Caneum (CANM) 10-Q 2008 Q1 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarter ended March 31, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to                    

Commission File Number: 000-30874

CANEUM, INC.

(Exact name of Registrant as specified in charter)

Nevada	33-0916900
State or other jurisdiction of incorporation or organization	I.R.S. Employer I.D. No.
3101 West Coast Highway, Suite 400, Newport Beach, CA (Address of principal executive offices)	92663 (Zip Code)

Issuer’s telephone number, including area code:(949) 273-4000

Indicate by check mark whether the registrant (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) Yesþ Noo (2) Yesþ Noo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filero Accelerated Filero Non-Accelerated Filero Smaller reporting companyþ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yeso Noþ

State the number of shares outstanding of each of the issuer’s classes of common equity stock, as of the latest practicable date: At May 13, 2008, there were 9,173,293 shares of our common stock outstanding.

Contents

PART I	3
Item 1. Financial Statements	3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation	18
Item 3. Quantitative and Qualitative Disclosures About Market Risk	23
Item 4T. Controls and Procedures	23
PART II	25
Item 1. Legal Proceedings	25
Item 6. Exhibits	25
SIGNATURES	25
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

2

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

CANEUM, INC.
March 31, 2008 and December 31, 2007

Condensed Consolidated Balance Sheets
Assets

	March 31,		December 31,
	2008		2007
	Unaudited		Note
CURRENT ASSETS
Cash and cash equivalents	$	72,028	$	46,280
Accounts receivable, net of allowance of $390,271 and $392,157, respectively		1,934,536		1,559,352
Accounts receivable from related parties, net of allowance of $153,852 at March 31, 2008		44,910		111,010
Prepaid assets		134,533		134,764
Other current assets		33,476		33,202
Total current assets		2,219,483		1,884,608
LONG TERM ASSETS
Property & equipment, net		179,498		193,843
Intangibles, net		592,200		643,555
Goodwill		1,464,805		1,464,805
Other		32,227		32,264
TOTAL ASSETS	$	4,488,213	$	4,219,075

Note: The Balance Sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date

See accompanying notes to unaudited condensed consolidated financial statements

3

CANEUM, INC.
March 31, 2008 and December 31, 2007

Condensed Consolidated Balance Sheets
Liabilities and Shareholders’ Equity

	March 31,			December 31,
	2008			2007
	Unaudited			Note
CURRENT LIABILITIES
Accounts payable	$	1,827,276		$	1,552,870
Accrued expenses		45,143			25,975
Credit lines		1,516,067			1,231,694
Accrued payroll and related expenses		271,595			248,287
Deferred revenue		47,026			22,880
Current portion of installment loans		725,593			734,974
Other current liabilities		106,385			90,992
Total current liabilities		4,539,085			3,907,672
LONG TERM LIABILITIES
Current portion of installment loan reclassified to non-current					200,000
Promissory notes — related party		250,000			—
Installment loans, less current portion		15,459			17,894
Other non current liabilities		64,023			61,058
Total liabilities		4,868,567			4,186,624
SHAREHOLDERS’ EQUITY
Preferred stock, $0.001 par value 20,000,000 shares authorized, 3,332,500 and 3,332,500 shares issued and outstanding (Liquidation preference $1,666,250)		3,332			3,332
Common stock, $0.001 par value 100,000,000 shares authorized, 9,173,293 and 8,896,368 shares issued and outstanding		9,171			8,895
Additional paid-in capital		8,922,097			8,708,827
Accumulated other comprehensive income		78,009			87,416
Accumulated deficit		(9,392,961	)		(8,776,019	)
Total shareholders’ equity (deficit)		(380,352	)		32,451
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)	$	4,488,213		$	4,219,075

Note: The Balance Sheet at December 31, 2007 has been derived from the audited consolidated financial statements at that date.

