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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
 FORM 10-KSB/A-3 (Mark One) [X]
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2003 [   ]
    
    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: 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
    
    
    92660(Address of principal executive offices)
    
    (Zip Code)
 Issuers telephone number, including area code: (949) 273-4000 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, Par Value $.001 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 [   ] (2) Yes [X]  No
[   ] Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrants knowledge,




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in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB.
[   ] The registrants revenues for the twelve months ended December 31, 2003, were
$77,350. The aggregate market value of the voting stock held by non-affiliates of the
registrant (2,670,635 shares) as of March 25, 2004, was $1,032,571, computed by
reference to the price at which the stock was originally sold by the
registrant. The aggregate market value of the voting stock held by
non-affiliates of the registrant computed by using the closing sale price has
been indeterminable within the past 60 days since there was no public market
for the stock during that period. At March 25, 2004, there were 4,010,000 shares of the registrants common stock
outstanding. Documents Incorporated by Reference: None EXPLANATORY NOTE The first amendment to the Form 10-KSB was filed on October 27, 2004, to
properly file corrected forms of the officers' certifications pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. The second amendment to the Form
10-KSB was filed on January 12, 2005, which inadvertently filed the original
certifications instead of the corrected ones filed with the first amendment.
This third amendment accurately files the correct officers' certifications. 2




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TABLE OF CONTENTS PagePART I
    
    
    4ITEM 1. DESCRIPTION OF BUSINESS
    
    
    4ITEM 2. DESCRIPTION OF PROPERTY
    
    
    10ITEM 3. LEGAL PROCEEDINGS
    
    
    10ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    10PART II
    
    
    11ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    11ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    11ITEM 7. FINANCIAL STATEMENTS
    
    
    16ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
    
    
    34ITEM 8A. CONTROLS AND PROCEDURES
    
    
    34PART III
    
    
    35ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    
    
    35ITEM 10. EXECUTIVE COMPENSATION
    
    
    40ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
    
    
    43ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    47ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K
    
    
    48ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    50EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32
 3






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PART I 
 ITEM 1. DESCRIPTION OF BUSINESS Background We were incorporated in the State of Nevada on March 1, 2000, as Saiph
Corporation. We changed our name to SaiphT Corporation on March 5, 2003, and
to Caneum, Inc. on July 21, 2003. We have no subsidiaries. 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. In December 2002, we acquired all of the assets of E.com Advantage Inc.
for 10,000 shares of our common stock. The assets of E.com Advantage primarily
consisted of a number of proprietary software programs which have not yet
generated any sales. 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. Overview of Our Business Approach Based in Newport Beach, California, our business plan is twofold:  
    
    to develop and market our business process outsourcing services,
our information technology consulting services, and software
development services, and
    
    to acquire and grow companies in the software and information
technology sectors that will either add to our service capabilities
and/or which represent a potentially profitable business area within
the general field of software development and information technology. We recently began offering our software and business process outsourcing
services. We provide these services to our customers through an approach that
can combine our own technical and account management team and/or through a
number of companies or individuals located offshore. The core technical and
software capabilities of these offshore companies include a 4




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number of different software programming skill sets. Through our management,
we also have access to offshore resources for outsourcing business process
services such as call centers, hosted communications services, and
administrative processes. Our overall growth strategy includes both growth through revenue generated
from the services we provide as well as growth through an active international
acquisition strategy. This acquisition strategy is intended to operate in
parallel with our internal growth and to assist us in expanding both the
services we provide our existing customers and our overall customer base
itself. We believe that the growth of our operations requires faster
deployment and a larger pool of skill sets than currently exists exclusively
inside our company. We also believe we can most cost effectively develop the
added infrastructure we need internationally and that the added offshore
capability and diversification, in turn, could drive additional business for
us. Our Outsourcing and Consulting Services Industry Overview Management believes that many companies today face increasing customer
demands to improve service levels, lower costs, and shorten times to market.
In this competitive environment, improving information technology and
communications systems and leveraging the Internet are critical to achieving
these objectives. At the same time, the pace of technology evolution has
accelerated. In order to remain competitive, companies are increasingly
required to adopt emerging technologies. These emerging technologies offer the promise of faster, more responsive,
lower cost business operations. However, their development, integration and
on-going management present major challenges and require a large number of
highly skilled individuals trained in many diverse technologies. In addition,
companies also require additional technical resources to maintain, enhance and
re-engineer their core legacy systems for e-business and communications and to
address application management projects. Many companies have made the strategic decision to focus on their basic
competencies and reduce their cost structures rather than invest in the
additional large information technology and communications staffs that are
necessary to evaluate, implement and manage information technology and
communications infrastructure initiatives in a rapidly changing environment.
Consequently, these companies have turned to information technology and
communications service providers, both to develop and implement new information
technology solutions and to maintain core systems. As the global demand for information technology and communications
services has increased, the number of qualified technical professionals has not
kept pace with such demand. As a result, some information technology and
communications service providers have attempted to access the large talent pool
in certain developing countries, particularly India. India is widely
acknowledged as a leader in offshore software development and has the second
largest pool of information technology talent behind the U.S. Historically,
information technology and 5




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communications service providers have used the offshore labor pool primarily to
supplement the internal staffing needs of customers. However, evolving
customer demands have led to the utilization of offshore resources for higher
value-added services. Such services include application development, software
integration, software maintenance, and call centers. The use of offshore
personnel can offer a number of benefits, including faster delivery of new
information technology and communications solutions, more flexible scheduling,
and lower costs. However, utilizing an offshore workforce to provide
value-added services presents a number of challenges to information technology
and communications service providers. The offshore implementation of value-added software and communications
services requires highly developed project orchestration and consulting skills.
Such skills are necessary to design, develop and deploy high-quality
technology solutions in a timely and cost-effective manner. In addition,
information technology and communications service providers must have the
methodologies, processes, and communications capabilities to successfully
integrate offshore workforces with on-site personnel. Service providers must
also have strong research and development capabilities and technology
competency centers. Finally, service providers utilizing offshore workforces
must continually recruit and manage their workforces to deliver solutions using
emerging technologies. As a result of the increasing demand for global
information technology and communications services, management believes a
significant opportunity exists for information technology and communications
service providers that can successfully address the challenges in utilizing an
offshore talent pool. We believe that through our management team we can
deliver the services to meet the needs of companies seeking to outsource their
information technology functions. Recent Developments in Our Business During 2003 we solidified our outsourcing and business consulting
relationships with several large multinational customers. Our initial
customers are Integras Consulting, a provider of high-end analytical consulting
and advanced decision support for marketing and location strategy, part of a
Dutch based public group called VNU, and Panasonic Communications, a worldwide
manufacturer of electric and electronic products. Of our total revenues for the year ended December 31, 2003, 65% were a
result of our business process outsourcing activities for Integras. Our
revenues in 2003 were primarily attributable to successful initial projects
that we completed on their behalf. We have had binding outsourcing agreements
with Integras Consulting on three projects which have been completed and we are
currently engaged in another binding outsourcing agreement with this customer. Our relationship with Panasonic Communications has resulted in a binding
month-to-month retainer agreement to provide outsourcing services for their
information technology development work at their San Diego based research
division. We have also been providing strategic outsourcing advice to them. Besides these two customers, we are also very actively pursuing several
Californian based business process outsourcing opportunities and are in
discussions with several companies who 6




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have expressed a strong willingness to consider our outsourcing services for
various projects and applications. In each case we have provided written
proposals which are under consideration. **Our global operations may pose complex management, foreign currency, legal, tax and economic risks, which we may not adequately address, nor do we have the resources available to fully research and anticipate each potential risk.** Our business includes outsourcing of client’s services to foreign countries, particularly India . As a result, we are subject to a number of risks relating to conducting business operations in India and other foreign countries. Because of the relative small size of the company and the limited resources available to it to investigate the specific applicability of all of the potential risks associated with its off-shore operations, management are not able to specify or quantify all of these risks. This inability to extensively predict the specific risks of foreign operations creates a risk for the company in so far as these risks may be realized in unanticipated and unforeseen ways in the future. These risks may especially be manifest in the inability of the company to dedicate significant resources to pursuing legal recourse in foreign jurisdictions either to defend legal actions by foreign
companies or governments, or to protect the rights of Caneum in such countries. In general, the risks which may apply to off-shore operations may include the following: 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 Management is seeking potential acquisition candidates. However, we have
not yet found potential acquisition targets to proceed beyond preliminary
negations and due diligence investigation. Although we have entered into a
non-binding letter of intent with one of these entities, we currently have no
binding agreements with any of these companies. We have divided our potential acquisition activities into two categories
which we have designated as strategic acquisitions and opportunistic
acquisitions. Strategic acquisitions would generally fit into two specific
areas of opportunity. The first area consists of our offshore subcontractors
that would be acquired and run as wholly owned subsidiaries in order to reduce
operating costs, to enhance the operating margins of the consolidated entities,
and to expand the customer base from which both companies could draw to expand
their business. The second area consists of new potential subcontractors that
when acquired would bring both new or expanded outsourcing capabilities and new
customers to our customer base. Opportunistic acquisitions generally fit into
software, technology and/or consulting companies that when acquired would
provide us entry into a new market or markets with similar operational benefits
to our strategic acquisitions. To date, we have investigated, conducted due diligence on, and engaged in
preliminary negotiation with a number of potential target companies in the area
of outsourcing services. These companies have included targets in the United
States, Canada, Australia, Romania, and India. The majority of the companies
evaluated did not meet our acquisition criteria and thus negotiations were
terminated. However, to date several of the companies did meet our general
acquisition criteria and we are exploring additional due diligence. However,
we do not anticipate consummating any of these or other acquisitions until, and
unless, a public market for our common stock is established, of which there is
no assurance. We have not entered into any binding arrangements or agreements
with regard to acquisition of any of these companies. Management anticipates that such acquisitions would be funded primarily
through the issuance of our shares in non-cash transactions. The anticipated
result of such acquisitions would be to provide additional software products or
product maintenance, and/or to augment our current staff. Our strategy is to
acquire mature, quality companies with sound financials, intriguing technology,
a loyal customer base, and talented management teams that have a passion for
what they are doing and want to continue to run and grow their companies. It
is anticipated that each acquired business would remain a separate,
self-funding unit with minimal overhead. We have unrestricted discretion in
seeking and participating in a business opportunity. While our strategy is to acquire mature, cash flow positive, profitable
companies, we are also interested in identifying additional growth
opportunities that are not currently being 7




