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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-QSB/A-1
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended March 31, 2006
 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.170 Newport Center Drive,
Suite 210, Newport Beach, CA
    
    92660(Address of principal executive offices)
    
    (Zip Code)
 (949) 273-4000
 (1) Yes þ No o (2) Yes þ No o
 Yes o No þ




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EXPLANATION




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##### 



PART I
 FINANCIAL INFORMATION
 Item 1. Financial Statements
   PageFinancial StatementsCondensed Consolidated Balance Sheets  Assets
    
    
    3Condensed Consolidated Balance Sheets  Liabilities and Stockholders Equity
    
    
    4Condensed Consolidated Statements of Operations
    
    
    5Condensed Consolidated Statements of Cash Flows
    
    
    6Notes to Condensed Consolidated Financial Statements
    
    
    8Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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March 31
    
    
    December 31,2006
    
    
    2005(Unaudited)As restatedCURRENT ASSETSCash and cash equivalents, including restricted
cash of $343,750 as of March 31, 2006
    
    $
    838,411
    
    
    $
    99,760Accounts receivable, net of allowance for doubtful accounts of
$9,454 and $79,454, respectively
    
    
    1,205,637
    
    
    
    469,074Prepaid assets  related parties (Note 3)
    
    
    82,695
    
    
    
    68,750Other prepaid expenses and current assets
    
    
    81,326
    
    
    
    51,099TOTAL CURRENT ASSETS
    
    
    2,208,069
    
    
    
    688,683FIXED ASSETSProperty and Equipment
    
    
    23,119
    
    
    
    Software
    
    
    61,073
    
    
    
    16,12884,192
    
    
    
    16,128Less accumulated depreciation
    
    
    (32,497
    )
    
    
    (1,571
    )TOTAL FIXED ASSETS
    
    
    51,695
    
    
    
    14,557INTANGIBLE ASSETS (Note 4 and 7)Employment contracts
    
    
    78,000
    
    
    
    Customer contracts/relationships
    
    
    670,000
    
    
    
    Trademarks and logos
    
    
    90,000
    
    
    
    Goodwill
    
    
    1,432,214
    
    
    
    2,270,214
    
    
    
    Less accumulated amortization
    
    
    (1,600
    )
    
    
    2,268,614
    
    
    
    TOTAL ASSETS
    
    $
    4,528,378
    
    
    $
    703,240
   3




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March 31
    
    
    December 31,2006
    
    
    2005(Unaudited)As restatedCURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    464,833
    
    
    $
    284,656Credit line
    
    
    13
    
    
    
    6,833Accrued payroll and related expenses
    
    
    132,086
    
    
    
    25,839Income tax payable
    
    
    1,500
    
    
    
    Purchase price installment payable (Note 7)
    
    
    772,564
    
    
    
    TOTAL CURRENT LIABILITIES
    
    
    1,370,996
    
    
    
    317,328LONG TERM LIABILITIESDeferred tax liability
    
    
    9,300
    
    
    
    Purchase price installment payable (Note 7)
    
    
    695,674
    
    
    
    COMMITMENTS AND CONTINGENCIES (Notes 6, 7 and 10)
    
    
    
    
    
    
    STOCKHOLDERS EQUITYCommon stock, 100,000,000 shares authorized at $.001 par value:6,177,045 and 5,386,991 shares issued and outstanding, respectively
    
    
    6,177
    
    
    
    5,386Preferred stock, 20,000,000 shares authorized at $.001 par value:4,000,000 and 0 shares issued and outstanding, respectively
    
    
    4,000
    
    
    
    Additional paid in capital
    
    
    5,848,814
    
    
    
    3,434,328Accumulated deficit
    
    
    (3,366,583
    )
    
    
    (3,013,802
    )Deferred compensation
    
    
    (40,000
    )
    
    
    (40,000
    )TOTAL STOCKHOLDERS EQUITY
    
    
    2,452,408
    
    
    
    385,912TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    4,528,378
    
    
    $
    703,240
   4




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Three months endedMarch 31
    
    
    March 312006
    
    
    2005(unaudited)
    