See accompanying notes to unaudited condensed consolidated financial statements

4

CANEUM, INC.
March 31, 2008 and 2007

Condensed Consolidated Statements of
Operations and Comprehensive Income (Loss)
Unaudited

	Three Months Ended
	March 31,			March 31,
	2008			2007
Revenue	$	3,236,624		$	2,750,373
Cost of revenue		2,727,087			2,188,212
Gross profit		509,537			562,161
Operating expenses		1,079,371			1,109,955
Loss from operations		(569,834	)		(547,794	)
Other income (expense)
Interest expense, net		(55,306	)		(52,492	)
Gain (loss) on foreign exchange		9,838			(14,303	)
Total other income (expense)		(45,468	)		(66,795	)
Minority Interest		—			(68,378	)
Loss before income tax		(615,302	)		(682,967	)
Income tax expense		(1,640	)		(2,984	)
Net loss	$	(616,942	)	$	(685,951	)
Basic and diluted net loss per common share	$	(0.07	)	$	(0.09	)
Weighted average number of Common Shares outstanding used in the calculation		9,055,571			7,946,621
Net loss	$	(616,942	)	$	(685,951	)
Comprehensive Income:
Foreign currency translation adjustment (Note 2)		(9,407	)		14,056
Comprehensive Loss	$	(626,349	)	$	(671,895	)

See accompanying notes to unaudited condensed consolidated financial statements

5

CANEUM, INC.
March 31, 2008 and 2007
Condensed Consolidated Statements of Cash Flows
Unaudited

	For the Three Months
	March 31,			March 31,
	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(616,942	)	$	(685,951	)
Adjustments to reconcile net loss to net cash used in operating activities
Stock option compensation expense		127,913			161,857
Expenses paid by common stock issuances or committed issuances		35,176			174,035
Interest accreted to TierOne installment loans		19,204			17,026
Depreciation and amortization		28,069			17,464
Amortization of acquired intangibles		50,626			67,188
Bad debt expense		20,000			—
Minority interest		—			68,378
(Increase) decrease in
Accounts receivable		(335,750	)		(189,980	)
Prepaid assets and other current assets		(1,479	)		(45,425	)
Increase in
Accounts payable and accrued expenses		293,824			151,020
Accrued payroll and related expenses		77,521			40,258
Deferred revenue		24,146			31,373
Other current liabilities		15,687			—
Net cash used in operating activities		(262,005	)		(192,756	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property & equipment		(15,265	)		(18,663	)
Net cash used in investing activities		(15,265	)		(18,663	)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of promissory notes — related party		50,000			—
Payment of debt		(49,484	)		(441,381	)
Addition to debt		18,750			24,225
Increase in credit lines		284,373			834,054
Net cash provided by financing activities		303,639			416,898
Effect of changes in foreign currency exchange rates on cash		(621	)		4,012
Net increase (decrease) in cash and cash equivalents		25,748			209,491
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		46,280			335,202
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	72,028		$	544,693
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid	$	21,367		$	38,076
Income taxes paid	$	1,626		$	2,984

Supplemental disclosure of non cash investing and financing activities:

During the three months ended March 31, 2008, the Company converted $200,000 of installment debt due to the former Principals of Tier One into $200,000 of Promissory Notes due in 2011.

See accompanying notes to unaudited condensed consolidated financial statements

6

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

NOTE 1 — CORPORATE HISTORY

Organization

Caneum, Inc. (the “Company,” “we,” “us,” or “our”) 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.

Caneum, Inc. is a global provider of business process and information technology outsourcing services across vertical industries, including technology, energy, government, transportation, financial services, education and healthcare. The Company provides a suite of business strategy and planning capabilities to assist companies with their outsourcing decisions in the areas of data, network, product development, product maintenance and customer support, and fulfills its services in-house, on-shore and off-shore, depending on the business goals and objectives of its global customers. The Company is opportunistically pursuing accretive acquisitions within its core outsourcing service suite in order to broaden its core capabilities, expand its customer base, and supplement its organic growth.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, and with the rules and regulations of the Securities and Exchange Commission related to quarterly reports on Form 10-Q. Accordingly, they do not include all the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. The interim financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the financial condition and results of operations for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature.

Results for the interim periods are not necessarily indicative of the results for the entire year. For more complete financial information, these financial statements, and notes thereto, should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2007, included in Caneum’s Annual Report on Form 10-K filed with the Securities and Exchange Commission.