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addressed within the individual companys business plan. These growth
opportunities would be evaluated for the potential to infuse additional capital
to fund selected growth opportunities. Selection Criteria for Acquisition Targets Prospective acquisitions will be selected for their profitability,
technology, market position, and customer base and for their experienced
management teams. Our current general acquisition criteria consist of
targeting private companies with less than $5,000,000 in annual revenues,
little or no debt, and no cash flow problems. We will seek target companies
with strong management teams that desire to continue to run and grow their
companies and that also have existing products and services with recurrent
revenue streams. We will also seek companies with a stable customer base which
fits inside our current outsourcing and consulting business. Management intends to consider a number of factors prior to making any
final decision as to whether to purchase a company or to participate in any
specific business endeavor, none of which may be determinative or provide any
assurance of success. Selection Process for Acquisitions The selection of a business opportunity in which to participate is complex
and risky. Additionally, as we have only limited resources available to us, it
may be difficult to find good opportunities. There can be no assurance that we
will be able to identify and acquire any business opportunity based on
managements business judgment. We are unable to predict the time as to when and if we may actually
participate in any specific business endeavor. We anticipate that proposed
business ventures may be made available to us through personal contacts of
directors, executive officers, stockholders, professional advisors, broker
dealers in securities, venture capital personnel, members of the financial
community, attorneys, and others who may present unsolicited proposals. In
certain cases, we may agree to pay a finders fee or to otherwise compensate
the persons who submit a potential business endeavor in which we eventually
participate. Such persons may include our directors, executive officers,
beneficial owners or our affiliates. In this event, such fees may become a
factor in negotiations regarding a potential acquisition and, accordingly, may
present a conflict of interest for such individuals. Our directors and
executive officer have not used any particular consultants, advisors or finders
on a regular basis to locate potential business opportunities. The possibility exists that we may acquire or merge with a business or
company in which our executive officer, directors, beneficial owners or our
affiliates may have an ownership interest. Our current policy does not
prohibit such transactions. Because no such transaction is currently
contemplated, it is impossible to estimate the potential pecuniary benefits to
these persons. 8




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Competition Outsourcing Services We believe that competition in the business process outsourcing services
market is based upon the following factors:  
    
    Speed of response to customer requests;
    
    Flexibility and willingness to adapt to customer needs;
    
    Responsiveness to customer demands;
    
    Number and availability of qualified engineers and programmers;
    
    Project management capability;
    
    Technical expertise;
    
    Size and reputation;
    
    Brand recognition and geographic presence; and
    
    Price. It can be assumed that we and any acquired company will compete with
numerous large companies that have substantially greater market presence and
financial, technical, marketing and other resources than we have. Principally,
these competitors include large information technology consulting and service
providers and application software firms such as Accenture, EDS and IBM Global
Services; large Indian business process outsourcing firms such as HCL, Infosys,
TCS and Wipro; smaller Indian business process outsourcing firms such as
Cognizant and Sierra Atlantic; and major accounting firms such as Ernst &
Young. However, management believes that in selected cases when the company
develops new sources of business opportunities, the Indian competitors are
often amenable to subcontracting agreements with the company to increase their
market presence in the United States to the mutual benefit of both companies. Many of our competitors have expanded their service offerings over the
past several years and have increased their focus on business process
outsourcing services markets, thus increasing the number of organizations that
are providing services similar to ours. As a result of continued competition, we expect to encounter pricing
pressure, which in turn could result in reductions in the average selling price
of our business process outsourcing and other services. There can be no
assurance that we will be able to offset the effects of any price reductions
through an increase in the number of customer engagements, higher revenue from
enhanced services, cost reductions, or otherwise. In addition, we believe that
continuing consolidation in the business and business processing outsourcing
market could result in increased price pressure and other competition in the
industry. Acquisition Activities There is a high degree of competition among companies seeking to acquire
interests in information technology service companies such as those we may
target for acquisition. A large 9




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number of established and well-financed entities, including large information
technology consulting companies and systems integrators such as Accenture, EDS
and IBM Global Services are active in acquiring interests in companies that we
may find to be desirable acquisition candidates. Many of these entities have
significantly greater financial resources, technical expertise and managerial
capabilities than do we. Consequently, we may be at a competitive disadvantage
in negotiating and executing possible acquisitions of these entities as many
competitors generally have easier access to capital than do we. Although
entrepreneur-founders of privately held information technology service
companies may place greater emphasis on the ease of access to capital than on
obtaining the management skills and networking services that we can provide,
management believes that we offer unique and attractive benefits, including
using the experience and ability of our founders and management, to assist the
acquired companies with their operating strategy, plans and execution while
preserving the acquired companies business culture and identity. In addition, it is anticipated that each of the prospective acquired
companies would face significant competition in its individual market. With
limited barriers to entry by others, we believe competition will continue to
grow both from new entrants to the market as well as from existing
participants, such as software vendors expanding the breadth of their services
into the market served. Employees At March 1, 2004, we had two full-time employees, namely our president,
Sukhbir Mudan, and our executive vice-president, Gary Allhusen. Two of our
directors, Messrs. Mitro and Knitowski, provide consulting services on a
regular part-time basis. 
 ITEM 2. DESCRIPTION OF PROPERTY Our administrative offices, consisting of approximately 1,000 square feet
of office space, are located at 170 Newport Center Drive, Suite 220, Newport
Beach, California, which are the offices of Cygni Capital LLC, a corporation
affiliated with Eric Chess Bronk, one of our shareholders. We sublease this
office space from Cygni Capital LLC on a month-to-month basis for $500 per
month. 
 ITEM 3. LEGAL PROCEEDINGS No legal proceedings are reportable pursuant to this item. 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of our shareholders during the fourth
quarter of the fiscal year ended December 31, 2003. 10




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PART II 
 ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES Market Information There is no established trading market for our common stock. We have made
application to the OTC Bulletin Board for quotation of our common stock, but
there is no assurance when, or if, such application will be approved. We have 3,787,500 shares of our common stock which at March 25, 2004, were
subject to outstanding options to purchase these shares. At March 25, 2004, we
had no other shares of our common stock which were subject to outstanding
warrants or securities convertible into our common stock. We have registered
for resale 3,305,000 shares of our outstanding common stock for selling
securities holders. We have not proposed to publicly offer any shares of our
common stock in a primary offering. Holders At March 25, 2004, we had 104 shareholders of record as reported to us by
our transfer agent. We have appointed Interwest Transfer Company, Inc., 1981
East 4800 South, Suite 100, Salt Lake City, UT 84117, to act as our transfer
agent. Dividend Policy Since our inception we have not paid any cash dividends on our common
stock and we do not anticipate that we will pay dividends in the foreseeable
future. 
 ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 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. 11




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In December 2002, we acquired all of the assets of E.com Advantage Inc.
for 10,000 shares of our common stock. The assets of E.com Advantage primarily
consisted of a number of proprietary software programs which have not yet
generated any sales. During first quarter of 2003 we also commenced our
outsourcing 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 in the year ended December 31,
2003. We derive our revenue primarily from the sale of services. Revenue is
recognized as services are performed in accordance with all applicable revenue
recognition criteria. For these transactions we apply the provisions of SEC
Staff Accounting Bulletin No. 104, Revenue Recognition. We recognize revenue
when there is persuasive evidence of an arrangement, title and risk of loss
have passed, delivery has occurred or the services have been rendered, the
sales price is fixed or determinable and collection of the related receivable
is reasonably assured. We record all shipping and handling fees billed to
customers as revenue, and related costs as cost of sales, when incurred, in
accordance with EITF 00-10 Accounting for Shipping and Handling Fees and
Costs. Cost of services consists primarily of payments to third-party vendors and
contractors. General and administrative expenses consist primarily of overhead
in managing the pilot programs and marketing expenses for future projects, and
due diligence costs in reviewing acquisition targets. Corporate overhead
expenses relate to salaries and benefits of personnel responsible for corporate
activities, including acquisitions, administrative, and reporting
responsibilities. We record these expenses when incurred. Results of Operations During the year ended December 31, 2003, we generated revenues of $77,350
and incurred operating expenses of $360,893. Our cost of revenue earned was
$53,291. Our primary operating expenses for the year ended December 31, 2003,
were payroll and related taxes and benefits ($186,000) and professional and
consulting fees ($95,000). Since operations commenced in the last month of the
year ended December 31, 2002, and no revenue was generated until 2003, there is
no comparable data for the prior year period. These revenues were generated
primarily from our information technology and business process outsourcing
consulting services. Management has not yet determined the amount of revenues
and expenses 12




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estimated for 2004, but anticipates that they will increase based upon the
commencement of operations during 2003. Liquidity and Capital Resources As of December 31, 2003, cash totaled $781,387, as compared with no cash
or cash equivalents at December 31, 2002. Cash used in operations was $329,544
during the year ended December 31, 2003. During the same period, cash flows
used by investing activities decreased by $112,444 and cash flows from
financing activities increased by $1,223,375. There were no comparable
investing or financing activities for the same period last year, and since
operations commenced in the last month of the year ended December 31, 2002,
there is no material comparable operating data for the same period in the prior
year. Working capital was $892,574 at December 31, 2003, as compared with
negative working capital of ($26,901) at December 31, 2002. This significant
increase in working capital was a result primarily of gross proceeds from two
stock offerings which generated a total of $1,250,000 in cash during the year
ended December 31, 2003, and repayment of outstanding notes totaling
approximately $23,087, plus interest, on June 1, 2003. The first offering of our common stock was conducted in the second quarter
from approximately May through June 2003. We offered an aggregate of 1,000,000
shares at $.50 per share and realized gross proceeds of $500,000. Alan S.
Knitowski, Robert F. Mitro, and Dr. Avtar Singh Ranshi, directors of our
company, each purchased 100,000 shares for $50,000 each. The second offering was conducted from approximately August to October
2003. We offered an aggregate of 1,000,000 shares at $.75 per share and
realized gross proceeds of $750,000. Mr. Knitowski purchased 66,667 shares in
the offering for $50,000; Mr. Mitro purchased 84,000 shares for $63,000; and
Sukhbir Singh Mudan, our President and a director, purchased 1,032 shares for
$774. Management believes that with revenues generated from operations, together
with funds generated from the 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 $45,000. 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. 13




