the $200,000 generated from the current offering. Management believes that with revenues generated from operations, together
with funds generated from the prior sale of our common stock, we will have
sufficient cash to satisfy existing operating cash needs and working capital
requirements during 2004 and through at least June 30, 2005. Our monthly cash
requirements have fluctuated between approximately $46,000 and $90,000, and
management estimates that future monthly cash requirements will be
approximately $60,000 to $90,000. Generating modest additional revenues, we
estimate that our cash on hand, together with the additional offering of
$1,000,000 would enable us to meet our cash flow requirements for the next
twelve months. Any additional funds from operations would likely extend this
estimated period. Additionally, we may continue to compensate employees with equity
incentives, where possible, and continue to utilize equity instruments to
compensate existing and new employees hired to minimize cash outlays.
Management believes this strategy provides the ability to increase stockholder
value as well as utilize cash resources more effectively. During future quarters, we may seek additional funding to finance future
acquisitions. The amount and timing of such capital transactions is not yet
known and will depend largely on our operating needs and the cost to acquire
new information technology companies. Our ability to secure this additional
funding given present market conditions is uncertain, as is the financial
effect any such funding may have on our capital structure or operating results. Off-Balance Sheet Arrangements During the nine months ended September 30, 2004, we did not engage in any
off-balance sheet arrangements. 20




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Recent Accounting Pronouncements Stock-Based Compensation. We account for employee stock-based
compensation under the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB
25), as opposed to the fair value method prescribed by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
(SFAS 123). Pursuant to the provisions of APB 25, we generally do not record
an expense for the value of stock-based awards granted to employees. If
proposals currently under consideration by various accounting standard
organizations are adopted, such as the Financial Accounting Standards Board
Proposed Statement of Financial Accounting Standard,  Share-Based Payment, an
amendment of FASB Statements No. 123 and 95,  we may be required to treat the
value of stock-based awards granted to employees as compensation expense in the
future, which could have a material adverse effect on our reported operating
results and could negatively affect the price of our Common Stock. If these
proposals are adopted, we could decide to reduce the number of stock-based
awards granted to employees in the future, which could adversely impact our
ability to attract qualified candidates or retain existing employees without
increasing their cash compensation and, therefore, have material adverse effect
on our business, results of operations and financial condition. Forward-Looking Statements This report contains certain forward-looking statements and information
that are based on assumptions made by management and on information currently
available. When used in this report, the words anticipate, believe,
estimate, expect, intend, plan, and similar expressions, as they relate
to our company or its management, are intended to identify forward-looking
statements. These statements reflect managements current view of our company
concerning future events and are subject to certain risks, uncertainties and
assumptions, including among many others the following: changes in the
information technology industry; changes in out-sourcing and off-shore
operations; a general economic downturn; a further downturn in the securities
markets; our early phase of operations; reliance on foreign suppliers and
contractors; the inability to locate suitable acquisition targets; and other
risks and uncertainties. Should any of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in this report as anticipated,
estimated or expected. Item 3. Controls and Procedures Disclosure Controls and Procedures. Our principal executive officer and
principal financial officer, Sukhbir Singh Mudan, has concluded, based on his
evaluation, as of the end of the period covered by this report, that our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) are (1) effective to ensure that material information required to
be disclosed by us in reports filed or submitted by us under the Exchange Act
is recorded, processed, summarized, and reported within the time periods
specified in the rules and forms of 21




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the Securities and Exchange Commission,
and (2) designed to ensure that material information required to be disclosed
by us in such reports is accumulated, organized and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriated, to allow timely decisions regarding
required disclosure. Internal Control Over Financial Reporting. There were no changes in our
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) that occurred during our most recent quarter ended September
30, 2004, that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting. It should be noted that any system of controls, however well designed and
operated, can provide only reasonable and not absolute assurance that the
objectives of the system will be met. In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of control systems,
there is only reasonable assurance that our controls will succeed in achieving
their stated goals under all potential future conditions. PART II
OTHER INFORMATION Item 2. Changes in Securities During the quarter ended September 30, 2004, the following securities were
sold by us without registering the securities under the Securities Act:  
    
