##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION  Form 10-QSB (Mark One) [X]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the quarter ended June 30, 2004
 [   ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the transition period
from __________ to _________
 Commission File Number: 0-30874 CANEUM, INC.  Nevada
    
    33-0916900State or other jurisdiction of
    
    I.R.S. Employer I.D. No.incorporation or organization
 170 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 [   ]
(2) Yes [X]  No [   ] State the number of shares outstanding of each of the Issuers classes of
common equity as of the latest practicable date: At August 5, 2004, there were
4,036,014 shares of our common stock
outstanding.




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##### Table of Contents



PART I
FINANCIAL INFORMATION 
 Item 1. Financial Statements CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) FINANCIAL STATEMENTS FOR THE QUARTERS ENDED JUNE 30, 2004 AND 2003 2




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
TABLE OF CONTENTS  
 PageINDEPENDENT AUDITORS REPORTSFINANCIAL 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 31.1 - Certification of Principal Executive OfficerExhibit 31.1 - Certification of Principal Financial OfficerExhibit 32 - Certification of PEO and PCO
  3




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
 
 ASSETS June 30,
    
    December 31,2004
    
    2003(unaudited)CURRENT ASSETSCash and cash equivalents
    
    $
    333,663
    
    
    $
    781,387Accounts receivable
    
    
    74,376
    
    
    
    40,450Prepaid expenses and other assets
    
    
    15,000
    
    
    
    15,000Available-for-sale equity securities (Note 3)
    
    
    171,220
    
    
    
    77,521TOTAL CURRENT ASSETS
    
    
    594,259
    
    
    
    914,358FIXED ASSETSSoftware
    
    
    100
    
    
    
    100TOTAL FIXED ASSETS
    
    
    100
    
    
    
    100OTHER ASSETSCapitalized acquisition costs
    
    
    31,615
    
    
    
    TOTAL ASSETS
    
    $
    625,974
    
    
    $
    914,458
 See accompanying notes to the financial statements. 4




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
BALANCE SHEETS
AS OF JUNE 30, 2004 (unaudited) AND DECEMBER 31, 2003 
 LIABILITIES AND STOCKHOLDERS EQUITY June 30,
    
    December 31,2004
    
    2003(unaudited)CURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    70,426
    
    
    $
    20,984Taxes payable
    
    
    800
    
    
    
    800TOTAL CURRENT LIABILITIES
    
    
    71,226
    
    
    
    21,784COMMITMENTS AND CONTINGENCIES (Note 6)STOCKHOLDERS EQUITYCommon stock, 100,000,000 shares authorized
at $.001 par value: 4,036,014 shares
issued or issuable and outstanding at June 30, 2004, and
4,010,000 shares issued and outstanding at December 31, 2003
    
    
    4,036
    
    
    
    4,010Additional paid in capital
    
    
    1,328,399
    
    
    
    1,287,665Accumulated deficit
    
    
    (718,452
    )
    
    
    (382,217
    )Accumulated other comprehensive loss
    
    
    (59,235
    )
    
    
    (16,784
    )TOTAL STOCKHOLDERS EQUITY
    
    
    554,748
    
    
    
    892,674TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    625,974
    
    
    $
    914,458
 See accompanying notes to the financial statements 5




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
 
 Three months ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003REVENUE
    
    $
    129,914
    
    
    $
    11,308
    
    
    $
    214,039
    
    
    $
    15,108COST OF REVENUE
    
    
    63,937
    
    
    
    3,750
    
    
    
    117,320
    
    
    
    3,750GROSS PROFIT
    
    
    65,977
    
    
    
    7,558
    
    
    
    96,719
    
    
    
    11,358OPERATING EXPENSES
    
    
    263,869
    
    
    
    61,654
    
    
    
    461,946
    
    
    
    65,114LOSS FROM OPERATIONS
    
    
    (197,892
    )
    
    
    (54,096
    )
    
    
    (365,227
    )
    
    
    (53,756
    )OTHER INCOME (EXPENSE)Other income
    
    
    33,346
    
    
    
    
    
    
    
    37,834
    
    
    
    Realized losses from the sales of securities
    
    
    
    
    
    
    
    
    
    
    (10,695
    )
    
    
    Dividend income
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    Interest income
    
    
    950
    
    
    
    
    
    
    
    1,831
    
    
    
    31Interest expense
    
    
    
    
    
    
    (524
    )
    
    
    
    
    
    
    (979
    )TOTAL OTHER INCOME (EXPENSE)
    
    
    34,296
    
    
    
    (524
    )
    