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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 year ended December 31, 2003, we did not engage in any
off-balance sheet arrangements. Recent Accounting Pronouncements In December 2003, the Financial Accounting Standards Board (FASB) issued
a revision to interpretation No. 46, Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51 (FIN 46R). FIN 46R clarifies the
application of ARB No. 51, Consolidated Financial Statements, to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support provided by any parties, including the equity holders. FIN 46R
requires the consolidation of these entities, known as variable interest
entities (VIEs), by the primary beneficiary of the entity. The primary
beneficiary is the entity, if any, that will absorb a majority of the entitys
expected losses, receive a majority of the entitys expected residual income,
or both. Among other changes, the revisions of FIN 46R (a) clarified some
requirements of the original FIN 46, which had been issued in January 2003, (b)
eased some implementation problems, and (c) added new scope exceptions. FIN
46R deferred the effective date of the Interpretation for public companies to
the end of the first reporting period ending after March 15, 2004, except that
all public companies must, at a minimum, apply the unmodified provisions of the
Interpretation to entities that were previously considered special-purpose
entities in practice and under the FASB literature prior to the issuance of
FIN 46R by the end of the first reporting period ending after December 15,
2003. As of December 31, 2003 and 2002, management believes that we are not
the primary beneficiary of any VIEs. In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity.
SFAS No. 150 establishes standards for how an issuer classified and measures
certain financial instruments with characteristics of both liabilities and
equity. SFAS No. 150 also requires that an issuer classify a financial
instrument that is within its scope as a liability, many of which were
previously classified as equity. SFAS No. 150 was effective for financial
instruments entered into or modified after May 31, 2003, and otherwise was
effective July 1, 2003. Our adoption of this statement had no impact on our
financial statements. 14




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##### Table of Contents



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. 15




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##### Table of Contents



ITEM 7. FINANCIAL STATEMENTS CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002 16




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##### Table of Contents



CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION)
TABLE OF CONTENTS PageINDEPENDENT AUDITORS REPORTS
    
    
    18-19FINANCIAL STATEMENTSBALANCE
SHEETS - ASSETS
    
    
    20BALANCE
SHEETS - LIABILITIES AND STOCKHOLDERS EQUITY
    
    
    21STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
    
    
    22STATEMENTS OF STOCKHOLDERS EQUITY
    
    
    23STATEMENTS OF CASH FLOWS
    
    
    24NOTES TO THE FINANCIAL STATEMENTS
    
    
    25
 17




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##### Table of Contents



INDEPENDENT AUDITORS REPORT The Board of Directors and Stockholders
Caneum, Inc. (formerly, SaiphT Corporation) We have audited the accompanying balance sheet of Caneum, Inc. (formerly,
SaiphT Corporation) (the Company) as of December 31, 2003, and the related
statements of operations and comprehensive loss, stockholders equity and cash
flows for the year then ended. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes 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 provides a
reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Caneum, Inc. (formerly, SaiphT
Corporation) as of December 31, 2003, 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. /s/ HASKELL & WHITE LLP  HASKELL & WHITE LLP Irvine, California
March 17, 2004 18




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##### Table of Contents



INDEPENDENT AUDITORS REPORT To the Stockholders and Directors of
SaiphT Corporation
(formerly Saiph Corporation) We have audited the accompanying balance sheets of SaiphT Corporation (formerly
Saiph Corporation) (a Nevada Corporation) (a development stage company) as of
December 31, 2002 and 2001, and the related statements of income, retained
earnings, and cash flows for the period then ended, and the period March 1,
2000 (inception) to December 31, 2002. These financial statements are the
responsibility of the Companys management. Our responsibility is to express
and opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes 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 provides a reasonable basis
for our opinion. In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SaiphT Corporation at December
31, 2002 and 2001, and the results of its operations and cash flows for the
periods then ended and the period March 1, 2000 to December 31, 2002 in
conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that SaiphT
Corporation will continue as a going concern. As discussed in Note 6 to the
financial statements, SaiphT Corporation has suffered recurring losses from
operations and has a net capital deficiency that raises substantial doubt about
the companys ability to continue as a going concern. Managements plans in
regard to these matters are also described in Note 6. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty. /s/ Bierwolf, Nilson & Associates Bierwolf, Nilson & Associates
March 26, 2003
Salt Lake City, Utah 19




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##### Table of Contents



CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
   ASSETS 2003
    
    2002CURRENT ASSETSCash and cash equivalents
    
    $
    781,387
    
    
    $
    Accounts receivable
    
    
    40,450
    
    
    
    Interest receivable
    
    
    
    
    
    
    144Prepaid expenses and other assets
    
    
    15,000
    
    
    
    Note receivable-related party
    
    
    
    
    
    
    1,250Available-for-sale equity securities (Note 3)
    
    
    77,521
    
    
    
    TOTAL CURRENT ASSETS
    
    
    914,358
    
    
    
    1,394FIXED ASSETSSoftware
    
    
    100
    
    
    
    TOTAL FIXED ASSETS
    
    
    100
    
    
    
    TOTAL ASSETS
    
    $
    914,458
    
    
    $
    1,394
 See accompanying notes and independent auditors reports. 20




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##### Table of Contents



CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
 
 LIABILITIES AND STOCKHOLDERS EQUITY 2003
    
    2002CURRENT LIABILITIESAccounts payable
    
    $
    20,984
    
    
    $
    1,220Interest payable
    
    
    
    
    
    
    3,988Taxes payable (Note 4)
    
    
    800
    
    
    
    Note payable
- related party (Note 5)
    
    
    
    
    
    
    23,087TOTAL CURRENT LIABILITIES
    
    
    21,784
    
    
    
    28,295COMMITMENTS AND CONTINGENCIES (Note 9)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
    
    
    
    1,000Additional paid in capital
    
    
    1,287,665
    
    
    
    9,000Accumulated deficit
    
    
    (382,217
    )
    
    
    (36,901
    )Accumulated other comprehensive loss
    
    
    (16,784
    )
    
    
    TOTAL STOCKHOLDERS EQUITY
    
    
    892,674
    
    
    
    (26,901
    )TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    914,458
    
    
    $
    1,394
 See accompanying notes and independent auditors reports. 21




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##### Table of Contents



CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
 
 For the year endedDecember
    
    December31, 2003
    
    31, 2002REVENUE
    
    $
    77,350
    
    
    $
    COST OF REVENUE
    
    
    53,291
    
    
    
    GROSS PROFIT
    
    
    24,059
    
    
    
    OPERATING EXPENSES
    
    
    360,893
    
    
    
    7,927LOSS FROM OPERATIONS
    
    
    (336,834
    )
    
    
    (7,927
    )OTHER INCOME (EXPENSE)Other income
    
    
    11,784
    
    
    
    Realized losses from the sales of securities
    
    
    (19,389
    )
    
    
    Dividend income
    
    
    103
    
    
    
    Interest income
    
    
    862
    
    
    
    125Interest expense
    
    
    (1,042
    )
    
    
    (1,922
    )TOTAL OTHER INCOME (EXPENSE)
    
    
    (7,682
    )
    
    
    (1,797
    )LOSS BEFORE INCOME TAX
    
    
    (344,516
    )
    
    
    (9,724
    )INCOME TAX EXPENSE (Note 4)
    
    
    (800
    )
    
    
    NET LOSS
    
    $
    (345,316
    )
    
    $
    (9,724
    )LOSS PER COMMON SHARE
    
    
    (0.14
    )
    
    
    (0.01
    )SHARES USED IN EARNINGS PER SHARE CALCULATIONSWEIGHTED AVERAGE COMMON SHARES
    
    
    2,485,726
    
    
    
    1,000,000OTHER COMPREHENSIVE INCOME (LOSS)NET LOSS
    
    $
    (345,316
    )
    
    $
    (9,724
    )OTHER COMPREHENSIVE INCOME (LOSS):Unrealized (loss) on
available-for-sale securities (Note 3)
    
    
    (16,734
    )
    
    
    COMPREHENSIVE LOSS
    
    $
    (362,050
    )
    
    $
    (9,724
    )
 See accompanying notes and independent auditors reports. 22




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##### Table of Contents



CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
  Additional
    
    
    
    
    
    Accumulated
    
    TotalCommon Stock
    
    Paid-in
    
    Accumulated
    
    other comprehensive
    
    StockholdersShares
    
    Amount
    
    Capital
    
    deficit
    
    loss
    
    EquityBALANCE, December 31, 2001
    
    
    1,000,000
    
    
    $
    1,000
    
    
    $
    9,000
    
    
    $
    (27,177
    )
    
    
    
    
    
    $
    (17,777
    )Net loss for the year ended December 31, 2002
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,724
    )
    
    
    
    
    
    
    (9,724
    )BALANCE, December 31, 2002
    
    
    1,000,000
    
    
    
    1,000
    
    
    
    9,000
    
    
    
    (36,901
    )
    
    
    
    
    
    
    (26,901
    )Shares issued for software
    
    
    10,000
    
    
    
    10
    
    
    
    90
    
    
    
    
    
    
    
    
    
    
    
    100Shares issued for cash at $0.001 per share
    
    
    450,000
    
    
    
    450
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    450Share issued for services at $0.001 per share
    
    
    500,000
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500Shares issued in connection with a private
placement at $0.50 per share
    
    
    1,000,000
    
    
    
    1,000
    
    
    
    499,000
    
    
    
    
    
    
    
    
    
    
    