7

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Tier One Consulting, Inc., from the date of its acquisition of March 28, 2006, and the majority (55%) owned subsidiary, Caneum India Pvt. Ltd., formerly Continuum Systems Private Limited, an Indian corporation (“Continuum”) acquired on December 31, 2006. The remaining 45% of the outstanding stock of Caneum India was acquired on June 6, 2007, when Continuum became a wholly (100%) owned subsidiary of the Company. However one share is held by Suki Mudan, President of Caneum, Inc., as nominee shareholder but the beneficiary ownership continues to be held by Caneum Asia Pacific Pte Limited. This was a requirement for compliance with Indian regulations which mandate that a company must have a minimum of two (2) shareholders. Continuum was renamed Caneum India Private Limited (“Caneum India”). This acquisition of Caneum India occurred through the Company’s wholly owned subsidiary, Caneum Asia Pacific PTE LTD. (“Caneum Asia Pacific”), formed in Singapore on December 21, 2006. The condensed consolidated financial statements include 100% of the accounts of Caneum India from June 6, 2007, the date of acquisition of the remaining 45% of the outstanding stock. All significant inter-company balances and transactions have been eliminated upon consolidation.

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 (“SAB”) No. 104,Revenue Recognition. The Company recognizes revenue when there is persuasive evidence of an arrangement, 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 expense reimbursements billed to customers as revenue, and related costs as cost of sales, when incurred, in accordance with Emerging Issues Task Force (“EITF”) 01-14 “Income Statement Characterization of Reimbursements Received for “Out-of-Pocket” Expenses.”

Segment Reporting

The Company has determined that it operates and reports as one single segment.

8

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

Stock-Based Compensation

Effective January 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004),Share-Based Payment(“SFAS 123R”) which revises SFAS No. 123,Accounting for Stock-Based Compensation, and supersedes Accounting Principles Board (“APB”) Opinion No. 25,Accounting for Stock Issued to Employees(“APB 25”). SFAS 123R requires all share based compensation payments to be recognized in the financial statements based on their fair value using an option pricing model.

The Company adopted SFAS 123R using the modified prospective method which requires that share based payments granted prior to adoption be expensed prospectively as they are earned. SFAS 123R requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. The Company uses the Black-Scholes option-pricing model to value stock option awards and has elected to treat awards with graded vesting as a single award. The Company accounts for stock-based compensation issued to non-employees under SFAS 123R and Emerging Issues Task Force (“EITF”) issue 96-18, accounting for equity investments that are issued to other than employees for acquiring, or in conjunction with selling, goods or services. As such, the value of such options is periodically re-measured and income or expense is recognized during their vesting terms.

Foreign Currency

Our foreign subsidiary’s functional currency is the Indian Rupee, their local currency. Translation of the subsidiary’s assets and liabilities is at the balance sheet date exchange rate. Translation of shareholders’ equity is at historical rates. Translation of income and expenses is at the average exchange rates for the applicable period. Adjustments from these translations are reflected in our consolidated balance sheet as a separate component of shareholders’ equity.

Transactions gains and losses arising from activities in other than the functional currency are calculated using average exchanges rates for the applicable period and reported in our consolidated statement of operations and comprehensive income (loss) as a non-operating item in each period.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States 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 the reported amounts of revenues and expenses during the reporting period. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from those estimates.

9

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

Comprehensive Income

The Company accounts for comprehensive income in accordance with SFAS No. 130,Reporting Comprehensive Income. The Company reports the accumulated balance of other comprehensive income or loss separately in the stockholders’ equity section of the consolidated balance sheets. The only component of other comprehensive income is the foreign currency translation adjustment.

NOTE 3 — GOING CONCERN UNCERTAINTY

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. For the three months ended March 31, 2008, the Company incurred a net loss of $616,942 and for the years ended December 31, 2007 and 2006 the Company incurred net losses of $2,966,415 and $2,040,757, respectively. As of March 31, 2008, the Company had negative working capital of $2,319,602. These results raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are discussed below. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Starting in May, 2008, cost reductions have taken place and the Company expects to transition to operating profitably by the third quarter of 2008. During the third quarter of 2008, management does not expect to continue to incur cash losses from operations. However, additional capital may be required to continue to fund the Company’s operations. Management is actively bridging cash shortfalls in 2008, as they occur, by additional fund raising activities from both existing and new investors alike. A $1,000,000 private placement in the form of a Promissory Note (Note 4) was commenced in March 2008. Fund raising associated with this private placement was temporarily suspended by the board in March 2008 but was recommenced at the end of April 2008 and $425,000 has been raised since then. However, there can be no assurance that management will be successful with any additional fund raising activity or achieving profitability during the third quarter of 2008.