    
    (unaudited)REVENUE
    
    $
    854,719
    
    
    $
    204,522COST OF REVENUE
    
    
    640,309
    
    
    
    137,938GROSS PROFIT
    
    
    214,410
    
    
    
    66,584OPERATING EXPENSES
    
    
    566,422
    
    
    
    568,705LOSS FROM OPERATIONS
    
    
    (352,012
    )
    
    
    (502,121
    )OTHER INCOMEOther expense
    
    
    31
    
    
    
    Interest income
    
    
    
    
    
    
    993TOTAL OTHER INCOME
    
    
    31
    
    
    
    993LOSS BEFORE INCOME TAX
    
    
    (351,981
    )
    
    
    (501,128
    )INCOME TAX EXPENSE
    
    
    (800
    )
    
    
    (800
    )NET LOSS
    
    $
    (352,781
    )
    
    $
    (501,928
    )LOSS PER COMMON SHARE-Basic and Diluted
    
    $
    (0.06
    )
    
    $
    (0.11
    )SHARES USED IN EARNINGS PER
SHARE CALCULATIONSWEIGHTED AVERAGE COMMON SHARES-Basic and Diluted
    
    
    5,820,551
    
    
    
    4,405,277
   5




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For the three months endedMarch 31
    
    
    March 312006
    
    
    2005(unaudited)
    
    
    (unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (352,781
    )
    
    $
    (501,928
    )Adjustments to reconcile net loss to net cash used by operating activities:Stock-based compensation expense
    
    
    129,272
    
    
    
    183,646Expenses paid by stock issuance
    
    
    15,000
    
    
    
    9,077Depreciation and amortization
    
    
    2,401
    
    
    
    (Increase) in accounts receivable
    
    
    (35,758
    )
    
    
    (113,674
    )Decrease (Increase) in prepaid expenses and other assets
    
    
    (29,859
    )
    
    
    Decrease accounts payable and accrued liabilities
    
    
    (83,263
    )
    
    
    (57,660
    )Increase in accrued payroll and related expenses
    
    
    57,754
    
    
    
    58,391NET CASH FLOWS USED BY OPERATING ACTIVITIES
    
    
    (297,234
    )
    
    
    (422,148
    )CASH FLOWS FROM INVESTING ACTIVITIESCash issued for purchase of TierOne Consulting, Inc., net of cash acquired
    
    
    (1,226,353
    )
    
    
    Purchase of fixed assets
    
    
    (945
    )
    
    
    NET CASH FLOWS USED BY INVESTING ACTIVITIES
    
    
    (1,227,298
    )
    
    
    CASH FLOWS FROM FINANCING ACTIVITIESIssuance of common stock for cash
    
    
    350,003
    
    
    
    40,000Issuance of Series A preferred shares for cash, net
    
    
    1,790,000
    
    
    
    Exercise of options
    
    
    130,000
    
    
    
    Decrease in credit line
    
    
    (6,820
    )
    
    
    NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
    
    
    2,263,183
    
    
    
    40,000NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    738,651
    
    
    
    (382,148
    )CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD
    
    
    99,760
    
    
    
    506,790CASH AND CASH EQUIVALENTS, END OF THE PERIOD
    
    $
    838,411
    
    
    $
    124,642SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONStock issued to satisfy TierOne acquisition costs
    
    $
    5,000
    
    
    $
    Stock issued to satisfy accrued expenses
    
    $
    
    
    
    $
    82,200Stock issued in connection with cost preference shares issued
    
    $
    50,400
    
    
    $
    Stock issued for services
    
    $
    20,000
    
    
    $
    Cash paid for interest
    
    $
    
    
    
    $
    Cash paid for income taxes
    
    $
    
    
    
    $
    800
   6




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Consolidation
  Revenue Recognition
    Cash and Cash Equivalents
  Stock Options
   7




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For the quarter endedMarch 31,
    
    
    March 31,2006
    
    
    2005Volatility
    
    
    71.23
    %
    
    
    178.33
    %Risk free Interest rate
    
    
    4.72
    %
    
    
    4.50
    %Expected life of Options
    
    4-5 years
    
    4-5 years
  Impact of SFAS No. 123R
  Three monthsended March 31,2006Stock-based compensation expense
    