    In April 2004 we entered into an engagement agreement with Jon
Jensen to provide legal services in connection with the Pipeline
transaction. As part of the consideration to be paid for such
services, we agreed to issue shares of our common stock at the rate of
the greater of $0.75 per share or the average closing bid (or sale if
reported) price of the shares in the public trading market for the ten
trading days immediately preceding the receipt by us of the bill
setting forth the amounts for services. For services rendered for the
quarter ended September 30, 2004, we issued 1,973 shares to Mr. Jensen,
which shares were valued at $2.63 per share. These shares were issued
without registration under the Securities Act by reason of the
exemption from registration afforded by the provisions of Section 4(2)
thereof, and Rule 506 promulgated thereunder, as a transaction by an
issuer not involving any public offering. Mr. Jensen represented that
he had received information similar to that which would be included in
a prospectus and that he was relying upon his own investigation and
analysis of the investment in our stock. He delivered appropriate
investment representations with respect to this issuance and consented
to the imposition of restrictive legends upon the stock certificates
evidencing the shares. He represented that he had not entered into the
transaction with us as a result of or subsequent to any advertisement,
article, notice, or other communication published in any newspaper,
magazine, or similar media or broadcast on television or radio, or
presented at any seminar or meeting. Mr. Jensen represented that he
had been afforded 22




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the opportunity to ask questions of our management
and to receive answers concerning the terms and conditions of the stock
issuance. No underwriting discounts or commissions were paid in
connection with the transaction.
    
    In July 2004 we granted options to Douglas Wadkins to purchase
50,000 shares at $3.00 per share for acceptance as a director,
appointment to the compensation and audit committees, and appointment
as chairman of the compensation committee. These options were granted
without registration under the Securities Act by reason of the
exemption from registration afforded by the provisions of Section 4(6)
and/or Section 4(2) thereof, and Rule 506 promulgated thereunder, as a
transaction by an issuer not involving any public offering. Mr.
Wadkins represented that he was an accredited investor as defined in
Rule 501 of Regulation D at the time of the granting. He delivered
appropriate investment representations with respect to this issuance
and consented to the imposition of restrictive legends upon the
documents evidencing the options. He represented that he had not
entered into the transaction with us as a result of or subsequent to
any advertisement, article, notice, or other communication published in
any newspaper, magazine, or similar media or broadcast on television or
radio, or presented at any seminar or meeting. Mr. Wadkins represented
that he had been afforded the opportunity to ask questions of our
management and to receive answers concerning the terms and conditions
of the grants. No underwriting discounts or commissions were paid in
connection with the grant.
    
    In August 2004 we granted options to Avtar Ranshi to purchase
50,000 shares at $2.40 per share for continuing as a director,
continuing on the compensation and audit committees, and appointment as
chairman of the audit committee. These options were granted without
registration under the Securities Act by reason of the exemption from
registration afforded by the provisions of Section 4(6) and/or Section
4(2) thereof, and Rule 506 promulgated thereunder, as a transaction by
an issuer not involving any public offering. Mr. Ranshi represented
that he was an accredited investor as defined in Rule 501 of Regulation
D at the time of the granting. He delivered appropriate investment
representations with respect to this issuance and consented to the
imposition of restrictive legends upon the documents evidencing the
options. He represented that he had not entered into the transaction
with us as a result of or subsequent to any advertisement, article,
notice, or other communication published in any newspaper, magazine, or
similar media or broadcast on television or radio, or presented at any
seminar or meeting. Mr. Ranshi represented that he had been afforded
the opportunity to ask questions of our management and to receive
answers concerning the terms and conditions of the grants. No
underwriting discounts or commissions were paid in connection with the
grant.
    