10

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

NOTE 4 — PROMISSORY NOTES — RELATED PARTY

As of March 31, 2008, the Company had issued $250,000 of Promissory Notes - Related Party. The notes bear interest at 10% per annum payable quarterly in cash and have a March 31, 2011 maturity date. The Company will have the right to retire the notes for cash or to convert the principal and any unpaid interest into common shares of the Company at the lesser rate of a 25% discount to the ten-day average closing price of the common stock preceding the Maturity Date or $0.50. In the event of a change of control of the Company prior to the Maturity Date, 150% of the principal amount of the Note and any unpaid interest will be paid in cash as of the date of the change of control.

NOTE 5 — RELATED PARTY TRANSACTIONS

On January 2, 2007, we entered into an agreement to pay $1,250 per month of the rent on office space of Curo Capital, LLC, a company controlled by Alan Knitowski, our Chairman, and Luan Dang, one of our directors. The agreement expires on December 31, 2008.

Customer

Our Chairman, Alan Knitowski, also serves on the Board of Directors and is an investor in Vootage, Inc. We provide Vootage with offshore software development resources located at our offices in India. The initial contract amount, entered into and fully earned during the year ended December 31, 2007, was $237,000 and a subsequent contract for recurring services in the amount of $45,760 per month was signed in July 2007. As of March 31, 2008, $164,910 had not been collected and remained in accounts receivable from related parties. The Company has reserved $120,000 against this receivable at March 31, 2008.

Mr. Knitowski and our Vice Chairman, Mr. Luan Dang, serve on the board and are investors in Trycera Financial. We provided Trycera Financial with IT services of which $33,852 remains unpaid and has been fully reserved at March 31, 2008.

NOTE 6 — BARRON FINANCING

On March 24, 2006, the Company sold 4,000,000 shares of Series A Preferred Stock to Barron Partners, LP at $0.50 per share for gross proceeds of $2,000,000. The Series A Preferred Stock is convertible into shares of the Company’s common stock on a share-for-share basis, and is subject to adjustment in the event of certain corporate transactions. The Series A Preferred Stock does not accrue dividends nor does it have voting rights. The Series A Preferred Shares have a liquation preference to any junior security of $0.50 per share. In addition, if the Company fails to meet certain adjusted EBITDA targets for 2006 or 2007, it has agreed to issue additional shares of Series A Preferred Stock to Barron, not to exceed 2,600,000 shares.

11

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

Pursuant to the agreement with Barron, the Company also issued 4,000,000 A Warrants exercisable at $0.50 per share, 2,000,000 B Warrants exercisable at $1.00 per share, and 2,000,000 C Warrants exercisable at $1.50 per share to acquire common stock. The warrants are exercisable immediately and expire on March 24, 2010. At any time that the average closing sale price of our common stock for a period of twenty consecutive trading days equals or exceeds 200% of the then existing exercise price of the warrants, and provided that a registration statement covering the shares underlying the warrants is available for the resale of the common shares, the Company has the right, upon twenty days written notice to the warrant holders, to call the warrants for cancellation in whole or in part. The Company paid a $50,000 due diligence fee to Barron.

In connection with the closing of this funding transaction on March 24, 2006, the Company entered into a Registration Rights Agreement with Barron and agreed to register the common shares issuable upon conversion of the outstanding shares of the Series A Preferred Stock and the common shares issuable upon exercise of the warrants held by Barron.

If the Company fails to maintain the effectiveness of the registration statement during the period through March 24, 2008, it is required to pay liquidated damages to Barron equal to 30,000 shares of common stock for each thirty-day period, or portion thereof, during which the registration statement is not effective. The maximum number of shares issuable as liquidated damages is 240,000 shares. As the Company failed to maintain the effectiveness of the registration statement in May 2007, the Company accrued $74,000 as estimated liquidated damages as of March 31, 2008 and December 31, 2007. (Note 10)

NOTE 7 — TIER ONE TRANSACTION

On March 28, 2006, the Company acquired all of the outstanding stock of Tier One Consulting, Inc. The purchase price for the shares of Tier One was $2,971,700, of which $1,375,000 was paid at closing, $1,375,000 of which was to be paid in two equal installments of $687,500 on the first and second anniversary of the closing, and $13,333 which was payable monthly for two years. The related installment payables have been recorded at present value using a discount rate between 11% and 12% and the related discount will be accreted to interest expense through the payment dates. In addition, the Company deposited $343,750 into a designated bank account for payment toward the first installment and it agreed to reserve a like amount from our bank lines of credit for payment of the first installment, if necessary.

