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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended June 30, 2008
 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 
incorporation or organization
    
    I.R.S. Employer I.D. No.3101 West Coast Highway, Suite 400, Newport Beach, CA
(Address of principal executive offices)
    
    92663
(Zip Code)
 (949) 273-4000
 þ o þ o
  Large Accelerated Filer o
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller reporting company þ
 o þ




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Contents
 PagePART I
    
    
    3Item 1. Financial Statements
    
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4T. Controls and Procedures
    
    
    25PART II
    
    
    25Item 1. Legal Proceedings
    
    
    25Item 2. Unregistered Sales of Equity Securities
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27Exhibit 31.1Exhibit 31.2Exhibit 32
   2




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PART I
FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CANEUM, INC.
June 30, 2008 and December 31, 2007
 Condensed Consolidated Balance Sheets
Assets
 June 30,
    
    
    December 31,2008
    
    
    2007UnauditedCURRENT ASSETSCash and cash equivalents
    
    $
    50,070
    
    
    $
    46,280Accounts receivable, net of allowance of $394,258 and $392,157, respectively
    
    
    1,406,009
    
    
    
    1,559,352Accounts receivable from related parties, net of allowance of $153,852
    
    
    47,240
    
    
    
    111,010Prepaid assets
    
    
    82,969
    
    
    
    134,764Other current assets
    
    
    32,180
    
    
    
    33,202Total current assets
    
    
    1,618,468
    
    
    
    1,884,608LONG TERM ASSETSProperty & equipment, net
    
    
    150,281
    
    
    
    193,843Intangibles, net
    
    
    579,001
    
    
    
    643,555Goodwill
    
    
    1,464,805
    
    
    
    1,464,805Other
    
    
    34,060
    
    
    
    32,264TOTAL ASSETS
    
    $
    3,846,615
    
    
    $
    4,219,075
    3




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CANEUM, INC.
June 30, 2008 and December 31, 2007
 Condensed Consolidated Balance Sheets
Liabilities and Shareholders Equity
 June 30,
    
    
    December 31,2008
    
    
    2007UnauditedCURRENT LIABILITIESAccounts payable
    
    $
    1,705,198
    
    
    $
    1,552,870Accrued expenses
    
    
    48,313
    
    
    
    25,975Credit lines
    
    
    1,190,450
    
    
    
    1,231,694Accrued payroll and related expenses
    
    
    152,257
    
    
    
    248,287Deferred revenue
    
    
    34,839
    
    
    
    22,880Current portion of installment loans
    
    
    259,225
    
    
    
    734,974Other current liabilities
    
    
    318,989
    
    
    
    90,992Total current liabilities
    
    
    3,709,271
    
    
    
    3,907,672LONG TERM LIABILITIESCurrent
portion of installment loan reclassifed to non-current
    
    
    
    
    
    
    200,000Promissory notes  related party
    
    
    625,000
    
    
    
    Promissory notes
    
    
    75,000
    
    
    
    Installment loans, less current portion
    
    
    433,672
    
    
    
    17,894Other non current liabilities
    
    
    63,820
    
    
    
    61,058Total liabilities
    
    
    4,906,763
    
    
    
    4,186,624SHAREHOLDERS EQUITYPreferred stock, $0.001 par value 20,000,000 shares authorized, 0 and
3,332,500
shares issued and outstanding
    
    
    
    
    
    
    3,332Common stock, $0.001 par value 100,000,000 shares authorized, 10,453,513
and 8,896,368 shares issued and outstanding
    
    
    10,452
    
    
    
    8,895Additional paid-in capital
    
    
    8,869,394
    
    
    
    8,708,827Accumulated other comprehensive income
    
    
    54,297
    
    
    
    87,416Accumulated deficit
    
    
    (9,994,291
    )
    
    
    (8,776,019
    )Total shareholders equity (deficit)
    
    
    (1,060,148
    )
    
    
    32,451TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    3,846,615
    
    
    $
    4,219,075
    4




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CANEUM, INC.
Three and Six Months Ended June 30, 2008 and 2007
 Condensed Consolidated Statements of
Operations and Comprehensive Income (Loss)
Unaudited
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,
    
    
    June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Unaudited
    
    
    Unaudited
    
    
    Unaudited
    
    
    UnauditedRevenue
    
    $
    3,282,784
    
    
    $
    3,241,315
    
    
    $
    6,519,408
    
    
    $
    5,991,688Cost of revenue
    
    
    2,742,409
    
    
    