    500,000Shares issued for legal services
    
    
    50,000
    
    
    
    50
    
    
    
    24,950
    
    
    
    
    
    
    
    
    
    
    
    25,000Shares issued in connection with a private
placement at $0.75 per share
    
    
    1,000,000
    
    
    
    1,000
    
    
    
    749,000
    
    
    
    
    
    
    
    
    
    
    
    750,000Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    5,625
    
    
    
    
    
    
    
    
    
    
    
    5,625Accumulated other comprehensive loss for the
year ended December 31, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,784
    )
    
    
    (16,784
    )Net loss for the year ended December 31, 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (345,316
    )
    
    
    
    
    
    
    (345,316
    )BALANCE, December 31, 2003
    
    
    4,010,000
    
    
    $
    4,010
    
    
    $
    1,287,665
    
    
    $
    (382,217
    )
    
    $
    (16,784
    )
    
    $
    892,674
 See accompanying notes and independent auditors reports. 23




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##### Table of Contents



CANEUM, INC.
(FORMERLY, SAIPHT CORPORATION) 
  For the
    
    For theYear Ended
    
    Year EndedDecember 31,
    
    December 31,2003
    
    2002CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (345,316
    )
    
    $
    (9,724
    )Adjustments to reconcile net loss to net
cash used by operating activitiesStock-based compensation expense
    
    
    5,625
    
    
    
    Stock issued for services
    
    
    25,500
    
    
    
    Realized loss on sale of securities
    
    
    19,389
    
    
    
    Increase in accounts receivable
    
    
    (40,450
    )
    
    
    Decrease in interest receivable
    
    
    144
    
    
    
    (125
    )Increase in prepaid expenses and other assets
    
    
    (15,000
    )
    
    
    Decrease in interest payable
    
    
    
    
    
    
    2,620Increase in accounts payable
    
    
    19,764
    
    
    
    270Increase in taxes payable
    
    
    800
    
    
    
    NET CASH FLOWS USED BY OPERATING ACTIVITIES
    
    
    (329,544
    )
    
    
    (6,959
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchases of available-for-sale securities
    
    
    (893,474
    )
    
    
    Proceeds from available-for-sale securities
    
    
    779,780
    
    
    
    Proceeds
from note receivable - related party
    
    
    1,250
    
    
    
    NET CASH FLOWS USED BY INVESTING ACTIVITIES
    
    
    (112,444
    )
    
    
    CASH FLOWS FROM FINANCING ACTIVITIESIssuance of common stock
    
    
    1,250,450
    
    
    
    Interest
paid on note payables - related party
    
    
    (3,988
    )
    
    
    Repayment of
note payable - related party
    
    
    (23,087
    )
    
    
    Proceeds from note payable
    
    
    
    
    
    
    5,587NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
    
    
    1,223,375
    
    
    
    5,587NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    781,387
    
    
    
    (1,372
    )CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR
    
    
    
    
    
    
    1,372CASH AND CASH EQUIVALENTS, END OF THE YEAR
    
    $
    781,387
    
    
    $
    SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIESIssuance of common stock for services
    
    $
    25,500
    
    
    
    Issuance of common stock for software
    
    $
    100
    
    
    
    SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATIONCash paid during the year for interest
    
    $
    1,042
    
    
    $
    Cash paid for taxes
    
    $
    
    
    
    $
    
 See accompanying notes and independent auditors reports. 24




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##### Table of Contents



Caneum, Inc.
(formerly, SaiphT Corporation) 
   NOTE 1 - CORPORATE HISTORY Caneum, Inc. (the Company) was incorporated in Nevada on March 1, 2000, as
Saiph Corporation for the purpose of seeking and consummating a merger or
acquisition with a business entity organized as a private corporation,
partnership, or sole proprietorship. On March 5, 2003 the Company filed
Amended Articles of Incorporation changing its name to SaiphT Corporation. On
July 21, 2003, the Company changed its name to Caneum, Inc. The Company 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. 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 year ended December 31, 2003, the Company had three customers that
each accounted for at least 10% of the Companys revenue. As of December 31,
2003, these same 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 December 31, 2003, the Company
has $555,000 on deposit with a financial institution that exceeds federally
insured limits. 25




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##### Table of Contents



Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 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 December 31, 2003, the Company has one stock-based compensation plan
which is described more fully in Note 8. 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. 2003
    
    2002Net loss, as reported
    
    $
    (345,316
    )
    
    $
    (9,724
    )Stock-based compensation determined under fair
value method
    
    
    (155,250
    )
    
    
    Net loss, pro-forma
    
    
    (500,566
    )
    
    
    (9,724
    )Net loss per share, as reported
    
    
    (0.14
    )
    
    
    (0.01
    )Net loss per share, pro-forma
    
    
    (0.20
    )
    
    
    (0.01
    )
 26




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##### Table of Contents



Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 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: 2003
    
    2002Volatility
    
    
    45.33
    %
    
    
    Risk-free Interest Rate
    
    
    6.00
    %
    
    
    Expected life of options
    
    5.0 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 December 31, 2003
and 2002, 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. 27




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 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. New Accounting Standards In December 2003, the Financial Accounting Standards Board (FASB) issued a
revision to interpretation No. 46, Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51 (FIN 46R). FIN 46R clarifies the
application of ARB No. 51, Consolidated Financial Statements, to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support provided by any parties, including the equity holders. FIN 46R
requires the consolidation of these entities, known as variable interest
entities (VIEs), by the primary beneficiary of the entity. The primary
beneficiary is the entity, if any, that will absorb a majority of the entitys
expected losses, receive a majority of the entitys expected residual income,
or both. Among other changes, the revisions of FIN 46R (a) clarified some requirements
of the original FIN 46, which had been issued in January 2003, (b) eased some
implementation problems, and (c) added new scope exceptions. FIN 46R deferred
the effective date of the Interpretation for public companies to the end of the
first reporting period ending after March 15, 2004, except that all public
companies must, at a minimum, apply the unmodified provisions of the
Interpretation to entities that were previously considered special-purpose
entities in practice and under the FASB literature prior to the issuance of
FIN 46R by the end of the first reporting period ending after December 15,
2003. As of December 31, 2003 and 2002, management believes that the Company
is not the primary beneficiary of any VIEs. 28




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 New Accounting Standards (continued) In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
establishes standards for how an issuer classified and measures certain
financial instruments with characteristics of both liabilities and equity.
SFAS No. 150 also requires that an issuer classify a financial instrument that
is within its scope as a liability, many of which were previously classified as
equity. SFAS No. 150 was effective for financial instruments entered into or
modified after May 31, 2003, and otherwise was effective July 1, 2003. The
Companys adoption of this statement had no impact on its financial statements. NOTE 3  AVAILABLE-FOR-SALE EQUITY SECURITIES At December 31, 2003, the Company had $77,521 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 $16,784, and an aggregate
cost basis of $94,305 as of December 31, 2003. NOTE 4 - INCOME TAXES Statement of Financial Accounting Standards No. 109 Accounting for Income
Taxes requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount of
taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns. Deferred income taxes result from temporary differences in the recognition of
accounting transactions for tax and financial reporting purposes. There were
no significant temporary differences at December 31, 2003 and earlier periods;
accordingly, no significant deferred tax liabilities have been recognized for
all periods. The Company has cumulative net operating loss carryforwards of approximately
$375,000 for federal and state income tax purposes at December 31, 2003. No
effect has been shown in the accompanying financial statements for the net
operating loss carryforwards as the likelihood of future tax benefit from such
net operating loss carryforwards is not presently determinable. Accordingly,
the potential tax benefits of the net operating loss carryforwards, estimated
based upon current tax rates at December 31, 2003 have been offset by valuation
reserves in the same amount. The net operating losses begin to expire in 2019.
The Companys utilization of its net operating loss carry-forwards will likely
be limited by Section 382 of the Internal Revenue Code as a result of the stock
issuances described in Note 6. 29




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 NOTE 5 - NOTE PAYABLE RELATED PARTY The Company had issued several promissory notes to various companies whose
officers and/or directors are shareholders of the Company. During the year
ended December 31, 2003, all notes
were paid in full including the accrued interest associated with the notes. The
notes were unsecured, bore interest at annual rates between 10% and 12% and
were payable on demand. NOTE 6 - COMMON STOCK In December 2002, through the subsequent issuance of 10,000 shares of common
stock, the Company acquired the rights and title to various software programs
from E.com Advantage, Inc., an unrelated party. The estimated fair value of
the common shares issued were determined to be $100 on the date of issuance
based on the non-operating nature of the Company. Between February 2003 and June 2003, the Company issued 500,000 shares to key
individuals for services and recorded expenses of $500, which was based on the
estimated fair value of the shares issued. In April 2003, the Company issued
450,000 shares of common stock to directors of the Company for cash of $450. Between May 2003 and July 2003, the Company issued 1,000,000 shares of common
stock for cash at $0.50 per share in connection with a private placement. Between August 2003 and October 2003, the Company issued 1,000,000 shares of
common stock in a private placement at $0.75 per share. Additionally, in
August 2003, the Company issued 50,000 shares of common stock for legal
services that were valued at $25,000 shares based on the estimated value of the
common stock issued. NOTE 7 - RELATED PARTY TRANSACTIONS During the year ended December 31, 2003, 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 $4,000 and none for the years ended December 31, 2003 and 2002
respectively. 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 $16,000 and $0 for the years ended
December 31, 2003 and 2002, respectively. This agreement expires on June 30,
2004. 30




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 Consulting Services The Company has retained Cygni Capital, LLC whose principal is a shareholder of
the Company to perform certain consulting services. These services are
professional in nature and include, but are not limited to document preparation
and consulting services. The current agreement is $5,000 per month. The total
expense pursuant to this agreement was $30,000 and $0 for the years ended
December 31, 2003 and 2002, respectively. This agreement is on a month-to-month
term. NOTE 8 - 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. 31




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Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 A summary of grants made under the Plan as of December 31, 2002 and 2003 and
during the years then ended are presented below: AverageCommon Stock Options
    
    
    
    
    
