##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-KSB
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended December 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
 None
 Common Stock, Par Value $.001
 o
 (1) Yes o
No þ (2) Yes þ No o
 o
 o
    o þ
 DOCUMENTS INCORPORATED BY REFERENCE




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##### 



PagePART I
    
    
    3ITEM 1. DESCRIPTION OF BUSINESS
    
    
    3ITEM 2. DESCRIPTION OF PROPERTY
    
    
    15ITEM 3. LEGAL PROCEEDINGS
    
    
    15ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    16PART II
    
    
    16ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    16ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    18ITEM 7. FINANCIAL STATEMENTS
    
    
    24ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    24ITEM 8A. CONTROLS AND PROCEDURES
    
    
    25ITEM 8B. OTHER INFORMATION
    
    
    26PART III
    
    
    27ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
    
    
    27ITEM 10. EXECUTIVE COMPENSATION
    
    
    33ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    39ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
    
    
    42ITEM 13. EXHIBITS
    
    
    44ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    46Exhibit 2.3Exhibit 2.5Exhibit 10.2Exhibit 10.4Exhibit 10.6Exhibit 10.11Exhibit 10.16Exhibit 10.17Exhibit 10.18Exhibit 10.19Exhibit 10.20Exhibit 10.21Exhibit 10.22Exhibit 21.1Exhibit 23.1Exhibit 23.2Exhibit 23.3Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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PART I
 
 ITEM 1. DESCRIPTION OF BUSINESS
 Background
     3




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Overview
   
    
    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.
  
    
    information technology enterprise software services, including architecting,
integrating, deploying, migrating and maintaining front-end Sales Force Automation,
back-end Enterprise Resource Planning, case management, expert system and enterprise
application software packages;
    
    information technology infrastructure services, including systems administration,
database administration, web development, network optimization, infrastructure audits
and system architecture; and
    
    product development, including hardware, firmware and software coding, development
and maintenance for existing product lines and next generation product prototyping.
   4




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Financing and Acquisition Events in 2006
 Barron Transaction
       5




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Tier One Transaction
      6




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Caneum India Private Limited Transaction
     7




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1 4
 1 4
  Recent Events
   8




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
    
    incurring additional indebtedness;
    
    merging or consolidating with or into any other business organization;
    
    acquiring all or substantially all of the capital stock or property of a third party
without the prior consent of the bank;
    
    permitting our asset coverage ratio to be less than certain bench mark amounts, as set
forth in the agreement; and
    
    failing to maintain a rolling three-month performance of a designated percentage of our
annual operating projections.
   Our Outsourcing Products and Services
 Industry Overview
   9




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10




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Risks of Foreign Operations
  
    
    the absence in some jurisdictions, especially those outside of India, of effective laws
to protect our intellectual property rights or any work product produced by off-shore
subcontractors;
    
    multiple and possibly overlapping and conflicting tax laws;
    
    restrictions on the movement of cash;
    
    the burdens of complying with a wide variety of national and local laws;
    
    political instability which could result in expatriation of our intellectual property
without compensation;
    
    currency fluctuations, especially if the U.S. dollar is devalued in the foreign country,
which could result in Caneum having to pay more for the services provided off-shore;
    
    longer payment cycles;
    
    restrictions on the import and export of certain technologies;
    
    price controls or restrictions on exchange of foreign currencies; and
    
    trade barriers which could limit our ability to outsource certain operations to a
foreign country.
 Our Business Acquisition Strategy
 Acquisition Targets
   11




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Selection Criteria for Acquisition Targets
    12




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Selection Process for Acquisitions
    Competition
 Outsourcing Services
  
    
    Speed of response to customer requests;
    
    Flexibility and willingness to adapt to customer needs;
    
    Responsiveness to customer demands;
    
    Number and availability of qualified human resources;
    
    Project management capability;
    
    Technical expertise;
    
    Size and reputation;
    
    Brand recognition and geographic presence; and
    
    Price.
  13




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Acquisition Activities
    14




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Employees
  
 ITEM 2. DESCRIPTION OF PROPERTY
   
 ITEM 3. LEGAL PROCEEDINGS
   15




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
 Market Information
  Quarter
    
    High
    
    
    LowFISCAL YEAR ENDED
DECEMBER 31, 2005
    
    First
    
    $
    2.20
    
    
    $
    1.25Second
    
    $
    1.73
    
    
    $
    1.05Third
    
    $
    1.29
    
    
    $
    0.70Fourth
    
    $
    1.00
    
    
    $
    0.65FISCAL YEAR ENDED
DECEMBER 31, 2006
    
    First
    
    $
    1.04
    
    
    $
    0.70Second
    
    $
    0.89
    
    
    $
    0.60Third
    
    $
    0.81
    
    
    $
    0.67Fourth
    
    $
    1.23
    
    
    $
    0.55FISCAL YEAR ENDING
DECEMBER 31, 2007
    
    First
    
    $
    0.75
    
    
    $
    0.47
  16




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Holders
  Dividend Policy
   Unregistered Sales of Equity Securities
  
    
    In June 2005 we entered into a financial services agreement with Ascendiant
Securities, LLC. As part of the consideration to be paid for such services, we agreed
to issue stock purchase warrants at the rate of 8% for any securities issued to
investors introduced by Ascendiant. On December 29, 2006, we issued 12,000 warrants to
Ascendiant, exercisable at $.50. These warrants were issued 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.
Ascendiant was an accredited investor as defined in Rule 501 of Regulation D at the
time of issuance. They delivered appropriate investment representations with respect
to this issuance and consented to the imposition of restrictive legends upon the
certificates evidencing such warrants. They represented that they 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.
Ascendiant 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
stock issuance. No underwriting discounts or commissions were paid in connection with
the transaction.
  17




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
    
    In March 2006, pursuant to the terms of the Preferred Stock Purchase Agreement with
Barron Partners LP, we issued 4,000,000 shares of convertible Series A Preferred Stock,
4,000,000 A Warrants exercisable at $.50 per share, 2,000,000 B Warrants exercisable at
$1.00 per share, and 2,000,000 C Warrants exercisable at $1.50 per share. The Series A
Preferred Stock is convertible at the rate of one share of common stock for each share
of preferred stock converted. In 2006 Barron Partners converted a total of 667,500
shares of Series A Preferred Stock into 667,500 shares of our common stock as follows:
 Number ofDate
    
    SharesJuly 6, 2006
    
    
    300,000July 13, 2006
    
    
    67,500December 27, 2006
    
    
    300,000
  Number ofDate
    
    SharesJuly 13, 2006
    
    
    135,000September 25, 2006
    
    
    75,000December 28, 2006
    
    
    100,000December 29, 2006
    
    
    50,000
  Purchases of Equity Securities
  
 ITEM
6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
   18




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Background
    Critical Accounting Policies
  Share-Based Payment
   19




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Results of Operations
 Revenue
  Cost of revenue and gross profit
  Operating expenses
   20




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Net loss
  Liquidity and Capital Resources
     21




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22




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EBITDA
  Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
   23




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Forward-Looking Statements
  
 ITEM 7. FINANCIAL STATEMENTS
  
 ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    24




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ITEM 8A. CONTROLS AND PROCEDURES
 Internal Control Over Financial Reporting
    
    
    We implemented a monthly review and sign-off process on all
accrual and amortization entries by the Principal Financial
Officer for the accounts listed above
    
    We created the position of Vice President of Finance and
Accounting responsible for day to day accounting activities,
financial reporting and assisting Principal Financial Officer
with the preparation of our financial statements. However, we
are still in the process of filling this position as the
candidate we hired in February, 2007 has resigned for unforeseen
personal and serious medical issues
    
    We implemented standard operating procedures and processes for
monthly revenue recognition, expense accruals, prepayments and
stock-based compensation
    
    We implemented expense control procedures including analysis of
potential outsourced opportunities including, but not limited
to, human resources, marketing, and accounting.
    Disclosure Controls and Procedures
   25




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ITEM 8B. OTHER INFORMATION
 th
 th
 th
  26




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PART III
 
 ITEM 9.
 Executive Officers, Directors, and Significant Employees
  DirectorName
    
    Age
    
    Position(s)
    