12

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

The installment payments are subject to adjustment for certain set-offs for any post-closing undisclosed liabilities of Tier One, enforcement of indemnification provisions by Tier One in the acquisition agreement, a decline in the EBIT calculation in the Tier One audited financial statements for 2005, or any increase or decrease in the estimated cost of the audit of the Tier One financial statements for 2005. The first anniversary payment was offset by $1,975 and reduced to $685,525. On March 28, 2007, we renegotiated the first anniversary payment and paid a total of $361,775 to Messrs Willner and Morris, with the balance of the adjusted first anniversary payment payable in installments of $10,000 each per month beginning in April, 2007. We discontinued the $10,000 monthly installment payments in October 2007. In March 2008, we converted $200,000 of the remaining principal into a promissory notes due in 2011 (Note 4). In accordance with SFAS 6, the Company reclassified this amount as a non-current liability at December 31, 2007. The remaining $23,948 balance of principal and accrued interest was paid in March 2008. The debt modifications are accounted for on a prospective basis.

The final installment of $687,500 initially due March 28, 2008, is currently being negotiated with the expectation of a payment term that is acceptable to both parties. However, as of this date there is no assurance that such an arrangement can be negotiated.

NOTE 8 — STOCK PLAN

The Company’s 2002 Stock Option/Stock Issuance Plan was amended effective June 8, 2006, to increase the number of shares authorized under the Plan to 15,000,000 shares. 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. Options that forfeited or canceled are added back into the Plan. At March 31, 2008 a total of 4,700,494 shares of common stock were available for grant under the plan and the company recognized share-based compensation expense in accordance with SFAS No. 123R, in the amount of $100,650 and $335,892 for the 3 months ended March 31, 2008 and 2007, respectively.

As of March 31, 2008 there was $429,292 of total unrecognized compensation expense related to unvested stock options under the plan. The expense is expected to be recognized over a weighted average period of 1 year. Because of its net operating losses, the Company did not realize any tax benefits for the tax deductions from share-based payment arrangements during the periods ended March 31, 2008 and 2007.

13

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

NOTE 9 — NOTES PAYABLE

Credit Lines

On February 12, 2007, the Company and its wholly owned subsidiary, Tier One Consulting, Inc. (“Tier One”), (collectively the “Borrower”) entered into a Business Financing Agreement (the “Credit Agreement”) with Bridge Bank, National Association (the “Lender”) that provides for an accounts receivable backed $1,500,000 revolving line of credit (the “Line of Credit”) with an interest rate of Prime + 1.75%. The effective date of the Credit Agreement was January 24, 2007. Effective April 9, 2008 the facility was renewed for an additional year. Under the Line of Credit, the Lender will make advances to the Borrower not exceeding the lesser of (i) $1,500,000 or (ii) 80% of the eligible accounts receivable; provided that at any time the Lender may establish a percentage of eligible accounts receivable greater or lesser than 80%. The Company paid an initial $15,000 facility fee to the Lender for entering into the Credit Agreement and an additional $15,000 facility fee upon renewal. The Credit Agreement is secured by accounts receivable and provides that the Borrower will pay a fee based on a percentage of the amount of the Line of Credit on each anniversary of the Credit Agreement. The balance outstanding as of March 31, 2008 was $1,425,782.

As of March 31, 2008, the Company maintained a line of credit with Wells Fargo Bank. Under the terms of the agreement there is no collateral for the line and the interest rate is variable in nature. The Company must pay the finance charge every month. The balance outstanding on the line was $90,285 at March 31, 2008, at an interest rate at that time of 7.75%.

Installment Loans Payable to Tier One Consulting Principals

In March 28, 2006, the Company had obligations of $1,375,000 to the former principals of Tier One Consulting payable in two equal installments on the first and second anniversary of the closing, and $13,333 payable monthly for two years. On March 28, 2007, the Company paid a total of $361,775 to Messrs Willner and Morris, with the balance of the adjusted first anniversary payment payable in installments of $10,000 each per month beginning April 2007. These $10,000 monthly installment payments were discontinued in October 2007. In March 2008, the Company converted $200,000 of the principal into notes due in March 31, 2011 (Note 4). The $23,948 remaining balance of principal and accrued interest was paid in March 2008. The debt modifications are accounted for on a prospective basis.

The final installment of $687,500 initially due March 28, 2008, is currently being negotiated with the expectation of a payment term that is acceptable to both parties. However, as of this date there is no assurance that such an arrangement can be negotiated.