    2,541,978
    
    
    
    5,469,496
    
    
    
    4,730,190Gross profit
    
    
    540,375
    
    
    
    699,337
    
    
    
    1,049,912
    
    
    
    1,261,498Operating expenses
    
    
    1,124,476
    
    
    
    1,187,839
    
    
    
    2,203,847
    
    
    
    2,297,794Loss from operations
    
    
    (584,101
    )
    
    
    (488,502
    )
    
    
    (1,153,935
    )
    
    
    (1,036,296
    )Other income (expense)Interest expense, net
    
    
    (57,363
    )
    
    
    (51,531
    )
    
    
    (112,669
    )
    
    
    (104,023
    )Gain (loss) on foreign exchange
    
    
    53,308
    
    
    
    (38,745
    )
    
    
    63,146
    
    
    
    (53,048
    )Total other income (expense)
    
    
    (4,055
    )
    
    
    (90,276
    )
    
    
    (49,523
    )
    
    
    (157,071
    )Minority interest
    
    
    
    
    
    
    (11,974
    )
    
    
    
    
    
    
    (80,352
    )Loss before income tax
    
    
    (588,156
    )
    
    
    (590,752
    )
    
    
    (1,203,458
    )
    
    
    (1,273,719
    )Income tax expense
    
    
    (13,174
    )
    
    
    (10,748
    )
    
    
    (14,814
    )
    
    
    (13,732
    )Net loss
    
    $
    (601,330
    )
    
    $
    (601,500
    )
    
    $
    (1,218,272
    )
    
    $
    (1,287,451
    )Basic and diluted net loss per common share
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.13
    )
    
    $
    (0.16
    )Weighted
average number of common shares outstanding used in the calculation
    
    
    9,534,667
    
    
    
    8,045,480
    
    
    
    9,293,810
    
    
    
    7,996,050Net loss
    
    $
    (601,330
    )
    
    $
    (601,500
    )
    
    $
    (1,218,272
    )
    
    $
    (1,287,451
    )Comprehensive Income (Loss):Foreign currency translation
adjustment (Note 2)
    
    
    (23,712
    )
    
    
    55,869
    
    
    
    (33,119
    )
    
    
    69,925Comprehensive Loss
    
    $
    (625,042
    )
    
    $
    (545,631
    )
    
    $
    (1,251,391
    )
    
    $
    (1,217,526
    )
   5




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CANEUM, INC.
June 30, 2008 and 2007
Condensed Consolidated Statements of Cash Flows
Unaudited
 For the Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (1,218,272
    )
    
    $
    (1,287,451
    )Adjustments to reconcile net loss to net cash used in operating activitiesStock option compensation expense
    
    
    241,864
    
    
    
    299,212Expenses paid by common stock issuances or committed issuances
    
    
    292,070
    
    
    
    317,003Interest accreted to TierOne installment loans
    
    
    
    
    
    
    34,538Depreciation and amortization
    
    
    49,789
    
    
    
    33,946Amortization of acquired intangibles
    
    
    91,326
    
    
    
    122,354Bad debt expense
    
    
    35,000
    
    
    
    Minority interest
    
    
    
    
    
    
    80,352(Increase) decrease inAccounts receivable
    
    
    109,286
    
    
    
    (1,070,247
    )Prepaid assets and other current assets
    
    
    43,549
    
    
    
    (58,584
    )Increase (decrease) inAccounts payable and accrued expenses
    
    
    201,467
    
    
    
    698,495Accrued payroll and related expenses
    
    
    (37,910
    )
    
    
    6,514Deferred revenue
    
    
    11,959
    
    
    
    Other current liabilities
    
    
    4,519
    
    
    
    Net cash used in operating activities
    
    
    (175,353
    )
    
    
    (823,868
    )CASH FLOWS FROM INVESTING ACTIVITIESCash paid for acquisition of remaining interest of Continuum
    
    
    
    
    
    
    (89,286
    )Purchase of property & equipment
    
    
    (17,185
    )
    
    
    (36,802
    )Sale of property & equipment
    
    
    1,050
    
    
    
    Net cash used in investing activities
    
    
    (16,135
    )
    
    
    (126,088
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of promissory notes
    
    
    500,000
    
    
    
    Payment of debt
    
    
    (76,896
    )
    
    
    (543,857
    )Addition to debt
    
    
    18,750
    
    
    