    SinceSuki Mudan
    
    
    58
    
    
    President and Director
    
    
    2002Gary D. Allhusen
    
    
    45
    
    
    Executive Vice-President & Chief Operating Officer
    
    Alan S. Knitowski
    
    
    38
    
    
    Chairman
    
    
    2003Luan Dang
    
    
    35
    
    
    Vice-Chairman
    
    
    2005Robert F. Mitro
    
    
    66
    
    
    Director
    
    
    2003Avtar Singh Ranshi
    
    
    59
    
    
    Director
    
    
    2003Michael A. Willner
    
    
    52
    
    
    Senior Vice-President
    
    Robert J. Morris
    
    
    37
    
    
    Senior Vice-President
    
    Jesper Lindorff
    
    
    35
    
    
    CEO of Caneum India Pvt Ltd
    
    Neeraj Sehgal
    
    
    34
    
    
    CTO of Caneum India Pvt Ltd
    
    
   Suki Mudan
  27




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Gary D. Allhusen
  Alan Knitowski
  28




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Luan Dang
  29




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Practical VoIP
 Robert F. Mitro
  30




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Dr. Avtar Singh Ranshi
 Michael A. Willner
 Robert J. Morris
  31




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Jesper Lindorff
 Neeraj Sehgal
 Section 16(a) Beneficial Ownership Reporting Compliance
  Number ofTransactions NotNumber of Late
    
    Reported on a
    
    Reports NotName
    
    Reports
    
    Timely Basis
    
    FiledRobert F. Mitro
    
    1
    
    1
    
    0Avtar Singh Ranshi
    
    1
    
    1
    
    0Suki Mudan
    
    1
    
    1
    
    0Alan S. Knitowski
    
    2
    
    2
    
    0Luan Dang
    
    1
    
    1
    
    0
 Code of Ethics
  Overview of Director Nominating Process
  
    
    In writing at 170 Newport Center Drive, Suite 210, Newport Beach, CA 92660;
    
    By e-mail at suki@caneum.com
  32




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Audit Committee Financial Expert
  
 ITEM 10. EXECUTIVE COMPENSATION
 Executive Compensation Summary
  Summary Compensation Table
 All OtherStock
    
    
    Option
    
    
    Compensa-Name and
    
    
    
    
    
    Salary
    
    
    Bonus
    
    
    Awards
    
    
    tion
    
    
    TotalPrincipal Position
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)Suki Mudan, CEO
    
    
    2006
    
    
    $
    120,000
    
    
    
    0
    
    
    $
    9,167
    
    
    $
    17,528
    
    
    $
    146,6952005
    
    
    $
    120,000
    
    
    $
    42,000
    
    
    $
    177,328
    
    
    $
    15,069
    
    
    $
    354,397Alan S. Knitowski,
    
    
    2006
    
    
    $
    120,000
    
    
    
    0
    
    
    $
    9,167
    
    
    $
    17,528
    
    
    $
    146,695Chairman
    
    
    2005
    
    
    $
    120,000
    
    
    $
    54,000
    
    
    $
    177,328
    
    
    $
    15,069
    
    
    $
    366,397Gary D. Allhusen, COO &
    
    
    2006
    
    
    $
    120,000
    
    
    
    0
    
    
    $
    61,375
    
    
    $
    17,528
    
    
    $
    198,903Executive Vice-President
    
    
    2005
    
    
    $
    120,000
    
    
    $
    42,600
    
    
    $
    146,374
    
    
    $
    15,069
    
    
    $
    324,043Michael A. Willner, Senior
    
    
    2006
    
    
    $
    108,000
    
    
    
    0
    
    
    $
    110,252
    
    
    $
    12,134
    
    
    $
    230,386Vice-President
    
    
    2005
    
    
    $
    120,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    $
    120,000Robert J. Morris, Senior
    
    
    2006
    
    
    $
    108,000
    
    
    
    0
    
    
    $
    110,252
    
    
    $
    12,134
    
    
    $
    230,386Vice-President
    
    
    2005
    
    
    $
    120,000
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    $
    120,000
   33




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
    
    Sukhbir Singh Mudan. The initial period of the employment agreement for Mr. Mudan
expires on March 31, 2008. If on or before March 31, 2008, he notifies us in writing that
he is willing to negotiate in good faith to enter into a new employment agreement, we will
pay him a bonus of $60,000, payable in cash or common stock. He is required to devote not
less than 100% of his business time to the business of Caneum. His base salary is $120,000
per annum. He received options to purchase 1,000,000 shares at $.55 per share as
additional compensation for entering into the agreement. All of these options have vested
and are available for exercise. On October 26, 2004, the Compensation Committee granted
13,065 restricted shares to Mr. Mudan as a performance bonus for 2004. These shares vested
on January 2, 2005. On November 16, 2005, the Compensation Committee granted 59,155
restricted shares to Mr. Mudan as a performance bonus for 2005. These shares vested on
January 2, 2006.
    
    Alan S. Knitowski. The initial period of the employment agreement for Mr. Knitowski
expires on March 31, 2008. If on or before March 31, 2008, he notifies us in writing that
he is willing to negotiate in good faith to enter into a new employment agreement, we will
pay him a bonus of $60,000, payable in cash or common stock. Mr. Knitowski is required to
devote his best efforts to performing well all duties that Caneum 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. He received options to purchase 1,000,000 shares at
$.55 per share as additional compensation for entering into the agreement. All of these
options have vested and are available for exercise. On October 26, 2004, the Compensation
Committee granted 14,033 restricted shares to Mr. Knitowski as a performance bonus for
2004. These shares vested on January 2, 2005. On November 16, 2005, the Compensation
Committee granted 76,056 restricted shares to Mr. Knitowski as a performance bonus for
2005. These shares vested on January 2, 2006.
   34




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th
  
    
    Each employee, except Messrs Allhusen, Morris, and Willner, is eligible to receive
an annual performance bonus between nothing and 100% of the then applicable base salary
upon achievement of annual performance objectives payable either in cash or stock. For
2004 no specific performance bonuses were established, but bonuses were granted by the
Compensation Committee based on a review of the employees performance during 2004.
Performance bonuses for 2004 were paid in common stock of Caneum only and no cash
bonuses were granted. Performance objectives for subsequent years will be established
by the Chairman, and in the case of performance objectives for the Chairman, by the
compensation committee, for each calendar year beginning with the year ending December
31, 2005. These performance objectives have not yet been established.
    
    Each employee, together with his spouse and dependents, is entitled to participate
in any employee benefit plans maintained by the Company of general applicability to
other senior executives, including, without limitation, group medical, dental, vision,
disability, life insurance, flexible-spending account, 401(k) and other plans.
    
    The employee is entitled to four weeks paid vacation per year.
    
    Each agreement contains customary termination provisions. The agreements will be
terminated by Caneum due to the death or disability of the employee, in which event
Caneum shall pay the base salary through the date of termination and all unexercised
options will immediately vest. The agreement may also be terminated by Caneum for
cause, in which event Caneum will pay the base salary through the date of
termination, but all unexercised options shall lapse. Caneum may also terminate the
agreements without cause upon ninety days notice, in which event Caneum will pay the
base salary through the date of termination, and all unexercised options will
immediately vest, except in the case of Messrs Allhusen, Willner, and Morris, for whom
only one-half of the unexercised options will vest. The employee may terminate the
employment agreement at any time, in which event Caneum will pay the base salary through
the date of termination, but all unexercised options shall lapse.
    
    Each agreement also contains certain confidentiality covenants, but does not contain
non-competition or anti-piracy provisions.
    