    ExerciseGranted
    
    Shares
    
    PriceOutstanding @ 12/31/2001
    
    
    0
    
    
    $
    0.00Granted during 2002
    
    
    0
    
    
    $
    0.00Outstanding @ 12/31/2002
    
    
    0
    
    
    $
    0.00Granted during 2003
    
    
    3,037,500
    
    
    $
    0.56Outstanding @ 12/31/2003
    
    
    3,037,500
    
    
    $
    0.56
  WeightedAverageExerciseShares
    
    PriceOptions exercisable @ 12/31/2003
    
    
    719,791
    
    
    $
    0.75
  Exercise Price
    
    Number Outstanding$0.50
    
    
    100,000$0.55
    
    
    2,750,000$0.75
    
    
    187,500
 NOTE 9  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. 32




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##### Table of Contents



Caneum, Inc.
(formerly, SaiphT Corporation)
Notes to the Financial Statements
December 31, 2003 and 2002 Employment Contracts (continued)  
    
    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. 33




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##### Table of Contents



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE A Form 8-K dated December 8, 2003, was filed on December 10, 2003,
reporting the following change in accounting firms: On December 8, 2003, we engaged Haskell & White LLP, Certified Public
Accountants, as our independent auditors for the year ending December 31, 2003.
The decision to retain Haskell & White LLP, and to dismiss Bierwolf, Nilson &
Associates, the former independent auditor, was made by the Audit Committee of
the Board of Directors on this date. The decision to dismiss Bierwolf, Nilson
& Associates did not involve a dispute with us over accounting policies or
practices. The report of Bierwolf, Nilson & Associates on our financial
statements for the years ended December 31, 2002 and 2001, did not contain an
adverse opinion or disclaimer of opinion, nor was it qualified or modified as
to uncertainty, audit scope, or accounting principals. In connection with the
audit of our financial statements for these years ended December 31, 2002 and
2001, there were no disagreements with Bierwolf, Nilson & Associates for the
annual periods and for the period up to the date of dismissal on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure which, if not resolved to the satisfaction of Bierwolf,
Nilson & Associates, would have caused the firm to make reference to the matter
in its reports. Prior to the engagement of Haskell & White LLP, neither we, nor anyone on
our behalf, consulted Haskell & White LLP regarding the application of
accounting principles to a specific completed or contemplated transaction, or
the type of audit opinion that might be rendered on our financial statements,
and neither written nor oral advice was provided by Haskell & White LLP that
was an important factor considered by us in reaching a decision as to any
accounting, auditing, or financial reporting issue. 
 ITEM 8A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures. Our principal executive officer and
principal financial officer, Sukhbir Singh Mudan, has concluded, based on his
evaluation, as of the end of the period covered by this report, that our
disclosure controls and procedures (as defined in Rule 13a-15(e) under the
Exchange Act) are (1) effective to ensure that material information required to
be disclosed by us in reports filed or submitted by us under the Exchange Act
is recorded, processed, summarized, and reported within the time periods
specified in the rules and forms of the Securities and Exchange Commission,
and (2) designed to ensure that material information required to be disclosed
by us in such reports is accumulated, organized and communicated to our
management, including our principal executive officer and principal financial
officer, as appropriated, to allow timely decisions regarding required
disclosure. Internal Control Over Financial Reporting. There were no changes in our
internal control over financial reporting (as defined in Rule 13a-15(f) under
the Exchange Act) that 34




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occurred during our most recent quarter ended December 31, 2003, 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 III 
 ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Current Management The following table sets forth as of March 25, 2004, the name, age, and
position of our executive officers and directors and the term of office of
these directors: DirectorName
    
    Age
    
    Position(s)
    
    SinceSukhbir Singh Mudan
    
    
    54
    
    
    Director, President & Treasurer
    
    
    2002Alan S. Knitowski
    
    
    34
    
    
    Chairman
    
    
    2003Robert F. Mitro
    
    
    62
    
    
    Director & Vice-Chairman
    
    
    2003Jason Daggett
    
    
    31
    
    
    Director
    
    
    2003Avtar Singh Ranshi
    
    
    56
    
    
    Director
    
    
    2003Gary D. Allhusen
    
    
    42
    
    
    Executive Vice-President
    
    
 Directors are elected for a term of one year and until their successors
are elected and qualified. Annual meetings of the stockholders, for the
selection of directors to succeed those whose terms expire, are to be held at
such time each year as designated by the Board of Directors. The Board of
Directors has not selected a date for the next annual meeting of shareholders.
Officers of the Company are elected by the Board of Directors, which is
required to consider that subject at its first meeting after every annual
meeting of stockholders. Each officer holds his office until his successor is
elected and qualified or until his earlier resignation or removal. Set forth below is certain biographical information of our executive
officers and directors: Sukhbir Singh Mudanhas been the President since August 1, 2002, and has
been the Treasurer since June 11, 2003. Mr. Mudan was the COO and Venture
Partner of IP Capital Partners in La Jolla, California from 2000 to 2004. IP
Capital Partners was focused on identifying and creating value in early to mid
stage technology companies that are poised to become future leaders in their
specific market segments. IP Capital leverages its access and special ties to
the regions universities and research centers with its deep business community
and industry contacts to identify and facilitate the growth of next generation
technology 35




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companies. Mr. Mudan is a technology and business strategist who was a
principal at Nextera Interactive, a technology and management consulting
company that is part of Knowledge Universe from 1997 to 2000. In 1986 he
founded Comwave Inc., originally a Packet Data radio company and subsequently a
Fax Broadcasting company that was acquired by a publicly traded company in
1992. In his capacity as CEO, he led the company from a small UK based company
to becoming a global company with offices in various countries interconnected
by a private data network. Previously, from 1981 to 1986, Mr. Mudan was a
principal consultant with Booz Allen and Hamilton. Mr. Mudan graduated in
Chemical Engineering from Imperial College, London University and completed a
Masters degree in Management Studies from Balliol College, Oxford University. Alan S. Knitowskihas been the chairman of the board since June 11, 2003.
Since November 2000 he has been involved in a number of companies in a number
of ongoing capacities including: advisory board member of IntEnt Media
Ventures, board member of Zentronix Pty Limited (Australia) and angel investor
in privately held technology, media, biotechnology and energy companies. From
August 2000 to July 2003 Mr. Knitowski was co-founder and board member of
Telverse Communications, a next-generation advanced services ASP focused on
wholesale communications services for carriers, service providers and
value-added resellers, which was acquired by Level 3 Communications. From
November 2000 to March 2003 Mr. Knitowski was Director of Marketing for the
Voice Technology Group at Cisco Systems and was responsible for business,
market and community development, including business planning and strategy for
Ciscos global packet voice initiatives. In November 2000, Mr. Knitowski
joined Cisco as part of the Vovida Networks acquisition, where he served as
founder, President and CEO and led the company from idea conception in February
1999 through its eventual acquisition by Cisco. From December 2000 to October 2002 Mr. Knitowski was an investor and board
member of vCIS, a proactive software behavior analysis and anti-virus security
company, and helped negotiate and structure its acquisition by Internet
Security Systems. Additionally, from April 1999 to October 2002 he was a
founding board member of both the Open Multimedia Protocol Alliance and the
International Softswitch Consortium, which were subsequently merged and scaled
to nearly 200 companies prior to renaming itself to become the International
Packet Communications Consortium in 2003. During his tenure at the consortium,
Mr. Knitowski served as its Vice Chairman, Co-Chair of its Government Liaison
Working Group and one of its external evangelists. Previously, Mr. Knitowski worked in various operational, line management
and consulting roles with The Results Group, from June 1998 to February 1999;
Nortel Networks, from August 1996 to June 1998; Hewlett-Packard, from May 1991
to September 1991; and the United States Army, from September 1991 to August
1996, where he served as an Airborne, Air Assault and Ranger qualified Captain
in the Corps of Engineers both domestically and abroad. Mr. Knitowski received
his Bachelor of Science degree in industrial engineering in 1991 from the
University of Miami. He received his Master of Science degree in industrial
engineering in 1992 from the Georgia Institute of Technology, and his MBA in
1999 from the Haas School of Business at the University of California at
Berkeley. He has delivered and moderated general 36




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and executive sessions at various events and conferences within the
communications industry and has appeared on both radio and television to
discuss next-generation networking and packet voice. Robert F. Mitrohas been the vice-chairman of the board since June 11,
2003. He had been retired since October 2002. From January 2001 until October
2002, he was President, CEO, and CFO of vCIS, Inc., a proactive software
behavior analysis and anti-virus security company which was acquired by
Internet Security Systems in 2002. Prior to joining vCIS Technology, Mr. Mitro
has held numerous executive positions including President of eCycle, Inc. from
January 1998 to April 1999; President and COO of Engelhard/ICC from June 1994
to April 1995; Senior Vice-President and General Manager of PictureTel Sales,
Marketing and Services Group from September 1988 to June 1994; Vice-President
Sales and Marketing for Harris Corporation from October 1985 to July 1988; plus
Group Director for IBM Storage Systems Group from October 1984 to September
1985, and Manager for IBM Engineering/Scientific Marketing from March 1981 to
September 1984 during a 17 year career at IBM from November 1968 to September
1985. In addition to his general management experience, Mr. Mitro has had a
successful 30 year sales, marketing and business development career in
maximizing revenues and profits for a variety of companies in the high tech
industry, including extensive experience in business strategy and development,
organization development, market entry for emerging products and markets,
global market and channel development; strategic partner alliances, and joint
venture investment strategies for both large corporations and start-up
companies alike. Mr. Mitro has recently served on the board of directors of
Vovida Networks from February 1999 to November 2000 when it was acquired by
Cisco Systems. He has served as a director of Telverse Communications from
August 2000 to July 2003 when it was acquired by Level 3 Communications, and
vCIS Technology from January 2001 to October 2002 when it was acquired by
Internet Security Systems. Mr. Mitro received a Bachelor of Engineering from
Stevens Institute of Technology, Hoboken, New Jersey, in 1965, and completed
Executive Programs at the Graduate Schools of Business at Harvard University in
1975 and the University of Michigan in 1979. Jason Daggettwas our treasurer from December 19, 2002, until May 16,
2003. He has been the president of BDR Showalter, a financial services company
in Las Vegas, Nevada, since 1999. Since 1999 he has also been the President of
Monico Capital Partners, LLC, a financial services company located in Los
Angeles, California. Monico Capital addresses the financial needs of high net
worth individuals and small institutions with a focus in the areas of early
stage funding, mergers and acquisitions. Monico Capital is 50% owned by Cygni
Capital LLC. From 1996 through 1998, Mr. Daggett served retail and
institutional clients at The Boston Group, a Century City, California,
investment banking firm, and First Financial Services, a pension and 401K
advisory firm. Mr. Daggett received his Bachelor of Science degree in
psychology from Mercyhurst College in 1994, and received his Masters Degree in
Clinical Psychology from Pepperdine University in 1996. Dr. Avtar Singh Ranshihas, since 1991, been a director of Spotform, PLC,
an English limited liability company engaged in the car and van rental
business. He received his Bachelor of Science, Masters of Science, and
Doctorate degrees from the University of Manchester, UK, in 37