    In August 2004 we granted options to Bernie Snow to purchase a
total of 268,000 shares at $2.44 per share for acceptance as compliance
services director for one of our business units. These options were
granted without registration under the Securities Act by reason of the
exemption from registration afforded by the provisions of Section 4(6)
and/or Section 4(2) thereof, and Rule 506 promulgated thereunder, as a
transaction by an issuer 23




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not involving any public offering. We believe Mr. Snow was an accredited investor as defined in Rule
501 of Regulation D at the time of the granting. He did not enter into the transaction with us as a result of or subsequent to
any advertisement, article, notice, or other communication published in
any
newspaper, magazine, or similar media or broadcast on television or
radio, or presented at any seminar or meeting. Mr. Snow had been afforded the opportunity to ask questions of our management
and to receive answers concerning the terms and conditions of the grants.
No underwriting discounts or commissions were paid in connection with
the grant. Mr. Snow has since terminated his services with us, at which
time he had 17,000 options vested. These options will expire on January
20, 2005.
    
    In August 2004 we granted options to Prashanth Mothukuri to
purchase 20,000 shares at $2.44 per share for acceptance as an oracle
data base operator. These options were granted without registration
under the Securities Act by reason of the exemption from registration
afforded by the provisions of Section 4(6) and/or Section 4(2) thereof,
and Rule 506 promulgated thereunder, as a transaction by an issuer not
involving any public offering. We believe Mr. Mothukuri was a
sophisticated investor as defined in Rule 501 of Regulation D at the
time of the granting. Mr. Mothukuri did not enter into the transaction
as a result of or subsequent to any advertisement, article, notice, or
other communication published in any newspaper, magazine, or similar
media or broadcast on television or radio, or presented at any seminar
or meeting. Mr. Mothukuri was provided access to information similar
to the type of information which would be included in a prospectus and
was also afforded the opportunity to ask questions of our management
and to receive answers concerning the terms and conditions of the
transaction. No underwriting discounts or commissions were paid in
connection with the grant. Mr. Mothukuri has since terminated his
services with us, at which time no options were vested.
    
    On September 30, 2004, we initiated an offering of 500,000 shares
of common stock at $2.00 per share for gross proceeds of $1,000,000.
These shares are being sold without registration under the Securities
Act by reason of the exemption from registration afforded by the
provisions of Section 4(6) and/or Section 4(2) thereof, and Rule 506
promulgated thereunder, as a transaction by an issuer not involving any
public offering. As of the date of this quarterly report the following
shares have been sold: NumberName
    
    of Shares
    
    AmountMarcia A. Girard
    
    
    25,000
    
    
    $
    50,000Kevin M. Morgan
    
    
    12,500
    
    
    $
    25,000Trymetris Capital Fund I, LLC
    
    
    100,000
    
    
    $
    200,000Naaim Ali Yahya
    
    
    15,000
    
    
    $
    30,000
 24




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Mr. Knitowski, the Chairman of Caneum, is one of two managing members of
Trymetris Capital Management, LLC, the managing member of Trymetris
Capital Fund I, LLC, and owns a membership interest in the fund. All of
the investors represented that they were accredited investors as defined
in Rule 501 of Regulation D at the time of the purchase. Each investor
delivered appropriate investment representations with respect to the
purchase of the shares and consented to the imposition of restrictive
legends upon the certificates evidencing such shares. Each investor
represented that he had not purchased the shares as a result of or
subsequent to any advertisement, article, notice, or other
communication published in any newspaper, magazine, or similar media or
broadcast on television or radio, or presented at any seminar or meeting.
Each investor also represented that he had received a term sheet
describing the offering and had received copies of, or had access to, all
of the reports made by us with the Securities and Exchange Commission.
Each investor further represented that he had been afforded the
opportunity to ask questions of our management and to receive answers
concerning the terms and conditions of the transaction. No underwriting
discounts or commissions were paid in connection with the sale of these shares. Item 5. Other Information Cancellation of Outstanding Options There are 3,000,000 shares currently authorized under our Stock
Option/Stock Issuance Plan. On October 28, 2003, our Board of Directors
authorized the increase of the total shares available under the Plan to
7,500,000. We are currently seeking approval from shareholders for that
increase in the number of shares authorized under the Plan. On October 28, 2003, we granted options to Eric Chess Bronk, a consultant
performing services through Cygni Capital, LLC, that were in excess of the
original number of shares authorized under the Plan by 37,500 shares. The Plan
provides that options may be granted in excess of the number of shares
authorized under the plan so long as within twelve months following the grant
in excess of the authorized shares, the Plan is amended to increase the number
of shares authorized to include the shares underlying the options granted in
excess of such authorized number. Because approval by the shareholders to
increase the current number of shares authorized under the Plan was not
obtained within the twelve-month period following the grant to Mr. Bronk,
these 37,500 additional options have lapsed. Annual Bonuses for Employees The employment agreements for Sukhbir Singh Mudan, our President, Alan S.
Knitowski, our Chairman, and Robert F. Mitro, our Vice-Chairman, provide for
annual performance bonuses as a percentage of their then applicable base
salary, less applicable withholding taxes. For 2004 the Board determined that
no cash bonuses would be paid and that the granting of any bonuses would be in
shares of common stock. No performance objectives 25