    Each agreement contains covenants that for a period of twelve months following
termination of employment, the employee will not solicit another employee to leave
Caneum.
  35




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Equity Awards
  Outstanding Equity Awards at Fiscal Year-End
 Option AwardsNumber of
    
    
    Number ofSecurities
    
    
    SecuritiesUnderlying
    
    
    UnderlyingUnexercised
    
    
    Unexercised
    
    
    OptionOptions
    
    
    Options
    
    
    Exercise
    
    
    Option(#)
    
    
    (#)
    
    
    Price
    
    
    ExpirationName
    
    Exercisable
    
    
    Unexercisable
    
    
    ($)
    
    
    DateSuki Mudan
    
    
    954,546
    
    
    
    0
    
    
    $
    0.55
    
    
    
    8/14/1320,833
    
    
    
    104,167
    
    
    $
    0.70
    
    
    
    9/29/16Alan S. Knitowski
    
    
    725,000
    
    
    
    0
    
    
    $
    0.55
    
    
    
    8/14/1320,833
    
    
    
    104,167
    
    
    $
    0.70
    
    
    
    9/29/16Gary D. Allhusen
    
    
    750,000
    
    
    
    0
    
    
    $
    0.75
    
    
    
    3/17/1431,250
    
    
    
    218,750
    
    
    $
    0.67
    
    
    
    6/22/16Michael A. Willner
    
    
    250,000
    
    
    
    750,000
    
    
    $
    0.83
    
    
    
    3/28/16Robert J. Morris
    
    
    250,000
    
    
    
    750,000
    
    
    $
    0.83
    
    
    
    3/28/16
  36




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Director Compensation
  Director Compensation
 Stock
    
    
    OptionAwards(1)(2)
    
    
    Awards(1)(2)
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)Luan Dang
    
    $
    0
    
    
    $
    76,203
    
    
    $
    76,203Robert F. Mitro
    
    $
    0
    
    
    $
    0
    
    
    $
    0Avtar Singh Ranshi
    
    $
    0
    
    
    $
    24,786
    
    
    $
    24,786
 (1)
    
    The value of stock and option awards was the 2006 compensation
charge dollar amount recognized for financial statement reporting purposes in
accordance with FAS 123R.(2)
    
    As of December 31, 2006, the aggregate number of option awards
outstanding for each director in the table was as follows: Mr. Dang 318,750;
Mr. Mitro, 600,000; and Dr. Ranshi, 150,000.
  
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 Beneficial Owners of More than Five Percent, Directors, and Management
   39




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Name and Address
    
    Amount and Nature of
    
    
    Percent ofof Beneficial Owner
    
    Beneficial Ownership(1)
    
    
    Class(2)Sukhbir Singh Mudan
170 Newport Center Dr.
Suite 210
Newport Beach, CA 92660
    
    
    1,404,155
    (3)
    
    
    15.1
    %Gary D. Allhusen
170 Newport Center Drive
Suite 210
Newport Beach, CA 92660
    
    
    1,034,576
    (4)
    
    
    11.2
    %Alan S. Knitowski
2 San Joaquin Plaza
Suite 240
Newport Beach, CA 92660
    
    
    2,076,756
    (5)
    
    
    22.5
    %Luan Dang
2 San Joaquin Plaza
Suite 240
Newport Beach, CA 92660
    
    
    604,174
    (6)
    
    
    7.0
    %Robert F. Mitro
348 Bean Ave.
Los Gatos, CA 95030
    
    
    1,284,611
    (7)
    
    
    14.6
    %Avtar Singh Ranshi
66 Marshals Drive
St. Albans, Hertfordshire
UK ALI 4RF
    
    
    300,000
    (8)
    
    
    3.6
    %Michael A. Willner
170 Newport Center Dr.
Suite 210
Newport Beach, CA 92660
    
    
    1,000,000
    (9)
    
    
    10.9
    %Robert J. Morris
170 Newport Center Dr.
Suite 210
Newport Beach, CA 92660
    
    
    1,000,000
    (9)
    
    
    10.9
    %Executive Officers and Directors
as a Group (8 Persons)
    
    
    8,704,272
    
    
    
    60.2
    %Iain Stuart Allison
5 Ravenscroft Rd.
Oxon RG9 2DH
United Kingdom
    
    
    424,357
    
    
    
    5.2
    %
  40




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(1)
    
    This table is based upon information supplied by officers, directors and principal
stockholders and Schedules 13D and 13G filed with the Securities and Exchange Commission.
Unless otherwise indicated in the footnotes to this table, and subject to community
property laws where applicable, we believe that each of the stockholders named in this
table has sole voting and investment power with respect to the shares indicated as
beneficially owned. Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment power with
respect to securities. Beneficial ownership also includes shares of stock subject to
options and warrants currently exercisable or exercisable within 60 days of the date of
this table. Options held by officers and directors are subject to early exercise, which
means the options are exercisable prior to vesting, subject to certain repurchase
rights held by us. Beneficial ownership by officers and directors therefore includes
all outstanding options held by these individuals.(2)
    
    Applicable percentages are based on 8,212,859 shares of our common stock outstanding on
June 15, 2007.(3)
    
    Includes 1,079,546 shares issuable upon exercise of options.(4)
    
    Includes 1,000,000 shares issuable upon exercise of options.(5)
    
    Includes 850,000 shares issuable upon exercise of options, 166,667 issuable upon
exercise of warrants held by a family trust, and 1,060,089 shares held by a family trust.(6)
    
    Includes 318,750 shares issuable upon exercise of options and 33,333 shares issuable
upon exercise of warrants.(7)
    
    Includes 600,000 shares issuable upon exercise of options and 684,611 shares held by a
living trust.(8)
    
    Includes 150,000 shares issuable upon exercise of options.(9)
    
    Consists of 1,000,000 shares issuable upon exercise of options.(10)
    
    Includes 140,000 shares issuable upon exercise of options.
  41




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##### Table of Contents



Equity Compensation Plan Information
  Number ofsecuritiesremaining availableNumber of
    
    
    
    
    
    
    for future issuancesecurities to be
    
    
    
    
    
    
    under equityissued upon
    
    
    Weighted-average
    
    
    compensation plansexercise of
    
    
    exercise price of
    
    
    (excludingoutstanding
    
    
    outstanding
    
    
    securitiesoptions
    
    
    options
    
    
    reflected in columnand warrants
    
    
    and warrants
    
    
    (a) and (b))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    7,522,796
    
    
    $
    0.77
    
    
    
    6,317,471
    (1)Equity compensation
plans not approved
by security holders
    
    
    0
    
    
    
    0
    
    
    
    0Total
    
    
    7,522,796
    
    
    $
    0.77
    
    
    
    6,317,471
 (1)
    
    We have a single equity compensation plan designated as the 2002 Stock Option/Stock
Issuance Plan which is authorized to issue up to 15,000,000 shares.
 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    42




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43




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##### Table of Contents



ITEM 13. EXHIBITS
  Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1 & 10.23
    
    Stock Purchase Agreement dated March
28, 2006, with Tier One Consulting,
Inc.
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    3/30/062.2 & 10.24
    
    Correcting Amendment dated November 2,
2006, to Stock Purchase Agreement dated
March 28, 2006, with Tier One
Consulting, Inc.
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    11/7/062.3 & 10.25
    
    Amendment dated March 26, 2007, to
Stock Purchase Agreement dated March
28, 2006, with Tier One Consulting,
Inc.
    
    
    
    
    
    
    
    
    
    
    
    X2.4
    
    Stock-For-Stock Exchange Agreement
dated December 29, 2006, with Iain
Allison
    
    8-K/A-1
    
    000-30874
    
    
    2.1
    
    
    1/8/072.5
    
    Stock Swap Agreement dated February 26,
2007, with Jesper Lindorff
    
    
    
    
    
    
    
    
    
    
    
    X2.6
    
    Stock Purchase Agreement dated December
29, 2006, with Neeraj Sehgal
    
    8-K/A-1
    
    000-30874
    
    
    2.3
    
    
    1/8/073.1
    
    Articles of Incorporation
    
    10-KSB
    
    000-30874
    
    
    4.3
    
    
    6/19/063.2
    
    Current Bylaws
    
    8-K
    
    000-30874
    
    
    3.2
    
    
    8/4/ 044.1
    
    Form of Common Stock Certificate
    
    S-8
    
    333-135124
    
    
    4.1
    
    
    6/19/064.2
    
    Amended 2002 Stock Option/Stock
Issuance Plan *
    
    8-K
    
    000-30874
    
    
    4.2
    
    
    5/14/074.3 & 10.27
    
    Grant of Stock Option Form used
pursuant to the 2002 Stock Option/Stock
Issuance Plan
    
    8-K
    
    000-30874
    
    
    4.3 & 10.27
    
    
    5/14/074.4
    
    Certificate of Designations, Rights and
Limitations of Series A Convertible
Preferred Stock
    