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1970, 1972, and 1974, respectively. Dr. Ranshi worked for four years, from
1975 to 1978, for National Nuclear Corporation primarily focusing on the
structural impact of an earthquake or aircraft impact on nuclear power
stations. He then worked for twelve years, from 1978 to 1990, for SDRC, a US
company, where he held several management positions in Technical Support,
Sales, Marketing and General Management with profit and loss responsibility.
With SDRC he also spent four years in Germany as the Country Manager for
Central Europe with complete control of all business in Germany, Austria,
Switzerland and emerging eastern European countries. Dr Ranshi has authored
several technical papers in international journals from his Masters and
Doctoral research, as well as from his work at National Nuclear Corporation and
SDRC. He has also presented technical papers at several international
conferences. Gary D. Allhusenwas appointed as our Executive Vice-President on March
17, 2004. From February 2003 until March 2004, Mr. Allhusen was a Director in
the Communications Industry Practice with EDS selling and delivering large
transformational consulting and outsourcing programs. Mr. Allhusen also set up
EDS strategic transformational outsourcing practice focused on the business
and information technology transformational outsourcing market. From July 2000
through January 2003 Mr. Allhusen was a principal with A. T. Kearney, a high
value management consulting firm and subsidiary of EDS. While at A. T.
Kearney, Mr. Allhusen focused on providing information technology strategy and
alignment consulting services to large multi-national organizations. He was
also responsible for embedding business process transformation and information
technology operational excellence services into large EDS outsourcing deals.
Major clients of Mr. Allhusen included Sprint, Bechtel, i2 Technologies,
Hewlett-Packard, Boeing, Solar Turbines, Jet Propulsion Laboratory, Warner
Brothers Studios, and Warner/Elektra/Atlantic. From June 1994 until July 2000
he was employed by Ernest & Young LLP. From June 1989 through May 1994 he was
employed by Hughes Space and Communications Company and from August 1984
through August 1987 he was employed by the New York State Energy Research and
Development Authority. In 1984 Mr. Allhusen received a Bachelor of Science degree in mechanical
and aerospace engineering from Sibley School, Cornell University. In 1989 he
received his MBA from Johnson Graduate School of Management, Cornell
University. And in 1993 he received a Master of Engineering degree in
operations research and industrial engineering from the School of Operations
Research and Industrial Engineering, Cornell University. He has published and
spoken at major conferences on the topic of Information Technology Strategy and
Alignment. He is also active on the Management Committee for the Special
Olympics of Southern California Summer Games Tennis Venue where he is
responsible for running the annual competition. Board Committees and Advisors In August 2003 our board created an Audit Committee and a Compensation
Committee. Jason Daggett and Dr. Avtar Singh Ranshi were both appointed to
each committee. Mr. Daggett was appointed as the chair of each committee. Our
board of directors has determined that we do not have an audit committee
financial expert serving on our Audit Committee. Our board has determined that
the need for an audit committee financial expert at our initial phase of
operations does not warrant the expense to retain such an expert. 38




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Mr. Daggett received options to purchase 55,000 shares for appointment as
a director, for his appointment to the committees, and for appointment as
chairman of each committee. The options were granted pursuant to our 2002
Stock Option/Stock Issuance Plan. The options are exercisable at $.50 per
share and expire five years from the date of grant. The options vest at the
rate of 25% per three-month period from the date of grant. Dr. Ranshi received options to purchase 45,000 shares for appointment as a
director and for his appointment to the committees. The options were granted
pursuant to our 2002 Stock Option/Stock Issuance Plan. The options are
exercisable at $.50 per share and expire five years from the date of grant.
The options vest at the rate of 25% per three-month period from the date of
grant. In October 2003 we established an advisory board to assist management in
its business goals. Luan Dang was appointed to the advisory board as its
initial member. As compensation to him for accepting this appointment, we
granted to him options to purchase 37,500 shares at $.75 per share. The
options vest at the rate of 1/12th per quarter over three years. The options
were granted under our 2002 Stock Option/Stock Issuance Plan. On March 10, 2004, we created a Disclosure Committee composed of our
President, Chairman, and Chair of our Audit Committee. The purpose of the
Disclosure Committee is to assist our principal executive officer and the
principal financial officer in fulfilling their responsibility for oversight of
the accuracy and timeliness of disclosures made by us in our period reports. Compliance with Section 16(a) of the Exchange Act The following table identifies each person who, at any time during the
fiscal year ended December 31, 2003, was a director, officer, or beneficial
owner of more than 10% of our common stock that failed to file on a timely
basis reports required by Section 16(a) of the Exchange Act during the most
recent fiscal year: Number ofTransactions NotNumber of Late
    
    Reported on aName
    
    Reports
    
    Timely Basis
    
    Reports Not FiledSteve Claflin
    
    
    1
    
    
    
    1
    
    
    
    0Alan S. Knitowski
    
    
    3
    
    
    
    3
    
    
    
    0Robert F. Mitro
    
    
    3
    
    
    
    3
    
    
    
    0Sukhbir Singh Mudan
    
    
    2
    
    
    
    2
    
    
    
    0Avtar Singh Ranshi
    
    
    2
    
    
    
    2
    
    
    
    0
 39




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##### Table of Contents



Code of Ethics We have adopted a Code of Ethics which applies to our principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. Stockholder Communications We do not have a standing nominating committee; recommendations for
candidates to stand for election as directors are made by the Board of
Directors. Our current policy is to permit security holders to recommend
candidates for election as directors and to provide for a process for
stockholders to send communications to the Board of Directors. Stockholders
may send communications to the Board of Directors by contacting our President,
Mr. Mudan, in one of the following ways:  
    
    In writing at 170 Newport Center Drive, Suite 220, Newport
Beach, CA 92660;
    
    By e-mail at suki@caneum.com. The President will submit each communication received to the Board of
Directors at the next regular meeting. 
 ITEM 10. EXECUTIVE COMPENSATION Compensation of Executive Officers Summary Compensation Table.The following table sets forth information
concerning the annual and long-term compensation awarded to, earned by, or paid
to the named executive officer for all services rendered in all capacities to
our company for the years ended December 31, 2003, 2002, and 2001: SUMMARY COMPENSATION TABLE Long-TermAnnual Compensation
    
    CompensationSecuritiesRestricted
    
    Under-Other Annual
    
    Stock
    
    lyingName and
    
    
    
    
    
    Salary
    
    Bonus
    
    Compensation
    
    Award(s)
    
    OptionsPrincipal Position
    
    Year
    
    ($)
    
    ($)
    
    ($)
    
    ($)
    
    (#)Sukhbir Singh Mudan,
    
    
    2003
    
    
    $
    53,534
    
    
    
    -0-
    
    
    $
    6,468
    (1)
    
    
    -0-
    
    
    
    1,000,000President
    
    
    2002
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-2001
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-
    40




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Option Grants Table.The following table sets forth information
concerning individual grants of stock options to purchase our common stock made
to the executive officer named in the Summary Compensation Table during the
fiscal year ended December 31, 2003. OPTIONS GRANTS IN LAST FISCAL YEAR
(Individual Grants) Number of securities
    
    Percent of totalunderlying options
    
    options granted to
    
    Exercise or basegranted
    
    employees in last
    
    priceName
    
    (#)
    
    fiscal year
    
    ($/Share)
    
    Expiration dateSukhbir Singh Mudan
    
    
    1,000,000
    
    
    
    32.92
    %
    
    $
    0.55
    
    
    August 14, 2008
 Aggregated Option Exercises and Fiscal Year-End Option Value Table.The
following table sets forth certain information regarding stock options
exercised during the fiscal year ended December 31, 2003, and held as of
December 31, 2003, by the executive officer named in the Summary Compensation
Table. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES Number ofSecurities
    
    Value ofUnderlying
    
    Unexercised In-The-Unexercised Options
    
    Money Options atat Fiscal Year-
    
    Fiscal Year-End(#)
    
    End($)(1)Shares acquired on
    
    
    
    
    
    Exercisable/
    
    Exercisable/Name
    
    exercise (#)
    
    Value realized ($)
    
    Unexercisable
    
    UnexercisableSukhbir Singh Mudan
    
    
    -0-
    
    
    
    -0-
    
    
    
    250,000/750,000
    
    
    $
    50,000/$150,000
    (1)
 (1) At December 31, 2003, there was no public trading market for our
common stock. The fair market value of the shares underlying the unexercised
options is computed for purposes of this table at $0.75 per share based on the
last sale price of our shares in the latest non-public offering of our stock in
October 2003, and the current offering price of our common stock by certain of
our shareholders registered for resale on Form S-2 filed with the Securities
and Exchange Commission and declared effective on February 11, 2004. Employment Contracts On October 28, 2003, our Compensation Committee approved employment
agreements with Sukhbir Singh Mudan, our President, Alan S. Knitowski, our
Chairman, and Robert F. Mitro, our 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. He is required to devote
not less than 75% 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. 41




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##### Table of Contents




    
    Alan S. Knitowski. 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.
    