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were created for 2004, but
the compensation committee made the determination to grant bonuses based on
overall performance by each such employee. On October 26, our compensation committee approved annual performance
bonuses as follows: NumberName
    
    of SharesSukhbir Singh Mudan
    
    
    13,065Alan S. Knitowski
    
    
    14,033Robert F. Mitro
    
    
    6,049
 The bonuses are effective as of October 28, 2004, the one-year anniversary
of each of the employment agreements. These shares were granted without registration under the Securities Act by
reason of the exemption from registration afforded by the provisions of Section
4(6), and Rule 506 promulgated thereunder, as a transaction by an issuer not
involving any public offering. All individuals represented that they were
accredited investors as defined in Rule 501 of Regulation D at the time of the
granting. They delivered appropriate investment representations with respect
to this issuance and consented to the imposition of restrictive legends upon
the documents evidencing the shares. They represented that they had not
entered into the transactions with us as a result of or subsequent to any
advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar media or broadcast on television or radio, or
presented at any seminar or meeting. They represented that they had been
afforded the opportunity to ask questions of our management and to receive
answers concerning the terms and conditions of the grants. No underwriting
discounts or commissions were paid in connection with the grant. The shares granted are in excess of the number of shares of common stock
currently available for issuance under the Plan. Therefore, the certificates
issued will be held in escrow by us until there is obtained shareholder
approval of the amendment sufficiently increasing the number of shares of
common stock available for issuance under the Plan. If such shareholder
approval is not obtained within twelve months, then these shares will thereupon
be automatically canceled and cease to be outstanding. Stock Issuance for Continued Employment On October 27, 2004 we granted options to Brittany Mason to purchase
80,000 shares at $2.50 per share for her continued employment. These options
were granted without registration under the Securities Act by reason of the
exemption from registration afforded by the provisions of Section 4(6), and
Rule 506 promulgated thereunder, as a transaction by an issuer not involving
any public offering. Ms. Mason represented that she was an accredited investor
as defined in Rule 501 of Regulation D at the time of the granting. She
delivered appropriate investment representations with respect to this issuance
and consented to the imposition of restrictive legends upon the documents
evidencing the options. She represented that she had not entered 26




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into the
transaction with us as a result of or subsequent to any advertisement, article,
notice, or other communication published in any newspaper, magazine, or similar
media or broadcast on television or radio, or presented at any seminar or
meeting. Ms. Mason represented that she had been afforded the opportunity to
ask questions of our management and to receive answers concerning the terms and
conditions of the grant. No underwriting discounts or commissions were paid in
connection with the grant. Item 6. Exhibits  (a)
    
    Exhibits. The following exhibits are included as part of this report: Exhibit No.
    
    Description31.1
    
    Rule 13a-14(a) Certification by Principal Executive Officer31.2
    
    Rule 13a-14(a) Certification by Principal Financial Officer32
    
    Section 1350 Certification of Principal
Executive Officer and Principal Financial Officer
 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized. Caneum, Inc.By
    /s/ SUKHBIR SINGH MUDANDate:
November 15, 2004
    
    Sukhbir Singh Mudan,President and Treasurer(Principal executive officer,principal financial officer, andchief accounting officer)
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