    8-K
    
    000-30874
    
    
    4.1
    
    
    3/30/064.5
    
    Form of Series A Preferred Stock
Certificate
    
    8-K
    
    000-30874
    
    
    4.2
    
    
    3/30/064.6
    
    Form of A Warrant
    
    8-K
    
    000-30874
    
    
    4.3
    
    
    3/30/064.7
    
    Form of B Warrant
    
    8-K
    
    000-30874
    
    
    4.4
    
    
    3/30/064.8
    
    Form of C Warrant
    
    8-K
    
    000-30874
    
    
    4.5
    
    
    3/30/064.9
    
    Form of D Warrant exercisable at $0.50
    
    10-QSB
    
    000-30874
    
    
    4.1
    
    
    5/15/064.10
    
    Form of E Warrant exercisable at $1.00
    
    10-QSB
    
    000-30874
    
    
    4.2
    
    
    5/15/064.11
    
    Form of F Warrant exercisable at $1.50
    
    10-QSB
    
    000-30874
    
    
    4.3
    
    
    5/15/064.12
    
    Registration Rights Agreement with
Barron Partners, LP
    
    8-K
    
    000-30874
    
    
    4.6
    
    
    3/30/06
  44




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith4.13
    
    Form of Warrants issued in 506 Offerings
    
    SB-2
    
    333-134963
    
    
    4.14
    
    
    6/13/064.14
    
    Form of Warrants issued to consultants
    
    SB-2
    
    333-134963
    
    
    4.15
    
    
    6/13/0610.1
    
    Employment Agreement dated October 28,
2003, with Suki Mudan *
    
    10-QSB
    
    000-30874
    
    
    10.6
    
    
    11/7/ 0310.2
    
    Amendment dated September 29, 2006, to
Employment Agreement with Suki Mudan*
    
    
    
    
    
    
    
    
    
    
    
    X10.3
    
    Employment Agreement dated October 28,
2003, with Alan S. Knitowski *
    
    10-QSB
    
    000-30874
    
    
    10.7
    
    
    11/7/ 0310.4
    
    Amendment dated September 29, 2006, to
Employment Agreement with Alan S.
Knitowski*
    
    
    
    
    
    
    
    
    
    
    
    X10.5
    
    Employment Agreement dated March 17,
2004, with Gary D. Allhusen *
    
    10-KSB
    
    000-30874
    
    
    10.9
    
    
    3/30/0410.6
    
    Amendment dated June 22, 2006, to
Employment Agreement with Gary D.
Allhusen*
    
    
    
    
    
    
    
    
    
    
    
    X10.7
    
    Employment Agreement dated March 28,
2006, with Robert Morris*
    
    8-K
    
    000-30874
    
    
    99.2
    
    
    3/30/0610.8
    
    Correcting Amendment dated November 2,
2006, to Employment Agreement with
Robert Morris*
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    11/7/0610.9
    
    Employment Agreement dated March 28,
2006, with Michael Willner*
    
    8-K
    
    000-30874
    
    
    99.3
    
    
    3/30/0610.10
    
    Correcting Amendment dated November 2,
2006, to Employment Agreement with
Michael Willner*
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    11/7/0610.11
    
    Sublease dated October 25, 2006, with
Cygni Capital LLC
    
    
    
    
    
    
    
    
    
    
    
    X10.12
    
    Investment Relations Agreement dated
December 2, 2004, with The Liquid
Group, Inc.
    
    10-KSB
    
    000-30874
    
    
    10.14
    
    
    3/31/0510.13
    
    Consulting Agreement dated February 4,
2005, with Robert F. Mitro
    
    10-KSB
    
    000-30874
    
    
    10.17
    
    
    3/31/0510.14
    
    Preferred Stock Purchase Agreement
Dated March 24, 2006, with Barron
Partners, LP
    
    8-K
    
    000-30874
    
    
    99.1
    
    
    3/30/0610.15
    
    Marketing Agreement dated December 31,
2006, with Iain Allison*
    
    8-K/A-1
    
    000-30874
    
    
    99.1
    
    
    1/8/0710.16
    
    Consulting Agreement effective December
31, 2006, with Burdock, Inc.*
    
    
    
    
    
    
    
    
    
    
    
    X10.17
    
    Amendment effective March 20, 2007, to
Consulting Agreement with Burdock,
Inc.*
    
    
    
    
    
    
    
    
    
    
    
    X10.18
    
    Amendment effective April 23, 2007, to
the Consulting Agreement with Burdock,
Inc.*
    
    
    
    
    
    
    
    
    
    
    
    X10.19
    
    Employment Agreement dated December 31,
2006, with Jesper Lindorff
    
    
    
    
    
    
    
    
    
    
    
    X10.20
    
    Amendment dated April 23, 2007, to
Employment Agreement with Jesper
Lindorff*
    
    
    
    
    
    
    
    
    
    
    
    X10.21
    
    Financing Agreement dated January 24,
2007, with Bridge Bank
    
    
    
    
    
    
    
    
    
    
    
    X10.22
    
    Agreement dated January 2, 2007, with
Curo Capital, LLC
    
    
    
    
    
    
    
    
    
    
    
    X
  45




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Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith14.1
    
    Code of Ethics
    
    10-KSB
    
    000-30874
    
    
    14.1
    
    
    3/30/0416.1
    
    Letter of Haskell & White LLP dated December 12, 2006
    
    8-K
    
    000-30874
    
    
    16.1
    
    
    12/13/0621.1
    
    List of Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    X23.1
    
    Consent of Haskell & White, LLP, independent registered public accounting firm
    
    
    
    
    
    
    
    
    
    
    
    X23.2
    
    Consent of LevitZacks, independent registered public accounting firm
    
    
    
    
    
    
    
    
    
    
    
    X23.3
    
    Consent of Bansal & Co., Chartered
Accountants, independent registered public accounting firm
    
    
    
    
    
    
    
    
    
    
    
    X31.1
    
    Rule 13a-14(a) Certification by Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Rule 13a-14(a) Certification by Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Section 1350 Certification of Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    X32.2
    
    Section 1350 Certification of Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    
    X
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 Fees Paid
  Audit Fees
  Audit-Related Fees
   46




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##### Table of Contents



Tax Fees
  All Other Fees
  Audit Committee
   
  47




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##### Table of Contents



SIGNATURES
  Caneum, Inc.Date: July 2, 2007
    By:
    /s/ Suki MudanSuki Mudan, President  Date: July 2, 2007
    /s/ Suki MudanSuki Mudan, Director and President(Principal Executive Officer)Date: July 2, 2007
    /s/ Gary AllhusenGary Allhusen, Chief Operating Officer(Principal Financial and Accounting Officer)Date:  July 2, 2007
    /s/ Alan S. KnitowskiAlan S. Knitowski, ChairmanDate:  July 2, 2007
    /s/ Luan DangLuan Dang, DirectorDate: July 2, 2007
    /s/ Avtar Singh RanshiDr. Avtar Singh Ranshi, DirectorDate: July 2, 2007
    /s/ Robert F. MitroRobert F. Mitro, Director  48




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and

Stockholders of Caneum, Inc. We have audited the accompanying consolidated balance sheet of Caneum, Inc. as of December 31, 2006, and the related
consolidated statements of operations, stockholders equity, and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the companys management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit. We did not audit the balance sheet of
Continuum Systems Private Limited, an Indian Corporation, a 55% owned subsidiary, which statement reflects total assets
of $609,567 as of December 31, 2006. That statement was audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts included for Continuum Systems Private Limited, is based
solely on the report of the other auditors. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit and the report of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of Caneum, Inc. as of December 31, 2006, and
the results of its operations and its cash flows for the year then ended, in conformity with accounting principles
generally accepted in the United States of America. As disclosed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts
for stock-based compensation in 2006. /s/ LevitZacks
LevitZacks San Diego, California

June 29, 2007




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
  49




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##### Table of Contents



BANSAL & CO.
CHARTERED ACCOUNTANTS HEAD OFFICE:

A-6, Maharani Bagh

New Delhi-110065

PH.: 011-41626470-71, 41328425

FAX: 011-26843073

e-mail-info@bansalco.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and

Stockholders of Caneum, Inc. We have audited the accompanying Balance sheet of Continuum Systems Private Limited, Gurgaon (India) as of December 31,
2006, a subsidiary of Caneum Inc. USA. This financial statement is the responsibility of the Companys management. Our
responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audit provide a reasonable basis for our opinion. In our opinion, the financial statement referred to above present fairly, in all material respects, the financial
position of Continuum Systems Private Limitedas of December 31, 2006 in conformity with accounting principles
generally accepted in the United States of America. M/s Bansal & Co.