    
    28,992
    
    
    
    (948
    )LOSS BEFORE INCOME TAX
    
    
    (163,596
    )
    
    
    (54,620
    )
    
    
    (336,235
    )
    
    
    (54,704
    )INCOME TAX EXPENSE
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NET LOSS
    
    $
    (163,596
    )
    
    $
    (54,620
    )
    
    $
    (336,235
    )
    
    $
    (54,704
    )LOSS PER COMMON SHARE
    
    $
    (0.04
    )
    
    $
    (0.03
    )
    
    $
    (0.08
    )
    
    $
    (0.04
    )SHARES USED IN EARNINGS PER SHARE CALCULATIONSWEIGHTED AVERAGE COMMON SHARES
    
    
    4,017,837
    
    
    
    1,819,341
    
    
    
    4,013,918
    
    
    
    1,439,006OTHER COMPREHENSIVE INCOME (LOSS)NET LOSS
    
    $
    (163,596
    )
    
    $
    (54,620
    )
    
    $
    (336,235
    )
    
    $
    (54,704
    )OTHER COMPREHENSIVE INCOME (LOSS):Unrealized (loss) on
available-for-sale securities (Note 3)
    
    
    (8,933
    )
    
    
    
    
    
    
    (42,451
    )
    
    
    COMPREHENSIVE LOSS
    
    $
    (172,529
    )
    
    $
    (54,620
    )
    
    $
    (378,686
    )
    
    $
    (54,704
    )
 See accompanying notes to the financial statements 6




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
 
 Additional
    
    
    
    
    
    Accumulated
    
    TotalCommon Stock
    
    Paid-in
    
    Accumulated
    
    other comprehensive
    
    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 six months ended June 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (336,235
    )
    
    
    
    
    
    
    (336,235
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    21,250
    
    
    
    
    
    
    
    
    
    
    
    21,250Issue of stock for services
    
    
    5,000
    
    
    
    5
    
    
    
    3,745
    
    
    
    
    
    
    
    
    
    
    
    3,750Issue of stock for legal services
    
    
    21,014
    
    
    
    21
    
    
    
    15,739
    
    
    
    
    
    
    
    
    
    
    
    15,760Other comprehensive loss for the
six months ended June 30, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,451
    )
    
    
    (42,451
    )BALANCE, June 30, 2004
    
    
    4,036,014
    
    
    $
    4,036
    
    
    $
    1,328,399
    
    
    $
    (718,452
    )
    
    $
    (59,235
    )
    
    $
    554,748
 See accompanying notes to the financial statements 7




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
 
 Six months endedJune 30,
    
    June 30,2004
    
    2003CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (336,235
    )
    
    $
    (54,704
    )Adjustments to reconcile net loss to net
cash used by operating activities:Stock-based compensation expense
    
    
    40,760
    
    
    
    1,050Receipt of stock for services
    
    
    (32,500
    )
    
    
    Increase in accounts receivable
    
    
    (33,926
    )
    
    
    Decrease in interest receivable
    
    
    
    
    
    
    (31
    )Decrease in interest payable
    
    
    
    
    
    
    (501
    )Increase in accounts payable
    
    
    49,442
    
    
    
    NET CASH
FLOWS (USED BY) OPERATING ACTIVITIES
    
    
    (312,459
    )
    
    
    (54,186
    )CASH FLOWS FROM INVESTING ACTIVITIESCapitalized acquisition costs
    
    
    (15,855
    )
    
    
    Purchases of available-for-sale securities
    
    
    (266,366
    )
    
    
    (29,517
    )Proceeds from available-for-sale securities
    
    
    146,956
    
    
    
    Payments on related party note
    
    
    
    
    
    
    1,250NET CASH
FLOWS (USED BY) INVESTING ACTIVITIES
    
    
    (135,265
    )
    
    
    (28,267
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of common stock for cash
    
    
    
    
    
    
    500,000Payments on notes payable
    
    
    
    
    
    
    (23,087
    )NET CASH
FLOWS PROVIDED BY INVESTING ACTIVITIES
    
    
    
    
    
    
    476,913NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (447,724
    )
    
    
    394,460CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
    
    
    781,387
    
    
    
    CASH AND
CASH EQUIVALENTS, END OF THE PERIOD
    
    $
    333,663
    
    
    $
    394,460SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the period for interest
    
    $
    
    
    
    $
    524Cash paid
for income taxes
    
    $
    
    
    
    $
    
 See accompanying notes to the financial statements 8




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Caneum, Inc.
(formerly, SaiphT Corporation) 
 
