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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 March 31, 2004o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the transition period fromto
 Commission File Number: 0-30874 CANEUM, INC.  Nevada
State or other jurisdiction of
incorporation or organization
    
    33-0916900
I.R.S. Employer I.D. No.170 Newport Center Drive, Suite 220,Newport Beach, CA
(Address of principal executive offices)
    
    92660
(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 filing 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 May 7, 2004, there were
4,010,000 shares of our common stock outstanding.




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PART I Item 1. Financial Statements 
    CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
FINANCIAL STATEMENTS
FOR THE QUARTERS ENDED MARCH 31, 2004 AND 2003         2




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




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
BALANCE SHEETS
AS OF MARCH 31, 2004 AND DECEMBER 31, 2003 ASSETS March 31,
    
    December 31,2004
    
    2003(unaudited)CURRENT ASSETSCash and cash equivalents
    
    $
    537,517
    
    
    $
    781,387Accounts receivable
    
    
    89,133
    
    
    
    40,450Prepaid expenses and other assets
    
    
    15,000
    
    
    
    15,000Available-for-sale equity securities (Note 3)
    
    
    74,132
    
    
    
    77,521TOTAL CURRENT ASSETS
    
    
    715,782
    
    
    
    914,358FIXED ASSETSSoftware
    
    
    100
    
    
    
    100TOTAL FIXED ASSETS
    
    
    100
    
    
    
    100TOTAL ASSETS
    
    $
    715,882
    
    
    $
    914,458
 See accompanying notes to the financial statements. 4




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
BALANCE SHEETS
AS OF MARCH 31, 2004 AND DECEMBER 31, 2003 LIABILITIES AND STOCKHOLDERS EQUITY March 31,
    
    December 31,2004
    
    2003(unaudited)CURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    24,502
    
    
    $
    20,984Taxes payable
    
    
    800
    
    
    
    800TOTAL CURRENT LIABILITIES
    
    
    25,302
    
    
    
    21,784COMMITMENTS AND CONTINGENCIES (Note 6)STOCKHOLDERS EQUITYCommon stock, 100,000,000 shares authorized
at $.001 par value: 4,010,000 and 1,000,000 shares
issued and outstanding, respectively
    
    
    4,010
    
    
    
    4,010Additional paid in capital
    
    
    1,291,727
    
    
    
    1,287,665Accumulated deficit
    
    
    (554,855
    )
    
    
    (382,217
    )Accumulated other comprehensive loss
    
    
    (50,302
    )
    
    
    (16,784
    )TOTAL STOCKHOLDERS EQUITY
    
    
    690,580
    
    
    
    892,674TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    715,882
    
    
    $
    914,458
 See accompanying notes to the financial statements. 5




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS For the quarter endedMarch 31,
    
    March 31,2004
    
    2003(unaudited)REVENUE
    
    $
    84,124
    
    
    $
    3,800COST OF REVENUE
    
    
    55,431
    
    
    
    GROSS PROFIT
    
    
    28,693
    
    
    
    3,800OPERATING EXPENSES
    
    
    196,027
    
    
    
    3,460LOSS FROM OPERATIONS
    
    
    (167,334
    )
    
    
    340OTHER INCOME (EXPENSE)Other income
    
    
    4,488
    
    
    
    Realized losses from the sales of securities
    
    
    (10,711
    )
    
    
    Dividend income
    
    
    22
    
    
    
    Interest income
    
    
    897
    
    
    
    31Interest expense
    
    
    
    
    
    
    (455
    )TOTAL OTHER INCOME (EXPENSE)
    
    
    (5,304
    )
    
    
    (424
    )LOSS BEFORE INCOME TAX
    
    
    (172,638
    )
    
    
    (84
    )INCOME TAX EXPENSE
    
    
    
    
    
    
    NET LOSS
    
    $
    (172,638
    )
    
    $
    (84
    )LOSS PER COMMON SHARE
    
    
    (0.04
    )
    
    
    (0.01
    )SHARES USED IN EARNINGS PER SHARE CALCULATIONSWEIGHTED AVERAGE COMMON SHARES
    
    
    4,010,000
    
    
    
    1,161,700OTHER COMPREHENSIVE INCOME (LOSS)NET LOSS
    
    $
    (172,638
    )
    
    $
    (84
    )OTHER COMPREHENSIVE INCOME (LOSS):Unrealized (loss) on
available-for-sale securities (Note 3)
    
    
    (33,518
    )
    
    
    COMPREHENSIVE LOSS
    
    $
    (206,156
    )
    
    $
    (84
    )
 See accompanying notes to the financial statements. 6




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
STATEMENTS OF STOCKHOLDERS EQUITY Common Stock
    