Chartered Accountants /s/ D.S. Rawat
D. S. Rawat

Partner

Mship no.-83030

Place: New Delhi

Date: 6th April, 2007




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##### Table of Contents



December 31,
    
    
    December 31,2006
    
    
    2005CURRENT ASSETSCash and cash equivalents
    
    $
    335,202
    
    
    $
    99,760Accounts
receivable, net of allowance of $229,626 and $6,733, respectively
    
    
    1,840,994
    
    
    
    469,074Prepaid assets
    
    
    57,673
    
    
    
    68,750Other current assets
    
    
    15,000
    
    
    
    51,099Total current assets
    
    
    2,248,869
    
    
    
    688,683LONG TERM ASSETSProperty
& equipment, net
    
    
    194,373
    
    
    
    14,557Intangibles, net
    
    
    938,587
    
    
    
    Goodwill
    
    
    1,464,805
    
    
    
    Other
    
    
    4,592
    
    
    
    TOTAL ASSETS
    
    $
    4,851,226
    
    
    $
    703,240
   50




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##### Table of Contents



December 31,
    
    
    December 31,2006
    
    
    2005CURRENT LIABILITIESAccounts payable
    
    $
    830,468
    
    
    $
    271,509Accrued expenses
    
    
    67,098
    
    
    
    13,147Credit lines
    
    
    159,966
    
    
    
    6,833Accrued payroll and related expenses
    
    
    119,556
    
    
    
    25,839Notes payable
    
    
    61,480
    
    
    
    Current
portion of installment loans
    
    
    785,573
    
    
    
    Other current liabilities
    
    
    84,522
    
    
    
    Total current liabilities
    
    
    2,108,663
    
    
    
    317,328LONG TERM LIABILITIESInstallment loans, less current portion
    
    
    665,862
    
    
    
    Other non current liabilities
    
    
    51,127
    
    
    
    Total liabilities
    
    
    2,825,652
    
    
    
    317,328Minority Interest
    
    
    231,227
    
    
    
    SHAREHOLDERS
EQUITYPreferred stock, $0.001 par value 20,000,000 shares
authorized 3,332,500 and 0 shares issued and outstanding (Liquidation preference $1,666,250)
    
    
    3,332
    
    
    
    Common stock. $0.001 par value 100,000,000 shares
authorized 7,918,921 and 5,386,991 shares issued and outstanding
    
    
    7,917
    
    
    
    5,386Additional paid-in capital
    
    
    7,592,702
    
    
    
    3,394,328Accumulated deficit
    
    
    (5,809,604
    )
    
    
    (3,013,802
    )Total
shareholders equity
    
    
    1,794,347
    
    
    
    385,912TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
    
    $
    4,851,226
    
    
    $
    703,240
   51




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##### Table of Contents



2006
    
    
    2005REVENUE
    
    $
    6,988,283
    
    
    $
    2,175,271COST OF REVENUE
    
    
    5,343,193
    
    
    
    1,676,112GROSS PROFIT
    
    
    1,645,090
    
    
    
    499,159OPERATING EXPENSES
    
    
    3,570,661
    
    
    
    1,775,041LOSS FROM OPERATIONS
    
    
    ($1,925,571
    )
    
    
    ($1,275,882
    )OTHER INCOME (EXPENSE)Interest
income (expense), net
    
    
    (113,581
    )
    
    
    1,737Other income
    
    
    1,266
    
    
    
    TOTAL OTHER INCOME (EXPENSE)
    
    
    ($112,315
    )
    
    $
    1,737LOSS BEFORE INCOME TAX
    
    
    ($2,037,886
    )
    
    
    ($1,274,145
    )INCOME TAX EXPENSE
    
    
    (2,868
    )
    
    
    (800
    )NET LOSS
    
    
    ($2,040,754
    )
    
    
    ($1,274,945
    )Beneficial
Conversion Charge upon Issuance of Preferred Shares
    
    
    755,048
    
    
    
    NET LOSS
ATTRIBUTABLE TO COMMON STOCKHOLDERS
    
    
    ($2,795,802
    )
    
    
    ($1,274,945
    )LOSS PER COMMON SHARE-Basic and Diluted
    
    
    ($0.44
    )
    
    
    ($0.27
    )WEIGHTED AVERAGE NUMBER OF COMMON
SHARES
OUTSTANDING USED IN THE CALCULATION
    
    
    6,332,795
    
    
    
    4,670,050
   52




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##### Table of Contents



For the Years EndedDecember 31,
    
    
    December 31,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (2,040,754
    )
    
    $
    (1,274,945
    )Adjustments to reconcile net loss to net cash
used in operating activitiesStock-based compensation expense
    
    
    523,614
    
    
    
    339,239Expenses paid by stock issuances
    
    
    133,448
    
    
    
    192,677Interest
accreted to TierOne notes
    
    
    100,329Depreciation and amortization
    
    
    88,274
    
    
    
    1,471Amortization of acquired intangibles from business combinations
    
    
139,800
    
    

Bad debt expense
    
    
351,279

    
    
    (Increase) decrease inAccounts receivable
    
    
    (877,169
    )
    
    
    (366,991
    )Prepaid assets  related party
    
    
    
    
    
    
    (68,750
    )Prepaid expenses and other current assets
    
    
    163,101
    
    
    
    (21,099
    )Increase inAccounts payable and accrued expenses
    
    
    286,977
    
    
    
    154,317Accrued payroll and related expenses
    
    
    93,717
    
    
    
    4,496Net cash used in operating activities
    
    
    (1,037,384
    )
    
    
    (1,039,585
    )CASH FLOWS FROM INVESTING ACTIVITIESCash paid for acquisition of TierOne Consulting, Inc., net of cash acquired
    
    
    (1,338,627
    )
    
    
    Cash acquired in acquisition of Continuum
    
    
    125,254
    
    
    
    Purchase of
property & equipment
    
    
    (32,641
    )
    
    
    Development
of software for internal use
    
    
    
    
    
    
    (16,028
    )Net cash used in investing activities
    
    
    (1,246,014
    )
    
    
    (16,028
    )CASH FLOWS FROM FINANCING ACTIVITIESIssuance of
common stock and warrants for cash
    
    
    350,004
    
    
    
    490,500Issuance of
Series A preferred shares and warrants for cash, net
    
    
    1,790,000
    
    
    
    Payment of debt
    
    
    (98,378
    )
    
    
    Addition to
debt
    
    
    11,480
    
    
    
    Exercise of warrants
    
    
    180,000
    
    
    
    Exercise of options
    
    
    132,250
    
    
    
    151,250Increase in credit line
    
    
    153,484
    
    
    
    6,833Net cash provided by financing activities
    
    
    2,518,840
    
    
    
    648,583Net increase (decrease) in cash and cash equivalents
    
    
    235,442
    
    
    
    (407,030
    )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    99,760
    
    
    
    506,790CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    335,202
    
    
    $
    99,760SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATIONInterest paid
    
    
    26,406
    
    
    
    333Income taxes
paid
    
    $
    2,868
    
    
     $
    800
 Non-cash Investing and Financing Activities
During the year ended December 31, 2006, the company had the following non cash
financing and investing activities:
         During the year ended December 31, 2005, the company had the following non cash
financing and investing activities:
        53




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##### Table of Contents



CANEUM, INC.
Consolidated Statements of Stockholders Equity
For the years ended December 31, 2006 and 2005
 Price per
    
    
    Series A Convertible,
    
    
    
    
    
    
    
    
    
    
    AdditionalEquity
    
    
    Preferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    AccumulatedUnit
    
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    TotalBalance at December 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,358,271
    
    
    $
    4,358
    
    
    $
    2,124,490
    
    
    $
    (1,738,857
    )
    
    
    389,9912004 Executive bonus paid in
stock (previously accrued)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,147
    
    
    
    33
    
    
    
    82,167
    
    
    
    
    
    
    
    82,200Shares issued  private
placement at $2.00/share
    
    $
    2.00
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    20
    
    
    
    39,980
    
    
    
    
    
    
    
    40,000Shares issued  private
placement at $1.25/share
    
    $
    1.25
    
    
    
    
    
    
    
    
    
    
    