 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 is a global provider of business process and information
technology outsourcing products and services across vertical industries
including technology, energy, government, education and healthcare. The Company
provides a suite of business strategy and planning capabilities to assist
customers with their make versus buy decisions in the areas of data, network,
product development, product maintenance and support, and fulfills its services
onshore, in-region (NAFTA), and offshore, depending on the business goals and
objectives of its global customers. In parallel, Caneum is opportunistically
pursuing accretive acquisitions within its core outsourcing products and
services suite in order to broaden its core capabilities, expand its customer
base and supplement its organic growth. 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 June 30, 2004, and the results of its operations through and
for the three and six months ended June 30, 2004 and June 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 9




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003 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 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 ended June 30, 2004, the Company had four customers
that each accounted for at least 10% of the Companys revenue. As of June 30,
2004, five 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. As of June 30, 2004, the Company
had approximately $210,000 on deposit with a financial institution that exceeds
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. 10




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003 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. As of June 30, 2004, the Company had 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
    
    Three
    
    Six months
    
    Six monthsmonths
    
    months
    
    ended
    
    endedended June
    
    ended June
    
    June 30,
    
    June 30,2004
    
    2003
    
    2004
    
    2003Net loss, as reported
    
    $
    (163,596
    )
    
    $
    (54,620
    )
    
    $
    (336,235
    )
    
    $
    (54,704
    )Stock-based compensation
determined under fair value
method
    
    
    (178,812
    )
    
    
    (50,417
    )
    
    
    (206,912
    )
    
    
    (50,417
    )Net loss, pro-forma
    
    
    (342,408
    )
    
    
    (105,037
    )
    
    
    (543,147
    )
    
    
    (105,121
    )Net loss per
share, as reported
    
    
    (0.04
    )
    
    
    (0.03
    )
    
    
    (0.08
    )
    
    
    (0.04
    )Net loss per share, pro-forma
    
    
    (0.09
    )
    
    
    (0.06
    )
    
    
    (0.14
    )
    
    
    (0.07
    )
 Stock-Based Compensation (continued) 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
    
    
    43.35
    %
    
    
    45.33
    %Risk-free Interest Rate
    
    
    4.00
    %
    
    
    4.00
    %Expected life of options
    
    4-5 years
    
    5 years
 11




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003 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. 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 June 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, 12




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003 assets, liabilities and earnings involve extensive reliance on managements
estimates. Actual results could differ from those estimates. NOTE 3  Available-for-Sale Equity Securities At June 30, 2004, the Company had $171,220 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 $59,235, and an
aggregate cost basis of $230,455 as of June 30, 2004. NOTE 4 - Related Party Transactions During the quarter ended June 30, 2004, the Company had the following
agreements with entities whose principals and/or directors are shareholders of
the Company: Rent The Company subleases space from Cygni Capital, LLC, whose principal is a
shareholder of the Company. The current rent is $2,050 per month. The total
rent expense was $4,750 for the quarter ended June 30, 2004 and $1,500 for the
quarter ended June 30, 2003. This agreement is on a month-to-month term. Management Services Agreement The Company had retained Cygni Capital, LLC, whose principal is a
shareholder of the Company to perform certain management services. These
services included, but are not limited to, reception, telephone, janitorial,
bookkeeping and general office services. The service agreement was for $450
per month. The total expense pursuant to this agreement was $1,350 for the
quarter ended June 30, 2004 and $2,000 for the quarter ended June 30, 2003.
This agreement expired on June 30, 2004. 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 June 30, 2004 and $3,600 for the quarter ended June 30, 2003.
This agreement is on a month-to-month term. 13




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003 NOTE 5 - Stock Plan On December 18, 2002, the Companys Board of Directors adopted the 2002
Stock Option/Stock Issuance Plan (the Plan). The Plan was approved by
shareholders effective July 20, 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 six 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 June 30, 2004, is
presented below: CommonStockOptions
    
    AverageGranted
    
    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
    
    
    $
    0.75
 14




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003 Outstanding at March 31, 2004
    
    
    3,787,500
    
    
    $
    0.59Granted during the quarter ended June
30, 2004
    
    
    1,105,000
    
    
    $
    0.75Outstanding Options at June 30, 2004
    
    
    4,892,500
    
    
    $
    0.63
 WeightedAverageExercisePriceOptions exercisable June 30, 2004
    
    
    1,658,542
    
    
    $
    0.57
 Exercise Price
    
    Number Outstanding$0.50
    
    
    100,000$0.55
    
    
    2,750,000$0.75
    
    
    2,042,500
 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 15




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003  $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. 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  Subsequent Events 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 16