    Robert F. Mitro. Mr. Mitro 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 $60,000 per annum. He received options to purchase
750,000 shares at $.55 per share as additional compensation for
entering into the agreement. On March 17, 2004, our Compensation Committee approved an employment
agreement with our Executive Vice-President, Gary D. Allhusen. The initial
period of the employment agreement for Mr. Allhusen is three years. He is
required to devote 100% of his business time to the business of Caneum. His
base salary is $120,000 per annum. He received options to purchase 750,000
shares at $.75 per share as additional compensation for entering into the
agreement. Each of the employment agreements contains the following provisions which
apply to each of the parties:  
    
    Each employee, except Mr. Allhusen, is eligible to receive an
annual performance bonus between 25% and 100% of the then applicable
base salary upon achievement of annual performance objectives
payable either in cash or stock.
    
    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 and confidentiality provisions. Compensation of Directors On August 14, 2003, our board of directors granted to Jason Daggett, one
of our directors, stock options to purchase 55,000 shares. These options were
granted in connection with his appointment as a director, for his appointment
to the audit and compensation committees, and for appointment as chairman of
each committee. The options were granted pursuant to our 2002 Stock
Option/Stock Issuance Plan. The options are exercisable at $.50 per share and
expire five 42




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##### Table of Contents



years from the date of grant. The options vest at the rate of 25% per
three-month period from the date of grant. On August 14, 2003, our board of directors granted to Avtar Singh Ranshi,
one of our directors, stock options to purchase 45,000 shares. These options
were granted in connection with his appointment as a director and for his
appointment to the audit and compensation committees. The options were granted
pursuant to our 2002 Stock Option/Stock Issuance Plan. The options are
exercisable at $.50 per share and expire five years from the date of grant.
The options vest at the rate of 25% per three-month period from the date of
grant. In connection with their appointment as directors in April 2003, Mr.
Knitowski and Mr. Mitro were each granted 225,000 shares of our common stock at
par value for an aggregate of $225 each paid by these individuals. Directors are permitted to receive fixed fees and other compensation for
their services as directors, as determined by the Board of Directors. Our
Board of Directors has not adopted any policy in regard to the payment of fees
or other compensation to directors. 
 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth certain information from reports filed by
the named parties, or furnished by current management, concerning the ownership
of our common stock as of March 25, 2004, of (i) each person who is known to us
to be the beneficial owner of more than 5 percent of our common stock; (ii) all
directors and executive officers; and (iii) our directors and executive
officers as a group: Amount and NatureName and Address
    
    of Beneficialof Beneficial Owner
    
    Ownership (1)
    
    Percent of ClassSukhbir Singh Mudan
    
    
    501,032
    (2)
    
    
    11.76
    %13542 Caminito Carmel
Del Mar, CA 92014Alan S. Knitowski
    
    
    641,667
    (3)
    
    
    15.06
    %52 Timor Sea
Newport Coast, CA 92657Robert F. Mitro
    
    
    579,166
    (4)
    
    
    13.80
    %20 East Main Street
Suite 19
Los Gatos, CA 95030
 43




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##### Table of Contents



Amount and NatureName and Address
    
    of Beneficialof Beneficial Owner
    
    Ownership (1)
    
    Percent of ClassJason Daggett
    
    
    227,500
    (5)
    
    
    5.63
    %23679 Calabasas Rd.
Suite 554
Calabasas, CA 91302Avtar Singh Ranshi
    
    
    127,500
    (6)
    
    
    3.16
    %66 Marshals Drive
St. Albans, Hertfordshire
UK ALI 4RFGary D. Allhusen
    
    
    41,667
    (7)
    
    
    1.03
    %424
7th Street
Huntington Beach, CA 92648Executive Officers and
    
    
    2,118,532
    
    
    
    50.44
    %Directors as a Group
(6 Persons)
    (2) Mr. Mudan holds vested options to purchase 250,000 shares which are
exercisable within sixty days. The shares underlying these options are
included in the table and are considered to be outstanding for purposes of
computing the percentage interest held by Mr. Mudan. (3) These shares are held of record by a family trust controlled by Mr.
Knitowski. Mr. Knitowski holds vested options to purchase 250,000 shares which
are exercisable within sixty days. The shares underlying these options are
included in the table and are considered to be outstanding for purposes of
computing the percentage interest held by Mr. Knitowski. (4) These shares are held of record by a living trust controlled by Mr.
Mitro. Mr. Mitro holds vested options to purchase 187,500 shares which are
exercisable within sixty days. The shares underlying these options are
included in the table and are considered to be outstanding for purposes of
computing the percentage interest held by Mr. Mitro. (5) Mr. Daggett holds vested options to purchase 27,500 shares which are
exercisable within sixty days. The shares underlying these options are
included in the table and are considered to be outstanding for purposes of
computing the percentage interest held by Mr. Daggett. (6) Dr. Ranshi holds vested options to purchase 22,500 shares which are
exercisable within sixty days. The shares underlying these options are
included in the table and are considered to be outstanding for purposes of
computing the percentage interest held by Dr. Ranshi. (7) Mr. Allhusen holds vested options to purchase 41,667 shares which are
exercisable within sixty days. The shares underlying these options are
included in the table and are considered to be outstanding for purposes of
computing the percentage interest held by Mr. Allhusen. 44




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##### Table of Contents



Equity Compensation Plan Information The following table sets forth as of the most recent fiscal year ended
December 31, 2003, certain information with respect to compensation plans
(including individual compensation arrangements) under which our common stock
is authorized for issuance: Number of securitiesremaining available forfuture issuance underNumber of securities to be
    
    Weighted-average exercise
    
    equity compensation plansissued upon exercise of
    
    price of outstanding
    
    (excluding securitiesoutstanding options,
    
    options, warrants and
    
    reflected in column (a) andwarrants and rights
    
    rights
    
    (b)(a)
    
    (b)
    
    (c)Equity compensation
plans approved by
security holders
    
    
    3,037,500
    (1)
    
    $
    0.56
    
    
    
    -0-Equity compensation
plans not approved
by security holders
    
    
    -0-
    
    
    
    -0-
    
    
    
    -0-Total
    
    
    3,037,500
    (1)
    
    $
    0.56
    
    
    
    -0-
 (1) Our 2002 Stock Option/Stock Issuance Plan only authorizes the issuance
of 3,000,000 shares under the plan. However, paragraph IV(C)(2) of the plan
permits the granting of options or issuance of stock under the plan in excess
of the number of shares of common stock then available for issuance under the
plan, provided any excess shares are to be held in escrow until there is
obtained shareholder approval of an amendment sufficiently increasing the
number of shares of common stock available for issuance under the plan.
Shareholder approval of the increase must be obtained within twelve months
following the grant or issuance in excess of the authorized shares. In this
instance, the option grants in excess of 3,000,000 underlying shares were made
on October 28, 2003. 2002 Stock Option/Stock Issuance Plan On December 18, 2002, our Board of Directors adopted the 2002 Stock
Option/Stock Issuance Plan. Our shareholders approved the plan in June of
2003. The purpose of the plan is to provide eligible persons an opportunity to
acquire a proprietary interest in our 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 is administered by our Compensation Committee, which is composed
of Jason Daggett and Avtar Singh Ranshi, two of our directors. Participants in the plan are to be selected by the plan administrator
which is currently our Compensation Committee. The persons eligible to
participate in the plan are as follows: (a) employees of our company and any
of its subsidiaries; (b) non-employee members of the 45




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##### Table of Contents



board or non-employee members of the Board of Directors of any of its
subsidiaries; and (c) consultants and other independent advisors who provide
services to our company or any of its subsidiaries. Options may be granted, or
shares issued, only to consultants or advisors who are natural persons and who
provide bona fide services to our company or one of its subsidiaries, provided
that the services are not in connection with the offer or sale of securities in
a capital-raising transaction, and do not directly or indirectly promote or
maintain a market for our securities. 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, 2012, 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. Stock option awards under the plan consist of nonstatutory stock options
(NSOs) and incentive stock options (ISOs). ISOs may be granted only to
employees of our company or one of its subsidiaries. The purchase price under each option is established by the plan
administrator, but in no event will it be less than 100% of the fair market
value of our common stock for ISOs and 85% for NSOs. The price applicable to
any option holder who holds more than 10 percent of our outstanding common
stock will be 110% percent of fair market value. The aggregate exercise price,
plus applicable taxes, are due and payable in cash or check on the date of the
exercise of an option. However, the plan administrator may permit payment of
the total amount due by a full-recourse, interest-bearing promissory note;
payroll deductions in installments; shares of common stock valued at fair
market value on the date of exercise of the option; or through a special sale
and remittance procedure through a designated brokerage firm. The plan administrator will fix the terms of each option, but no option
can be granted for a term in excess of 10 years. The term of such an option
will not be longer than five years in the case of any option holder who holds,
on the date of the grant of an ISO, more than 10% of our outstanding common
stock. Upon termination of services, the option holder will have a limited time
in which to exercise vested options. The plan administrator will not impose a
vesting schedule upon any options granted which provides for exercise of an
option for less than 20 percent of the shares subject to the option and with an
initial installment for vesting which is fixed for a longer period than one
year from the date of grant of the option. During the lifetime of the person to whom an option has been granted, only
that person has the right to exercise the option and that person cannot assign,
encumber or transfer any right to the option. Upon the death of the person to
whom an option has been granted, the option may be exercised only by those
persons who inherit from the holder of the option by will or under the
applicable laws of descent and distribution. The plan administrator has the authority, with the consent of the option
holder affected, to cancel outstanding options and to grant in substitution
therefore new options covering the same 46