    299,181
    
    
    
    299
    
    
    
    374,701
    
    
    
    
    
    
    
    375,000Shares issued for consulting
services
    
    $
    1.03
    
    
    
    
    
    
    
    
    
    
    
    52,692
    
    
    
    53
    
    
    
    54,024
    
    
    
    
    
    
    
    54,077Shares issued in connection
with asset purchase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,822
    
    
    
    13
    
    
    
    14,987
    
    
    
    
    
    
    
    15,000Shares issued  private
placement $0.75/share
    
    $
    0.75
    
    
    
    
    
    
    
    
    
    
    
    100,667
    
    
    
    101
    
    
    
    75,399
    
    
    
    
    
    
    
    75,500Options exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    275,000
    
    
    
    275
    
    
    
    150,975
    
    
    
    
    
    
    
    151,250Shares issued for consulting
services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,000
    
    
    
    40
    
    
    
    (40
    )
    
    
    
    
    
    
    Stock based compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339,239
    
    
    
    
    
    
    
    339,2392005 Executive bonus paid in
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    195,211
    
    
    
    195
    
    
    
    138,405
    
    
    
    
    
    
    
    138,600Net loss for the year ended
December 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,274,945
    )
    
    
    (1,274,945
    )Balance at December 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,386,991
    
    
    
    5,386
    
    
    
    3,394,328
    
    
    
    (3,013,802
    )
    
    
    385,912Preferred Shares and Warrants issued in a
private placement
    
    $
    0.50
    
    
    
    4,000,000
    
    
    
    4,000
    
    
    
    
    
    
    
    
    
    
    
    1,996,000
    
    
    
    
    
    
    
    2,000,000Offering costs for Preferred
Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (210,000
    )
    
    
    
    
    
    
    (210,000
    )Beneficial Conversion Charge upon
Issuance of Preferred Shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    755,048
    
    
    
    (755,048
    )
    
    
    Shares issued as direct
acquisition cost
    
    $
    0.78
    
    
    
    
    
    
    
    
    
    
    
    26,633
    
    
    
    27
    
    
    
    20,750
    
    
    
    
    
    
    
    20,777Shares and warrants issued in a private
placement
    
    $
    0.75
    
    
    
    
    
    
    
    
    
    
    
    466,671
    
    
    
    467
    
    
    
    349,537
    
    
    
    
    
    
    
    350,004Shares issued for services
    
    $
    0.74
    
    
    
    
    
    
    
    
    
    
    
    180,521
    
    
    
    181
    
    
    
    133,267
    
    
    
    
    
    
    
    133,448Options exercised
    
    $
    0.55
    
    
    
    
    
    
    
    
    
    
    
    240,454
    
    
    
    240
    
    
    
    132,010
    
    
    
    
    
    
    
    132,250Warrants exercised
    
    $
    0.50
    
    
    
    
    
    
    
    
    
    
    
    360,000
    
    
    
    360
    
    
    
    179,640
    
    
    
    
    
    
    
    180,000Conversion of Preferred
Shares to Common Shares
    
    
    
    
    
    
    (667,500
    )
    
    
    (668
    )
    
    
    667,500
    
    
    
    668
    
    
    
    
    
    
    
    
    
    
    
    Stock option compensation
expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    523,614
    
    
    
    
    
    
    
    523,614Shares issued for acquisition
    
    $
    0.67
    
    
    
    
    
    
    
    
    
    
    
    590,151
    
    
    
    588
    
    
    
    392,908
    
    
    
    
    
    
    
    393,496For
estimated liquidated damages
    
    $
    0.62
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74,400
    )
    
    
    
    
    
    
    (74,400
    )Net loss for the year ended
December 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,040,754
    )
    
    
    (2,040,754
    )Balance at December 31,
2006
    
    
    
    
    
    
    3,332,500
    
    
    $
    3,332
    
    
    
    7,918,921
    
    
    $
    7,917
    
    
    $
    7,592,702
    
    
    $
    (5,809,604
    )
    
    $
    1,794,347
   54




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 NOTE 1  CORPORATE HISTORY
      55




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CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 NOTE 2  Significant Accounting Policies
 Consolidation
   Revenue Recognition
  Segment Reporting
  Customer Concentrations
  Accounts
Receivable Policy
  Advertising
   56




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CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 Cash and Cash Equivalents
  Stock-Based Compensation
 Share-Based Payment Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees
   2005Net loss as reported
    
    $
    (1,274,945
    )Stock based compensation deducted in arriving at net loss as reported
    
    
    339,239Adjusted
net loss
    
    
    (935,706
    )Stock based compensation determined under the fair value method
    
    
    (1,203,045
    )Pro-forma net loss
    
    $
    (2,138,751
    )Net loss per share, as reported
    
    $
    (0.27
    )Pro-forma net loss per share
    
    $
    (0.46
    )
  57




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 Goodwill and Other Intangible Assets
 Goodwill is recorded when the purchase price of an acquisition exceeds the estimated fair value of the net identified
tangible and intangible assets acquired. In accordance with SFAS No. 142, Goodwill and Other Intangible Assets,
goodwill is not amortized but requires testing for potential impairment, at a minimum on an annual basis, or when
indications of potential impairment exist. The impairment test for identifiable assets not subject to amortization is
also performed annually or when impairment indications exist. Identified intangible assets that are subject to amortization are evaluated for impairment similar to the evaluation of
other long-lived assets in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-lived
Assets.The carrying value of these assets is evaluated whenever events or changes in circumstances indicate that a
potential impairment has occurred relative to a given asset or asset group. Fair Value of Financial Instruments
  Accounting for Income Taxes
  Long-Lived Assets
  Property & Equipment
   58




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CANEUM, INC.
Notes to Financial Statements
December 31, 2006
  Per Share Data
 The Company computes net loss per common share in accordance with SFAS No. 128, Earnings Per Share and SEC Staff
Accounting Bulletin No. 98, Computations of Earnings Per Share. Under the provisions of SFAS No. 128 and SAB No. 98,
basic net loss per common share is computed by dividing the net loss attributable to common stockholders for the period
by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is
computed by dividing the net loss attributable to common shareholders for the period by the weighted average common and
dilutive equivalent shares outstanding during the period. At December 31, 2006 and
December 31, 2005, the Company had options to purchase an
additional 7,522,796 and 4,636,250
common shares, respectively, that were not included in the computation of diluted net loss per share as their inclusion
would have been anti-dilutive. At December 31, 2006 and
December 31, 2005, the Company had warrants to purchase an
additional 8,372,469 and 150,333 common shares, respectively that were not included
in the computation of diluted net loss per share as their inclusion would have been anti-dilutive. In addition, as of
December 31, 2006, the Company could be required to issue
addition warrants to purchase up to 611,200 common shares upon future
exercise of existing outstanding warrants. At December 31, 2006, the Company had outstanding 3,332,500 convertible (1:1) preferred shares that were not included
in the computation of diluted net loss per share as their inclusion would have been anti-dilutive. In addition, as of
December 31, 2006, the Company could be required to issue up to
2,600,000 addition Preferred shares upon failure to achieve certain
adjusted EBITDA targets. Use of Estimates
   New Accounting Pronouncements
 Considering the Effects of Prior Year Misstatements when Quantifying Current Year
Misstatements
  59




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 Fair Value Measurements
 Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109 Accounting for Income Taxes
    NOTE 3  RELATED PARTY TRANSACTIONS
 Investor Relations
    60




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CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 Consulting
  NOTE 4  INTANGIBLE ASSETS
      61




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
  Intangible assets subject to amortization:Useful
    
    
    Gross
    
    
    Amort as of
    
    
    UnamortLife
    
    
    Cost
    
    
    Dec 06
    
    
    BalanceCustomer contracts & relationships
    
    5 Yrs
    
    $
    737,000
    
    
    $
    110,550
    
    
    $
    626,450Employment contracts
    
    2 Yrs
    
    $
    78,000
    
    
    $
    29,250
    
    
    $
    48,750Licenses
    
    1 Yr
    
    $
    75,000
    
    
    $
    62,500
    
    
    $
    12,500Continuum
customer relationships
    
    5 Yrs
    
    $
    161,000
    
    
    
    
    