    $
    129,272Effect on loss per share:Basic
    
    $
    (0.02
    )
    8




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Pro forma for 2005 Under SFAS No. 123
  Three monthsended March 31,2005Net income (loss) as reported
    
    $
    (501,928
    )Add: stock option-based employee compensation
expense included in reported net loss,
net of related tax effects
    
    
    183,646Deduct: stock-based employee compensation
expense, net of related tax effects
    
    
    (397,800
    )Pro forma
    
    $
    (716,082
    )Basic and diluted net loss per share, as reported
    
    $
    (0.11
    )Basic and diluted net loss per share, pro forma
    
    $
    (0.16
    )
  Fair Value of Financial Instruments
   9




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Accounting for Income Taxes
  Earnings (Loss) Per Share
  Use of Estimates
  New Accounting Pronouncements
    10




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Rent
  Management Services Agreement
  Consulting Services
   11




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Investor Relations
  Consulting
  Revenue
       12




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For the quarter endedMarch 31,2006
    
    
    2005Current:Federal
    
    $
    
    
    
    $
    State
    
    
    800
    
    
    
    800800
    
    
    
    800Deferred:Federal
    
    $
    
    
    
    $
    State
    
    
    
    
    
    
    Income tax provision
    
    $
    800
    
    
    $
    800
        13




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For the quarter ended
    
    
    For the quarter endedMarch 31, 2006
    
    
    March 31, 2005Weighted-Average
    
    
    
    
    
    
    Weighted-AverageShares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at January 1
    
    
    4,636,250
    
    
    $
    0.81
    
    
    
    3,990,000
    
    
    $
    0.67Granted
    
    
    2,090,000
    
    
    $
    0.83
    
    
    
    670,000
    
    
    $
    2.24Cancelled/forfeited
    
    
    (148,125
    )
    
    $
    1.86
    
    
    
    Exercised
    
    
    (240,454
    )
    
    $
    0.54
    
    
    
    Outstanding at March 31
    
    
    6,337,671
    
    
    $
    0.81
    
    
    
    4,660,000
    
    
    $
    0.89Options exercisable at March 31
    
    
    3,988,818
    
    
    
    
    
    
    
    3,191,250Weighted-average fair value of
options granted during the period
    
    $
    0.83
    
    
    
    
    
    
    $
    2.42
  Options Outstanding
    
    
    Options ExercisableNumber
    
    
    Weighted-Average
    
    
    
    
    
    
    NumberRange of
    
    Outstanding
    
    
    Remaining
    
    
    Weighted-Average
    
    
    Exercisable
    
    
    Weighted-AverageExercise Prices
    
    at 3/31/06
    
    
    Contractual Life
    
    
    Exercise Prices
    
    
    at 3/31/06
    
    
    Exercise Price$0.00 - $1.00
    
    
    5,570,796
    
    
    4 years
    
    $
    0.69
    
    
    
    3,515,935
    
    
    $
    0.61$1.00 - $2.00
    
    
    679,375
    
    
    5 years
    
    $
    1.47
    
    
    
    275,321
    
    
    $
    1.47$2.00 - $3.00
    
    
    87,500
    
    
    5 years
    
    $
    2.66
    
    
    
    197,562
    
    
    $
    2.50$0.00 - $3.00
    
    
    6,337,671
    
    
    4 years
    
    $
    0.81
    
    
    
    3,757,739
    
    
    $
    0.76
  *
    
    50,000 warrants for common shares at $0.75 each. These warrants
were issued during 2005 and are fully vested.*
    
    50,000 warrants for common shares at $1.40 each. These warrants
were issued to consultants to the Company and are fully vested.In connection with the Barron funding that is more fully described in
Note 6, the Company issued warrants 4,160,000 warrants for common shares at
$.50, 2,080,000 warrants for common shares at $1.00 and 2,080,000
warrants for common shares at $1.50.
  16




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Credit Line
  Employment Contracts
  *
    