    Additional
    
    
    
    
    
    Accumulated
    
    TotalPaid-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 quarter ended March 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (172,638
    )
    
    
    
    
    
    
    (172,638
    )Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    4,062
    
    
    
    
    
    
    
    
    
    
    
    4,062Accumulated other comprehensive loss for the
quarter ended March 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33,518
    )
    
    
    (33,518
    )BALANCE, March 31, 2004
    
    
    4,010,000
    
    
    $
    4,010
    
    
    $
    1,291,727
    
    
    $
    (554,855
    )
    
    $
    (50,302
    )
    
    $
    690,580
 See accompanying notes to the financial statements. 7




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CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
STATEMENTS OF CASH FLOWS For the quarter endedMarch 31,
    
    March 31,2004
    
    2003(unaudited)CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (172,638
    )
    
    $
    (84
    )Adjustments to reconcile net loss to net
cash used by operating activities:Stock-based compensation expense
    
    
    4,062
    
    
    
    Expenses paid by stock issuance
    
    
    
    
    
    
    480Realized loss on sale of securities
    
    
    10,711
    
    
    
    Increase in accounts receivable
    
    
    (48,683
    )
    
    
    Decrease in interest receivable
    
    
    
    
    
    
    (31
    )Decrease in interest payable
    
    
    
    
    
    
    745Increase in accounts payable
    
    
    3,518
    
    
    
    NET CASH FLOWS USED BY OPERATING ACTIVITIES
    
    
    (203,030
    )
    
    
    1,110CASH FLOWS FROM INVESTING ACTIVITIESPurchases of available-for-sale securities
    
    
    (203,556
    )
    
    
    Proceeds from available-for-sale securities
    
    
    162,716
    
    
    
    NET CASH FLOWS USED BY INVESTING ACTIVITIES
    
    
    (40,840
    )
    
    
    NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (243,870
    )
    
    
    1,110CASH AND CASH EQUIVALENTS, BEGINNING OF QUARTER
    
    
    781,387
    
    
    
    CASH AND CASH EQUIVALENTS, END OF QUARTER
    
    $
    537,517
    
    
    $
    1,110SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the period for interest
    
    $
    
    
    
    $
    Cash paid for taxes
    
    $
    
    
    
    $
    
 See accompanying notes to the financial statements. 8




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Caneum, Inc.
(formerly SaiphT Corporation)
Notes to Financial Statements
March 31, 2004 and December 31, 2003 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 March 31, 2004, and the results of its operations for the
three months ended March 31, 2004 and March 31, 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 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
March 31, 2004, the Company had two customers that
each accounted for at least 10% of the Companys revenue. As of March 31,
2004, three 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 March 31, 2004, the Company had
approximately $368,000 on deposit with a financial institution that exceeds federally insured
limits. 9




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Caneum, Inc.
(formerly SaiphT Corporation)
Notes to Financial Statements
March 31, 2004 and December 31, 2003 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. As of March 31, 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. Quarter
    
    Quarterended
    
    endedMarch 31,
    
    March 31,2004
    
    2003Net loss, as reported
    
    $
    (172,638
    )
    
    $
    (84
    )Stock-based compensation
determined under fair value
method
    
    
    (28,100
    )
    
    
    Net loss, pro-forma
    
    
    (200,738
    )
    
    
    (84
    )Net loss per share, as reported
    
    
    (0.04
    )
    
    
    (0.01
    )Net loss per share, pro-forma
    
    
    (0.05
    )
    
    
    (0.01
    )
 10




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Caneum, Inc.
(formerly SaiphT Corporation)
Notes to Financial Statements
March 31, 2004 and December 31, 2003 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
    %
    
    
    Risk-free Interest Rate
    
    
    4.00
    %
    
    
    Expected life of options
    
    4-5 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. 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 March 31, 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. 11




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Caneum, Inc.
(formerly SaiphT Corporation)
Notes to Financial Statements
March 31, 2004 and December 31, 2003 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. NOTE 3  AVAILABLE-FOR-SALE EQUITY SECURITIES At March 31, 2004, the Company had $74,132 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 $50,302, and an aggregate
cost basis of $124,434 as of March 31, 2004. NOTE 4  RELATED PARTY TRANSACTIONS During the quarter ended March 31, 2004, the Company entered into the following
transactions 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 $500 per month. The total rent
expense was $1,500 for the quarter ended March 31, 2004 and none for the
quarter ended March 31, 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 $2,000 per month. The
total expense pursuant to this agreement was $6,000 for the quarter ended March
31, 2004 and none for the quarter ended March 31, 2003. This agreement expires
on June 30, 2004. Consulting Services The Company has retained Cygni Capital, LLC whose principal is a shareholder of
the Company to 12