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or a different number of shares of common stock at an exercise price per
share based upon the fair market value per share of such stock on the date of
the grant of a new option. At the discretion of the plan administrator, the consideration provided
for the issuance of shares of common stock under the stock issuance plan will
be satisfied in one or more of the following ways, or combinations thereof:
(a) in cash or check payable to us; (b) issuing of a full-recourse promissory
note; (c) payroll deductions in installments; (d) past services rendered to us
or one of our subsidiaries; or (e) the agreement of a participant to accept
employment and the undertaking and performance of services with or to us or one
of our subsidiaries. Stock issued under the stock issuance 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. Irrespective of whether a participants shares are vested or are held in
escrow, a participant to whom shares under the stock issuance plan have been
issued will have the right to vote those shares and to receive any regular cash
dividends paid on those shares. If employment with or service to us terminates for whatever cause at a
time when the participant holds unvested shares issued under the stock issuance
plan, those shares will be immediately surrendered to us and cancelled. In the
event the participant paid for the shares surrendered in cash or cash
equivalent, the amount of that consideration will be repaid. In the event that
the participant furnished a promissory note in payment of shares surrendered,
the remaining balance of that note attributable to the surrendered shares will
be cancelled. In the sole discretion of the plan administrator, the surrender
and cancellation of any unvested shares issued under the stock issuance plan
may be waived at any time by the plan administrator subject to such terms and
conditions or on no terms and conditions as the plan administrator may
determine. 
 ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Eric Chess Bronk was the founder of our company. He was a director from the
organization of the company on March 23, 2000, until December 19, 2002. Mr.
Bronk served as president from March 23, 2000, until August 1, 2002, and he
served as treasurer from March 23, 2000, until December 19, 2002. In connection with our organization in 2000, Mr. Bronk received 190,000
shares for management services rendered to us, which services were valued at $1,900. Mr. Bronk is the sole managing member of Cygni Capital LLC, and Mr.
Daggett, one of our former directors, is a vice-president and non-managing member of
this entity. Pursuant to a sublease entered into on November 1, 2003, Cygni Capital subleases office space to us on a month-to-month
basis for $1,400 per month and provides office services to us for $450 per
month pursuant to a Management Services Agreement entered into on November 1, 2003, for office services which is
terminable upon 30 days notice by either party. Since June 2003, Cygni Capital has also provided 47




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business and financial consultant services to us for $5,000 per month in an
oral arrangement which is terminable at any time by either party. On June 14,
2002, Cygni Capital loaned to us $1,862, and on December 31, 2002, loaned
$3,725, for operating expenses. These loans were repaid, with interest at 10%
per annum, on June 1, 2003. Mr. Bronk is also a director of Rigel Funds Management, Ltd., formerly
known as Mezzanine Fund Management Ltd. On March 27, 2000, Rigel loaned $9,000
to us. This loan was repaid, with interest at 10% per annum, on June 1, 2003. On May 2, 2001, Mezzanine Investment Corporation, a corporation of which
Mr. Bronk is the sole officer and director, loaned $3,500 to us. This loan was
repaid, with interest at 12% per annum, on June 1, 2003. On August 1, 2001, Procyon Corporation, a corporation of which Mr. Bronk
is a shareholder, loaned $5,000 to us. This loan was repaid, with interest at
12% per annum, on June 1, 2003. On November 2, 2001, we loaned $750 to Whitelight Technologies, Inc., a
corporation of which Mr. Bronk is the president and sole director. This loan
was repaid to us, with interest at 10% per annum, on June 1, 2003. On November 15, 2001, we loaned $500 to Cygni Investments, Inc., a
corporation of which Mr. Bronk is a shareholder. This loan was repaid to us,
with interest at 10% per annum, on June 1, 2003. Mr. Daggett and Alan S. Knitowski, our Chairman, are managers of Trymetris
Capital Management LLC which is the manager of Trymetris Capital Fund I, LLC, a
private investment fund. Cygni Capital is a non-managing member of the fund
manager. 
 ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K (a)(1) Financial Statements. The following financial statements are
included in this report: PageReport of Auditor dated March 17, 2004
    
    
    18Report of Auditor dated March 26, 2003
    
    
    19Balance Sheets as of December 31, 2003 and 2002
    
    
    20-21Statement of Operations for the years ended December 31, 2003
and 2002
    
    
    22Statement of Stockholders Equity for the years ended December 31,
2003 and 2002
    
    
    23Statement of Cash Flows for the years ended December 31, 2003 and
2002
    
    
    24Notes to Financial Statements
    
    
    25
 48




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##### Table of Contents



(a)(2)Exhibits. The following exhibits are included as part of this report: Exhibit No.
      
      Description of Exhibit
      
      Location2.1
      
      Asset Purchase Agreement dated December 15, 2002, with E.com Advantage, Inc.
      
      
      (6
      )3.1
      
      Articles of Incorporation filed March 1, 2000
      
      
      (1
      )3.2
      
      Current Bylaws
      
      
      (1
      )3.3
      
      Articles of Amendment filed July 10, 2000
      
      
      (2
      )3.4
      
      Certificate of Amendment filed March 5, 2003
      
      
      (3
      )3.5
      
      Certificate of Amendment filed July 21, 2003
      
      
      (4
      )4.1
      
      Form of Common Stock Certificate
      
      
      (1
      )4.2
      
      Amended 2002 Stock Option/Stock Issuance Plan*
      
      
      (5
      )10.1
      
      Promissory Note dated March 27, 2002
      
      
      (2
      )10.2
      
      Promissory Note dated May 2, 2001
      
      
      (2
      )10.3
      
      Promissory Note dated August 1, 2001
      
      
      (2
      )10.4
      
      Promissory Note dated June 14, 2002
      
      
      (3
      )10.5
      
      Promissory Note dated December 31, 2002
      
      
      (3
      )10.6
      
      Employment Agreement dated October 28, 2003, with Sukhbir Singh Mudan*
      
      
      (5
      )10.7
      
      Employment Agreement dated October 28, 2003, with Alan S. Knitowski*
      
      
      (5
      )10.8
      
      Employment Agreement dated October 28, 2003, with Robert F. Mitro*
      
      
      (5
      )10.9
      
      Employment Agreement dated March 17, 2004, with Gary D. Allhusen*
      
      
      (8
      )10.10
      
      Sublease dated November 1, 2003, with Cygni Capital LLC
      
      
      (6
      )10.11
      
      Management Services Agreement dated November 1, 2003, with Cygni Capital LLC
      
      
      (6
      )14.1
      
      Code of Ethics
      
      
      (8
      )16.1
      
      Letter dated December 9, 2003, from Bierwolf, Nilson & Associates on change in certifying accountant
      
      
      (7
      )23.1
      
      Consent of Haskell & White LLP
      
      
      (8
      )23.2
      
      Consent of Chisholm, Bierwolf & Nilson
      
      
      (8
      )31.1
      
      Rule 13a-14(a) Certification by Principal Executive Officer
      
      Attached31.2
      
      Rule 13a-14(a) Certification by Principal Financial Officer
      
      Attached32
      
      Section 1350 Certification of Principal Executive Officer and Principal Financial Officer
      
      Attached
    (2) Incorporated by reference from our 2001 annual report on Form 10-KSB
filed with the Securities and Exchange Commission on April 1, 2002 (File
No.0-30874). 49




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(3) Incorporated by reference from our 2002 annual report on Form 10-KSB
filed with the Securities and Exchange Commission on March 31, 2003 (File
No.0-30874). (4) Incorporated by reference from our quarterly report on Form 10-QSB for
the quarter ended June 30, 2003, filed with the Securities and Exchange
Commission on August 14, 2003 (File No.0-30874). (5) Incorporated by reference from our quarterly report on Form 10-QSB for
the quarter ended September 30, 2003, filed with the Securities and Exchange
Commission on November 7, 2003 (File No.0-30874). (6) Incorporated by reference from our first amended registration
statement on Form S-2/A filed with the Securities and Exchange Commission on
December 24, 2003 (File No. 333-110373). (7) Incorporated by reference from our current report on Form 8-K dated
December 8, 2003, filed with the Securities and Exchange Commission on December
10, 2003 (File No.0-30874). (8) Incorporated by reference from our 2003 annual report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 (File No. 0-30874). *    Management contract, or compensatory plan or arrangement required to be filed as an exhibit . (b) Reports on Form 8-K: On December 10, 2003, we filed a report on Form
  8-K dated December 8, 2003, to disclose a change of auditors under Item 4. 
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The audit of our financial statements for the year ended December 31,
2002, as well as the review of our financial statements included in our
quarterly reports on Form 10-QSB for the first three quarters of 2002 and 2003,
were performed by Bierwolf, Nilson & Associates. On December 8, 2003, we
engaged Haskell & White LLP as our independent auditors for the year ended
December 31, 2003. Audit Fees. The aggregate fees incurred for professional services rendered
for the audit of our annual financial statements for the fiscal years ended
December 31, 2003 and 2002, and the review of the financial statements included
in our Forms 10-QSB for the fiscal years ended December 31, 2003 and 2002, were
$19,600 and $4,150, respectively. Audit-Related Fees. Except as disclosed above, no fees were billed to us
during the fiscal years ended December 31, 2003 or 2002, for assurance and
related services by our auditors that were reasonably related to the
performance of the audit or review of our financial statements. Tax Fees. The aggregate fees incurred by us for tax compliance, tax
consulting, and tax planning services by our auditors for the fiscal years
ended December 31, 2003 and 2002, were $3,000 and $250, respectively. The
foregoing tax-related services include review and preparation of tax returns. All Other Fees. No fees were incurred during 2003 and 2002 for services
rendered to us by our auditors, other than those services covered in the
sections captioned Audit Fees, Audit-Related Fees, and Tax Fees. 50




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Our Audit Committee was created on August 14, 2003. Prior to that date
the function of overseeing our accounting and financial reporting processes,
and the audits of our financial statements, was performed by our board of
directors. Our Audit Committee has considered whether the non-audit services provided
by our auditors to us are compatible with maintaining the independence of our
auditors and concluded that the independence of our auditors is not compromised
by the provision of such services. Our Audit Committee pre-approves all
auditing services and permitted non-audit services, including the fees and
terms of those services, to be performed for us by its independent auditor
prior to engagement. 
 SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. Caneum, Inc.Date: January 28, 2005
    By:
    /s/ Sukhbir Singh MudanSukhbir Singh Mudan, President(Principal Executive
Officer)  51