14

Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

NOTE 10 — LITIGATION

Barron Litigation

On or about August 17, 2007, the Company filed a complaint against Barron Partners LP in the United States District Court for the Southern District of New York. The Complaint alleged that Barron committed numerous material breaches of the Stock Purchase Agreement it entered into with the Company on or about March 24, 2006, including by engaging in trading activity in Caneum common stock that violates the Stock Purchase Agreement. The Complaint seeks, inter alia, damages, attorneys’ fees, costs, and a declaratory judgment that Barron’s material breaches of the Stock Purchase Agreement excuse the Company from further performance under the Stock Purchase Agreement. In a letter dated August 9, 2007, Barron demanded that the Company issue 2,600,000 additional shares of preferred stock to Barron because the Company did not meet the Adjusted EBITDA goals provided in the Stock Purchase Agreement for the year ended December 31, 2006 as interpreted by Barron. The Company’s complaint alleges that Barron’s material breaches of the Stock Purchase Agreement excuse the Company from any obligation to issue additional stock to Barron. Management has recorded a $74,000 registration rights liability (Note 6). The Company intends to pursue this matter vigorously.

Barron Partners LP filed an answer to this complaint, denying the allegations in the Company’s complaint. Barron also filed a counterclaim alleging breach of contract for failure to meet the adjusted EBITDA goals, the Company’s failure to maintain the effectiveness of its registration statement, and its failure to maintain a quotation for its stock on the OTC Bulletin Board. Barron is claiming damages in the amount of approximately 2,000,000 shares and an unspecified cash amount. The Company intends to continue to pursue this matter vigorously.

On March 3, 2008, the Company’s action against Barron Partners LP in New York federal court was voluntarily dismissed by the parties for lack of subject matter jurisdiction in the federal court. On March 3, 2008, the Company filed a complaint against Barron Partners in the Superior Court of the State of California, County of Orange. The complaint alleges that Barron committed numerous material breaches of the Stock Purchase Agreement it entered into with the Company on or about March 24, 2006, including by engaging in trading activity in the Company’s common stock that violates the Stock Purchase Agreement. The Complaint seeks, inter alia, damages, attorneys’ fees, costs, a declaratory judgment that Barron’s material breaches of the Stock Purchase Agreement excuse the Company from further performance under the Stock Purchase Agreement, and the appointment of a receiver to take over and oversee the trading activity in the Company’s stock by Barron. In a letter dated August 9, 2007, Barron demanded that the Company issue 2,600,000 additional shares of preferred stock to Barron because the Company did not meet the Adjusted EBITDA goals provided in the Stock Purchase Agreement for the year ended December 31, 2006 as interpreted by Barron. The Company’s complaint alleges that Barron’s material breaches of the Stock Purchase Agreement excuse the Company from any obligation to issue additional stock to Barron. The Company intends to pursue this matter vigorously. On March 17, 2008, Barron Partners filed a complaint against the Company in the Supreme Court of the State of New York. The complaint alleges that the Company did not meet the requirements of the Stock Purchase Agreement with Barron Partners in regard to the target Adjusted EBITDA value for 2006 and that the Company is obligated to issue 1,720,000 additional preferred shares to them. The complaint also alleges that because the Company failed to maintain the effectiveness of its registration statement, it is obligated to issue 240,000 common shares to Barron Partners. The complaint also seeks judgment requiring the Company to timely file its reports with the Securities and Exchange Commission.

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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

Innofone Litigation

The Company filed an action in the Superior Court of California, County of Orange, against Innofone, Inc. on or about November 13, 2006, alleging that Innofone breached its contracts with us by failing to pay approximately $200,000. Innofone then filed counterclaims alleging breach of contract and fraud. At a hearing on October 31, 2007, brought by the Company to seek summary judgment in the Innofone case, the Company was unsuccessful in seeking a summary judgment; the matter was scheduled for trial on November 29, 2007. On February 11, 2008, the court granted judgment in favor of the Company against Innofone in the amount of $198,203 and awarded us prejudgment interest in the amount of $27,122. The court also dismissed the cross-complaint previously filed by Innofone against us. There is no assurance that the Company will be able to collect on this judgment.

Publishing Concepts, L.P.