    24,225Repurchase of common and preferred shares
    
    
    (200,000
    )
    
    
    Increase (decrease) in credit lines
    
    
    (41,244
    )
    
    
    1,232,671Net cash provided by financing activities
    
    
    200,610
    
    
    
    713,039Effect of changes in foreign currency exchange rates on cash
    
    
    (5,332
    )
    
    
    19,028Net increase (decrease) in cash and cash equivalents
    
    
    3,790
    
    
    
    (217,889
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    46,280
    
    
    
    335,202CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    50,070
    
    
    $
    117,313SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONInterest paid
    
    $
    106,451
    
    
    $
    72,745Income taxes paid
    
    $
    14,814
    
    
    $
    13,732
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7




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 NOTE 1  CORPORATE HISTORY
 Organization
   Basis of Presentation
    8




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 NOTE 2  SIGNIFICANT ACCOUNTING POLICIES
 Consolidation
  Revenue Recognition
 Revenue Recognition
 Segment Reporting
   9




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 Stock-Based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
  Foreign Currency
   Use of Estimates
   10




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 Comprehensive Income
 Reporting
Comprehensive Income
 New Accounting Pronouncements
     11




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
  NOTE 3  GOING CONCERN UNCERTAINTY
      12




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 NOTE 4  PROMISSORY NOTES
   NOTE 5  RELATED PARTY TRANSACTIONS
  Customer
    13




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 NOTE 6  TIER ONE TRANSACTION
   NOTE 7  STOCK PLAN
    14




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
  NOTE 8  NOTES PAYABLE
 Credit Lines
    15




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 NOTE 9  LITIGATION
 Barron Litigation
     16




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
 Innofone Litigation
  Publishing Concepts, L.P.
  NOTE
10  FACILITY LEASE
   2008
    
    $
    89,2032009
    
    $
    181,4472010
    
    $
    138,365
  17




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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
June 30, 2008
   2008
    
    $
    48,2062009
    
    $
    69,9472010
    
    $
    47,7672011
    
    $
    7,357
 NOTE
11  SUBSEQUENT EVENTS
       18




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation
  Forward-Looking Statements
  Background
  Overview
 near-shore
  19




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
    
    Customer Support, including call centers and web agents for online and
offline technical, customer and product support;
    
    Human Resources, including benefits packages, pre-employment screening,
retained and contingent recruiting and information technology centric
staffing;
    
    Sales and Marketing, including online web agents, lead generation and
distribution channel expansion;
    
    Investor Relations and Public Relations, including audio transcription
and web development, deployment and maintenance for investor
communications; and
    
    Finance and Accounting, including data entry and back office processing.
  Results of Operations
 Three and Six months ended June 30, 2008, versus the Three and Six months ended June 30,
2007
 Revenue
   20




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Cost of Revenue and Gross Profit
     Operating Expenses
   21




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
 
 
 
   
 
 
 
  22




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Other Income (Expense)
   Net loss
   Liquidity and Capital Resources
     23




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Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
   24




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Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4T. Controls and Procedures
 Disclosure Controls and Procedures
   Changes in Internal Control Over Financial Reporting
  
 PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Barron Litigation
   25




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Item 2. Unregistered Sales of Equity Securities
 ten-day
 Name
    
    Investment Date
    
    
    Investment AmountMichael A. Willner
    
    
    3/19/08
    
    
    $
    100,000Robert Morris
    
    
    3/20/08
    
    
    
    100,000Ecewa Capital Group, LLC
    
    
    3/25/08
    
    
    
    50,000Ecewa Capital Group, LLC
    
    
    4/24/08
    
    
    
    50,000Matthew Portoni
    
    
    4/27/08
    
    
    
    25,000Ecewa Capital Group, LLC
    
    
    5/6/08
    
    
    
    200,000Charles Eckel
    
    
    5/12/08
    
    
    
    50,000Avtar Singh Ranshi
    
    
    5/14/08
    
    
    
    100,000Roger Goulette
    
    
    5/27/08
    
    
    
    25,000TOTAL
    
    
    
    
    
    $
    700,000
  
 Item 6. Exhibits
  31.1
    
    
    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 and Financial Officer
  26




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SIGNATURES
  Caneum, Inc.Date:  August 18, 2008
    By:
    /s/ Suki MudanSuki Mudan,President(Principal Executive and Financial Officer)  27




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EXHIBIT INDEX
 ExhibitNo.
    
    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 and Financial Officer
  28