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Caneum, Inc.
(formerly SaiphT Corporation)
Notes to Financial Statements
March 31, 2004 and December 31, 2003 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 March 31,
2004 and none for the quarter ended March 31, 2003. This agreement is on a
month-to-month term. 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 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 grants made
under the Plan during the quarter ended March 31, 2004 and the
year ended December 31, 2003 are presented below: 13




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Caneum, Inc.
(formerly SaiphT Corporation)
Notes to Financial Statements
March 31, 2004 and December 31, 2003 Common Stock Options Granted
    
    Shares
    
    Average Exercise PriceOutstanding @ 12/31/2002
    
    
    0
    
    
    $
    0.00Granted
during the year ended December 31, 2003
    
    
    3,037,500
    
    
    $
    0.56Outstanding @ 12/31/2003
    
    
    3,037,500
    
    
    $
    0.56Granted during the quarter
ended March 31, 2004
    
    
    750,000
    
    
    $
    0.75Outstanding @ 03/31/2004
    
    
    3,787,500
    
    
    $
    0.59
 Weighted AverageShares
    
    Exercise PriceOptions exercisable @ 03/31/2004
    
    
    1,081,250
    
    
    $
    0.51
 Exercise Price
    
    Number Outstanding$0.50
    
    
    100,000$0.55
    
    
    2,750,000$0.75
    
    
    937,500
 14




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Caneum, Inc.
(formerly SaiphT Corporation)
Notes to Financial Statements
March 31, 2004 and December 31, 2003 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. 15




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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 in
the business of providing a broad array of business process outsourcing,
software development, and business consulting services. The business
processing services typically include providing outsourcing to clients for data
entry, data collection and data gathering; web site development and
maintenance; call centers and customer support; and software, hardware, and
product development. We provide none of the outsourced services directly.
However, through our management team, we provide operational management and
business planning consulting services directly to our clients. In addition, we
are seeking and, if a suitable target company is located we will attempt, to
acquire businesses in related industries to supplement our current business
operations. We intend to grow in two ways: First, through the further development and
marketing of our software development and information technology services and
outsourcing capabilities, and second, through the acquisition of other software
development and information technology companies that add to the services that
we develop, market and/or outsource, or which represent a potentially
profitable business sector that can take advantage of our 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 March 31,
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. 16




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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 March 31, 2004, we generated revenues of $84,124
versus $3,800 for the comparative quarter ended March 31, 2003. The increase in
revenue is due to the additional sales effort, additional orders from
existing customers, and new customers generated over the past year. Our
cost of revenue earned was $55,431 for the quarter ended March 31, 2004
versus $0 for the comparative quarter ended March 31, 2003. The increased cost
reflects subcontractor costs associated with the services provided by us to our clients by
consulting with them to source their buying decisions with a suite of
business process and information technology outsourcing. The resulting gross profit for the quarter
ended March 31, 2004 is $28,693 versus $3,800 for the
comparative quarter reflecting a current quarterly gross profit of 34%. Our operating expenses for the quarter ended March 31, 2004 were $196,027
versus $3,460 for the quarter ended March 31, 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 $98,572 and professional and
consulting fees of $48,565. Management has not yet determined the amount of revenues and expenses
estimated for 2004, but anticipates that they will increase progressively. Liquidity and Capital Resources As of March 31, 2004, cash totaled $537,517 as compared with $781,387 of
cash at December 31, 2003 resulting in a decrease of $243,870 in cash and cash
equivalents for the quarter ended March 31, 2004. The decrease in cash and cash
equivalents consists of cash used in operations of $203,030 and cash used by
investing activities of $40,840. The decrease in cash and cash equivalents for
the quarter ended March 31, 2003 was $1,110 consisting of cash used in
operations. There were no comparable investing or financing activities for the
same period last year. Working
capital was $690,480 at March 31, 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. 17




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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 $29,867 and $42,343, and management
estimates that future monthly cash requirements will be approximately $50,000.
Without generating any 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. Off-Balance Sheet Arrangements During the quarter ended March 31, 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. 18




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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 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. 19




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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 March 31,
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 Item 2. Changes in Securities During the quarter ended March 31, 2004, the following securities were
sold by us without registering the securities under the Securities Act:  
    
    In March 2004, we granted options to Gary Allhusen, our
Vice-President, to purchase 750,000 shares at $.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 a transaction by an issuer not involving any public
offering. Mr. Allhusen 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. Allhusen
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
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(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarter ended March 31, 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: May 17, 2004
    
    By
    
    /s/ Sukhbir Singh Mudan

Sukhbir Singh Mudan, President and 
Treasurer (Principal executive officer,
principal financial officer, and chief
accounting officer)
 21