    
    $
    161,000
   Fiscal 2007
    
    $
    231,000Fiscal 2008
    
    $
    189,000Fiscal 2009
    
    $
    180,000Fiscal 2010
    
    $
    180,000Fiscal 2011
    
    $
    69,000
 NOTE 5  INCOME TAX
  Year EndedDecember 31,2006
    
    
    2005Current:Federal
    
    $
    
    
    
    $
    State
    
    
    2,868
    
    
    
    8002,868
    
    
    
    800Deferred:Federal
    
    
    
    
    
    
    State
    
    
    
    
    
    
    Income tax provision
    
    $
    2,868
    
    
    $
    800
  62




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
  Year Ended December 31,2006
    
    
    2005Expected
Federal income tax benefit
    
    $
    (694,000
    )
    
    $
    (368,000
    )Expected
State income tax benefit, net
    
    
    (122,500
    )
    
    
    (65,000
    )State tax (benefit) expense, net of Federal benefit
    
    
    2,868
    
    
    
    800Other
    
    
    (120,500
    )
    
    
    Increase in valuation allowance
    
    
    937,000
    
    
    
    433,000Income tax provision
    
    $
    2,868
    
    
    $
    800
  12/31/2006
    
    
    12/31/2005Deferred tax assets:Federal and state net operating loss carryforwards
    
    $
    1,258,000
    
    
    $
    865,000Allowances for bad debts
    
    
    89,000
    
    
    
    2,000Stock based compensation
    
    
    407,000
    
    
    
    Capital losses in excess of capital gains
    
    
    55,000
    
    
    
    5,000Total deferred tax assets
    
    
    1,809,000
    
    
    
    872,000Valuation allowance
    
    
    (1,809,000
    )
    
    
    (872,000
    )Net deferred tax assets
    
    $
    
    
    
    $
    
     63




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
  NOTE 6  BARRON FINANCING
       64




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
   NOTE 7  TIER ONE TRANSACTION
   65




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 Allocated to purchase price:
    
    
    2,971,700Accounts
receivable and cash
    
    
    777,800Fixed assets
    
    
    40,200Trademarks
    
    
    90,000Customer contracts & relationships
    
    
    737,000Employment contracts
    
    
    78,000Less liabilities assumed
    
    
    (216,100
    )Total identifiable assets, net
    
    
    1,506,900Remaining balance to goodwill
    
    
    1,464,800
  NOTE 8  CONTINUUM TRANSACTION
    66




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CANEUM, INC.
Notes to Financial Statements
December 31, 2006
  1 4
 1 4
  67




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
   Acquired
identifiable assets:Accounts
receivable and cash
    
    $
    422,800Fixed assets
    
    $
    132,800Customer relationships
    
    $
    160,900Other
    
    $
    53,900Less liabilities assumed
    
    $
    (95,700
    )Total identifiable assets, net
    
    $
    674,700Minority interest
    
    $
    (231,200
    )Acquisition price
    
    $
    443,500
 NOTE 9  COMMON STOCK TRANSACTIONS
      68




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CANEUM, INC.
Notes to Financial Statements
December 31, 2006
               NOTE 10  STOCK PLAN
       69




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##### Table of Contents



2006
    
    
    2005Volatility
    
    71  97%
    
    35.33%Risk free Interest rate
    
    4.8%
    
    4.29%Expected life of Options
    
    4-5 years
    
    4-5 yearsExercise
price
    
    $0.59  0.83
    
    $0.71  2.38Dividend
yield
    
    0
    
    0
    Impact of SFAS No. 123R
  Year endedDecember 31,2006Stock-option compensation expense
    
    $
    524,000Effect on loss per share:Basic and
diluted
    
    $
    (0.08
    )
   70




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
     71




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
  2006
    
    
    2005Weighted-Average
    
    
    
    
    
    
    Weighted-AverageShares
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise PriceOutstanding at January 1
    
    
    4,636,250
    
    
    
    0.81
    
    
    
    3,990,000
    
    
    $
    0.67Granted
    
    
    3,287,000
    
    
    
    0.77
    
    
    
    1,577,500
    
    
    $
    1.69Cancelled/forfeited
    
    
    (160,000
    )
    
    
    2.36
    
    
    
    (656,250
    )
    
    $
    1.70Exercised
    
    
    (240,454
    )
    
    
    0.54
    
    
    
    (275,000
    )
    
    $
    0.55Outstanding at December 31,
    
    
    7,522,796
    
    
    
    0.77
    
    
    
    4,636,250
    
    
    $
    0.81Options exercisable at December 31
    
    
    4,522,420
    
    
    
    0.75
    
    
    
    3,735,668
    
    
    
    0.70Weighted-average fair value of
options granted during the period
    
    $
    0.48
    
    
    
    
    
    
    $
    1.33
  Options Outstanding
    
    
    Options ExercisableNumber
    
    
    Weighted-Average
    
    
    
    
    
    
    NumberRange of
    
    Outstanding
    
    
    Remaining
    
    
    Weighted-Average
    
    
    Exercisable
    
    
    Weighted-AverageExercise Prices
    
    December 31, 2006
    
    
    Contractual Life
    
    
    Exercise Prices
    
    
    December 31, 2006
    
    
    Exercise Price$0.00 - $1.00
    
    
    6,807,796
    
    
    8.1 years
    
    
    0.69
    
    
    
    4,003,092
    
    
    $
    0.64$1.00 - $2.00
    
    
    665,000
    
    
    8.4 years
    
    
    1.47
    
    
    
    469,328
    
    
    $
    1.46$2.00 - $3.00
    
    
    50,000
    
    
    7.6 years
    
    
    2.40
    
    
    
    50,000
    
    
    $
    2.40$0.00 - $3.00
    
    
    7,522,796
    
    
    8.1 years
    
    
    0.77
    
    
    
    4,522,420
    
    
    $
    0.75
   72




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
  
    
    50,000 warrants for common shares at $0.75 each. These warrants were
issued during 2005 and are fully vested at December 31, 2005.
    
    50,000 warrants for common shares at $1.40 each. These warrants were
issued to consultants to the Company and are fully vested.
    
    The Company issued 100,667 shares of common stock in a private
placement dated October 1, 2005, with accompanying Common Stock
Purchase Warrants at the rate of 50% of the shares purchased.
Accordingly 50,333 warrants are outstanding related to this common
stock. The warrants are exercisable at $1.00 with certain
incentive discounts to the exercise price available through December
31, 2009.
    
    The Company issued 466,671 shares of common stock in a private
placement dated January 2, 2006, with accompanying Common Stock
Purchase Warrants at the rate of 50% of the shares purchased.
Accordingly 233,336 warrants are outstanding related to this common
stock. The warrants are exercisable at $1.00 with certain
incentive discounts to the exercise price available through March 31,
2010.
 NOTE 11  COMMITMENTS AND CONTINGENCIES
 Employment Contracts
    73




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
   Leases
   NOTE 12  NOTES PAYABLE
 Credit Lines
      74




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##### Table of Contents



CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 Note Payable to TierOne Consulting Principals
  NOTE
13  CORRECTION OF AN ERROR
    NOTE 14  SUBSEQUENT EVENTS
 Bridge Bank Line of Credit
   Consummation
of Continuum Acquisition
   75




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CANEUM, INC.
Notes to Financial Statements
December 31, 2006
 NOTE 15  PRO FORMA BUSINESS COMBINATIONS
   CANEUM, INC.Pro forma Income StatementTwelve months ended
    
    
    Twelve months endedDecember 31,
    
    
    December 31,2006
    
    
    2005(unaudited)
    
    
    (unaudited)REVENUE
    
    $
    9,503,000
    
    
    $
    8,844,000COST OF REVENUE
    
    
    6,859,000
    
    
    
    5,974,000GROSS PROFIT
    
    
    2,644,000
    
    
    
    2,870,000OPERATING EXPENSES
    
    
    4,276,000
    
    
    
    3,653,000LOSS FROM OPERATIONS
    
    
    (1,632,000
    )
    
    
    (783,000
    )TOTAL OTHER INCOME
    
    
    (140,000
    )
    
    
    (170,000
    )NET LOSS
    
    
    (1,772,000
    )
    
    
    (953,000
    )LOSS PER COMMON SHARE
    
    
    ($0.26
    )
    
    
    ($0.18
    )WEIGHTED AVERAGE COMMON SHARES
    
    
    6,929,604
    
    
    
    5,286,834
  76




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##### Table of Contents



EXHIBIT INDEX
 Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1 & 10.23
    
    Stock Purchase Agreement dated March
28, 2006, with Tier One Consulting,
Inc.
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    3/30/062.2 & 10.24
    
    Correcting Amendment dated November 2,
2006, to Stock Purchase Agreement dated
March 28, 2006, with Tier One
Consulting, Inc.
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    11/7/062.3 & 10.25
    
    Amendment dated March 26, 2007, to
Stock Purchase Agreement dated March
28, 2006, with Tier One Consulting,
Inc.
    