    Sukhbir Singh Mudan. The initial period of the employment agreement
for Mr. Mudan is three years. Mr. Mudan is required to devote 100%
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.
    17




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Clarence Kelley
    For the quarter endedMarch 31,
    
    
    March 31,2006
    
    
    2005Proforma
    
    
    Proforma(unaudited)
    
    
    (unaudited)REVENUE
    
    $
    1,921,403
    
    
    $
    1,417,841COST OF REVENUE
    
    
    1,275,996
    
    
    
    1,108,327GROSS PROFIT
    
    
    645,407
    
    
    
    309,514OPERATING EXPENSES
    
    
    968,930
    
    
    
    792,146LOSS FROM OPERATIONS
    
    
    (323,523
    )
    
    
    (482,632
    )OTHER INCOME (EXPENSE)Other income
    
    
    31
    
    
    
    Interest income
    
    
    
    
    
    
    993TOTAL OTHER INCOME (EXPENSE)
    
    
    31
    
    
    
    993LOSS BEFORE INCOME TAX
    
    
    (323,492
    )
    
    
    (481,639
    )INCOME TAX EXPENSE
    
    
    (800
    )
    
    
    (800
    )NET LOSS
    
    $
    (324,292
    )
    
    $
    (482,439
    )LOSS PER COMMON SHARE-Basic and Diluted
    
    $
    (0.06
    )
    
    $
    (0.11
    )SHARES USED IN EARNINGS PER SHARE CALCULATIONS
WEIGHTED AVERAGE COMMON SHARES
    
    
    5,823,950
    
    
    
    4,405,277
  18




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As of March 31, 2006As Reported
    
    
    Adjustment
    
    
    As RestatedTotal current assets
    
    $
    2,141,125
    
    
    $
    66,944
    
    
    $
    2,208,069Total long-term assets
    
    
    2,236,420
    
    
    
    83,889
    
    
    
    2,320,309Total assets
    
    $
    4,377,545
    
    
    $
    150,833
    
    
    $
    4,528,378Total current liabilities
    
    $
    1,237,637
    
    
    $
    133,359
    
    
    $
    1,370,996Total long-term liabilities
    
    
    687,500
    
    
    
    17,474
    
    
    
    704,974Total liabilities
    
    $
    1,925,137
    
    
    $
    150,833
    
    
    $
    2,075,970Total shareholders equity
    
    $
    2,452,408
    
    
    $
    
    
    
    $
    2,452,408Total liabilities and shareholders equity
    
    $
    4,377,545
    
    
    $
    150,833
    
    
    $
    4,528,378
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
    
    We are implementing a monthly review and sign-off process on all accrual and amortization entries by the
Principal Financial Officer for the accounts listed above; and
    
    We successfully completed a search for a full-time Vice President of Finance and Accounting responsible for
day to day accounting activities, financial reporting and assisting the Principal Financial Officer with the
preparation of our financial statements.
    
    We are implementing standard operating procedures and processes for monthly revenue recognition, expense
accruals, prepayments and stock-based compensation.
    
    We are implementing expense control procedures including analysis of potential outsourced opportunities
including, but not limited to, human resources, marketing, and accounting.
     26




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31.1
    
    Rule 13a-14(a) Certification by Principal Executive Officer31.2
    
    Rule 13a-14(a) Certification by Principal Financial Officer32.1
    
    Section 1350 Certification of Principal Financial Officer32.2
    
    Section 1350 Certification of Principal Executive Officer
  27




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SIGNATURES
  Date: November 20, 2006
    By /s/ Sukhbir Singh MudanSukhbir Singh Mudan,President (Principal Executive Officer)Date: November 20, 2006
    By /s/ Gary AllhusenGary Allhusen,Chief Operating Officer (Principal Financial Officer)  28




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EXHIBIT INDEX
 ExhibitIndex
    
    Description31.1
    
    Rule 13a-14(a) Certification by Principal Executive Officer31.2
    
    Rule 13a-14(a) Certification by Principal Financial Officer32.1
    
    Section 1350 Certification of Principal Financial Officer32.2
    
    Section 1350 Certification of Principal Executive Officer
  29