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
June 30, 2004 and December 31, 2003 $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
agreement will be terminated if the merger has not been completed by September
30, 2004. 17




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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
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 agreement will be terminated if the merger has not been
completed by September 30, 2004. 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 18




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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 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 June 30, 2004, revenues increased 1,049%, to
$129,914 versus $11,308 for the comparative quarter ended June 30, 2003. For
the six months ended June 30, 2004, revenue increased 1,298%, to $214,039
versus $15,108 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 1,605%, to $63,937 for the quarter
ended June 30, 2004, versus $3,750 for the comparative quarter ended June 30,
2003. For the six months ended June 30, 2004, cost of revenue increased
3,029%, to $117,320 versus $3,750 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 June 30, 2004, increased
773%, to $65,977 versus $7,558 for the comparative quarter, reflecting a
current quarterly gross profit of 50%. The gross profit for the six months
ended June 30, 2004 was $96,719 or 45%. Our operating expenses for the quarter ended June 30, 2004, increased
327%, to $263,869 versus $61,654 for the quarter ended June 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 and benefits of $154,529
and investor relations of $19,500 19




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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. Management has not yet determined the amount of revenues and expenses
estimated for 2004, but anticipate that they will increase progressively. Liquidity and Capital Resources As of June 30, 2004, cash decreased 57%, to $333,663 from $781,387 at
December 31, 2003. This is a decrease of $447,724 in cash and cash equivalents
for the six months ended June 30, 2004. The decrease in cash and cash
equivalents consists of cash used in operations of $312,459 and cash used by
investing activities of $135,265. The amount of cash and cash equivalents used
in operations and investing activities for the six months ended June 30, 2003,
was $54,186 and $28,267, respectively. However, during this period we also
raised $500,000 in a private placement, resulting in a net increase in cash and
cash equivalents during the comparative period. Working
capital decreased 41%, to $523,033 at June 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. 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 $65,000, and
management estimates that future monthly cash requirements will be
approximately $65,000. Generating modest additional revenues, we estimate that
our cash on hand would meet our cash flow requirements through at least June
30, 2005. Any additional funds from operations would likely extend this
estimated period. We do not anticipate the immediate need for additional
funding from investors. 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. 20




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Off-Balance Sheet Arrangements During the six months ended June 30, 2004, we did not engage in any
off-balance sheet arrangements. 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. 21




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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 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 June 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 June 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
$0.75 per share. For services rendered prior to June 30, 2004, we
issued a total of 21,014 shares to Mr. Jensen. 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 22




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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 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 April and May 2004 we issued 5,000 shares and granted options to
purchase 5,000 shares at $.75 per share to Brittany Mason, our
assistant secretary and a part-time consultant. These shares were
issued, and the options granted, 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. Ms. Mason represented that she was an accredited investor as
defined in Rule 501 of Regulation D at the time of the transactions.
She delivered appropriate investment representations with respect to
this issuance and grant, and consented to the imposition of restrictive
legends upon the documents evidencing the shares and the options. She
represented that she 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. 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 stock issuance and option
grant. No underwriting discounts or commissions were paid in
connection with the stock issuance or the option grant.
    
    In May 2004 we granted options to Cygni Capital LLC to purchase
100,000 shares at $.75 per share for past and current services rendered to us.
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. Cygni Capital represented that it was an accredited
investor as defined in Rule 501 of Regulation D at the time of the
granting. The entity delivered appropriate investment representations
with respect to this issuance and consented to the imposition of
restrictive legends upon the documents evidencing the options. It
represented that it 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. Cygni Capital represented that it 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 grants. 23




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
    
    In June 2004 we granted 500,000 options each to Charlie Sundling
and Raju Patel in connection with employment agreements with these
individuals. The exercise price of the options is $0.75 per share.
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 transactions by an issuer not involving any
public offering. Mr. Sundling and Mr. Patel each represented that he
was an accredited investor as defined in Rule 501 of Regulation D at
the time of the granting. Each delivered appropriate investment
representations with respect to the issuance and consented to the
imposition of restrictive legends upon the documents evidencing the
options. Each 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. Each 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 grants. Item 6. Exhibits and Reports on Form 8-K  (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
  (b)
    
    Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended June 30, 2004. 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.Date: August 16, 2004
    By  /s/ Sukhbir Singh MudanSukhbir Singh Mudan, President andTreasurer (Principal executive officer,
principal financial officer, and chief
accounting officer) 24