    
    
    
    
    
    
    
    
    
    
    X2.4
    
    Stock-For-Stock Exchange Agreement
dated December 29, 2006, with Iain
Allison
    
    8-K/A-1
    
    000-30874
    
    
    2.1
    
    
    1/8/072.5
    
    Stock Swap Agreement dated February 26,
2007, with Jesper Lindorff
    
    
    
    
    
    
    
    
    
    
    
    X2.6
    
    Stock Purchase Agreement dated December
29, 2006, with Neeraj Sehgal
    
    8-K/A-1
    
    000-30874
    
    
    2.3
    
    
    1/8/073.1
    
    Articles of Incorporation
    
    10-KSB
    
    000-30874
    
    
    4.3
    
    
    6/19/063.2
    
    Current Bylaws
    
    8-K
    
    000-30874
    
    
    3.2
    
    
    8/4/ 044.1
    
    Form of Common Stock Certificate
    
    S-8
    
    333-135124
    
    
    4.1
    
    
    6/19/064.2
    
    Amended 2002 Stock Option/Stock
Issuance Plan *
    
    8-K
    
    000-30874
    
    
    4.2
    
    
    5/14/074.3 & 10.27
    
    Grant of Stock Option Form used
pursuant to the 2002 Stock Option/Stock
Issuance Plan
    
    8-K
    
    000-30874
    
    
    4.3 & 10.27
    
    
    5/14/074.4
    
    Certificate of Designations, Rights and
Limitations of Series A Convertible
Preferred Stock
    
    8-K
    
    000-30874
    
    
    4.1
    
    
    3/30/064.5
    
    Form of Series A Preferred Stock
Certificate
    
    8-K
    
    000-30874
    
    
    4.2
    
    
    3/30/064.6
    
    Form of A Warrant
    
    8-K
    
    000-30874
    
    
    4.3
    
    
    3/30/064.7
    
    Form of B Warrant
    
    8-K
    
    000-30874
    
    
    4.4
    
    
    3/30/064.8
    
    Form of C Warrant
    
    8-K
    
    000-30874
    
    
    4.5
    
    
    3/30/064.9
    
    Form of D Warrant exercisable at $0.50
    
    10-QSB
    
    000-30874
    
    
    4.1
    
    
    5/15/064.10
    
    Form of E Warrant exercisable at $1.00
    
    10-QSB
    
    000-30874
    
    
    4.2
    
    
    5/15/064.11
    
    Form of F Warrant exercisable at $1.50
    
    10-QSB
    
    000-30874
    
    
    4.3
    
    
    5/15/064.12
    
    Registration Rights Agreement with
Barron Partners, LP
    
    8-K
    
    000-30874
    
    
    4.6
    
    
    3/30/06
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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith4.13
    
    Form of Warrants issued in 506 Offerings
    
    SB-2
    
    333-134963
    
    
    4.14
    
    
    6/13/064.14
    
    Form of Warrants issued to consultants
    
    SB-2
    
    333-134963
    
    
    4.15
    
    
    6/13/0610.1
    
    Employment Agreement dated October 28,
2003, with Suki Mudan *
    
    10-QSB
    
    000-30874
    
    
    10.6
    
    
    11/7/ 0310.2
    
    Amendment dated September 29, 2006, to
Employment Agreement with Suki Mudan*
    
    
    
    
    
    
    
    
    
    
    
    X10.3
    
    Employment Agreement dated October 28,
2003, with Alan S. Knitowski *
    
    10-QSB
    
    000-30874
    
    
    10.7
    
    
    11/7/ 0310.4
    
    Amendment dated September 29, 2006, to
Employment Agreement with Alan S.
Knitowski*
    
    
    
    
    
    
    
    
    
    
    
    X10.5
    
    Employment Agreement dated March 17,
2004, with Gary D. Allhusen *
    
    10-KSB
    
    000-30874
    
    
    10.9
    
    
    3/30/0410.6
    
    Amendment dated June 22, 2006, to
Employment Agreement with Gary D.
Allhusen*
    
    
    
    
    
    
    
    
    
    
    
    X10.7
    
    Employment Agreement dated March 28,
2006, with Robert Morris*
    
    8-K
    
    000-30874
    
    
    99.2
    
    
    3/30/0610.8
    
    Correcting Amendment dated November 2,
2006, to Employment Agreement with
Robert Morris*
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    11/7/0610.9
    
    Employment Agreement dated March 28,
2006, with Michael Willner*
    
    8-K
    
    000-30874
    
    
    99.3
    
    
    3/30/0610.10
    
    Correcting Amendment dated November 2,
2006, to Employment Agreement with
Michael Willner*
    
    8-K
    
    000-30874
    
    
    2.1
    
    
    11/7/0610.11
    
    Sublease dated October 25, 2006, with
Cygni Capital LLC
    
    
    
    
    
    
    
    
    
    
    
    X10.12
    
    Investment Relations Agreement dated
December 2, 2004, with The Liquid
Group, Inc.
    
    10-KSB
    
    000-30874
    
    
    10.14
    
    
    3/31/0510.13
    
    Consulting Agreement dated February 4,
2005, with Robert F. Mitro
    
    10-KSB
    
    000-30874
    
    
    10.17
    
    
    3/31/0510.14
    
    Preferred Stock Purchase Agreement
Dated March 24, 2006, with Barron
Partners, LP
    
    8-K
    
    000-30874
    
    
    99.1
    
    
    3/30/0610.15
    
    Marketing Agreement dated December 31,
2006, with Iain Allison*
    
    8-K/A-1
    
    000-30874
    
    
    99.1
    
    
    1/8/0710.16
    
    Consulting Agreement effective December
31, 2006, with Burdock, Inc.*
    
    
    
    
    
    
    
    
    
    
    
    X10.17
    
    Amendment effective March 20, 2007, to
Consulting Agreement with Burdock,
Inc.*
    
    
    
    
    
    
    
    
    
    
    
    X10.18
    
    Amendment effective April 23, 2007, to
the Consulting Agreement with Burdock,
Inc.*
    
    
    
    
    
    
    
    
    
    
    
    X10.19
    
    Employment Agreement dated December 31,
2006, with Jesper Lindorff
    
    
    
    
    
    
    
    
    
    
    
    X10.20
    
    Amendment dated April 23, 2007, to
Employment Agreement with Jesper
Lindorff*
    
    
    
    
    
    
    
    
    
    
    
    X10.21
    
    Financing Agreement dated January 24,
2007, with Bridge Bank
    
    
    
    
    
    
    
    
    
    
    
    X10.22
    
    Agreement dated January 2, 2007, with
Curo Capital, LLC
    
    
    
    
    
    
    
    
    
    
    
    X
  78




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##### Table of Contents



Exhibit
    
    
    
    Incorporated by Reference
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith14.1
    
    Code of Ethics
    
    10-KSB
    
    000-30874
    
    
    14.1
    
    
    3/30/0416.1
    
    Letter of Haskell & White LLP dated December 12, 2006
    
    8-K
    
    000-30874
    
    
    16.1
    
    
    12/13/0621.1
    
    List of Subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    X23.1
    
    Consent of Haskell & White, LLP, independent registered public accounting firm
    
    
    
    
    
    
    
    
    
    
    
    X23.2
    
    Consent of LevitZacks, independent registered public accounting firm
    
    
    
    
    
    
    
    
    
    
    
    X23.3
    
    Consent of Bansal & Co., Chartered Accountants, independent registered public accounting firm
    
    
    
    
    
    
    
    
    
    
    
    X31.1
    
    Rule 13a-14(a) Certification by Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Rule 13a-14(a) Certification by Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Section 1350 Certification of Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    X32.2
    
    Section 1350 Certification of Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    
    X
   79