On September 27, 2007, the Company filed a complaint in the District Court of Dallas County, Texas, against Publishing Concepts, L.P., doing business as PCI, for failure to pay an invoice in the amount of $101,734.75 for services rendered to PCI by the Company. On October 22, 2007, PCI filed an answer generally denying the allegations contained in the Company’s complaint. It also alleged affirmative defenses that the Company overcharged PCI for the services due to the poor quality of the work performed and that therefore, PCI is due credits or offsets from the fees owed. The Company intends to pursue this matter vigorously.

NOTE 11 — FACILITY LEASE

In September, 2007, the Company relocated into new premises. The Company executed two three year leases for approximately 3,400 square feet of office space located at 3101 West Coast Highway, Suite 400, Newport Beach, California, with initial monthly average rent of approximately $14,700, escalating by 2% in years two and three. The lease facilities in India are for lease terms expiring through 2011. Rent expense for our corporate office for the three months ended March 31, 2008 and 2007 was $45,771 and $16,138, respectively.

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Caneum, Inc.,
Notes to Condensed Consolidated Financial Statements
March 31, 2008

Future minimum lease commitments for our Newport Beach corporate office are:

2008	$	133,298
2009	$	181,447
2010	$	138,365

Rent expense for our Caneum India facilities for the three months ended March 31, 2008 was $26,449.

Future minimum lease commitments for our Caneum India offices are:

2008	$	77,879
2009	$	75,118
2010	$	51,298
2011	$	7,900

NOTE 12 — SUBSEQUENT EVENTS

In April 2008, we resumed a private offering of promissory notes. The notes are unsecured, bear interest at 10% per annum and mature March 31, 2011. At maturity, the Company will have the right to retire the notes for cash or to convert the principal and any unpaid interest into common shares of the Company at the rate of 25% discount to the five-day average closing price of the common stock proceeding the maturity date. In the event of change of control prior to the maturity date, 150% of the principal amount of the note and any unpaid interest will be paid in cash as of the date of the change of control. In April and May we raised $375,000 additional funds under this offering.

Effective April 30, 2008, Gary Allhusen resigned as Executive Vice-President and Chief Operating Officer of the Company to pursue other opportunities. Mr. Allhusen had also served as the principal financial officer for the Company. Of the total options granted to Mr. Allhusen for service as COO, 140,625 lapsed as a result of his resignation. Mr. Allhusen has three months from the date of resignation to exercise the remaining 859,375 options. After Mr. Allhusen’s resignation, Suki Mudan, the Company’s President, assumed responsibilities as the principal financial officer for the Company.

Effective May 2, 2008 Mike Willner and Rob Morris transitioned from being EVP’s of the Company to become free lance agents. Their 2,000,000 options were forfeited and they have agreed to not compete with the Company for the next 90 days.

On May 19, 2008 Caneum and Barron Partners reached a settlement agreement. Under the terms of the settlement agreement all claims against Barron Partners by Caneum and all claims against Caneum by Barron Partners are paid in full and final satisfaction. Caneum has agreed to pay to Barron Partners $500,000 for the settlement amount, of which forty percent will be paid within forty-eight hours of receipt of certain common stock certificates and common stock purchase warrants. The remaining balance is to be paid with three additional payments of twenty percent of the total settlement amount each within 30, 60, and 90 days after receipt of such common stock certificates and warrants. Barron Partners has agreed that following the initial forty percent payment, all common stock purchase warrants shall be cancelled, terminated, and of no future force or effect. In addition, Barron Partners shall relinquish any claim of ownership or right to any Caneum Series A Convertible Preferred Stock, Caneum common stock or warrants to purchase shares of Caneum common stock still held by Barron Partners, its agents, or representatives.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

The discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this quarterly report on Form 10-Q (the “Quarterly Report”) and the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2007 (the “2007 Annual Report”), as filed with the Securities and Exchange Commission (“SEC”). In addition to historical information, this discussion and analysis contains forward looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward looking statements as a result of certain factors, including but are not limited to those identified in 2007 Annual Report in the section entitled “Risk of Foreign Operations” and “Competition”.

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.

Background

We have two wholly owned operating subsidiaries, Tier One Consulting, Inc., which operates from our Newport Beach, California, offices, and Caneum India Private Limited, formerly Continuum Systems Private Limited, which operates from our offices, located in Gurgaon, Delhi, India, and is owned by our wholly owned holding company formed and located in Singapore, Caneum Asia Pacific Pte. Ltd.

Overview

We are a global provider of business process and information technology outsourcing services across vertical industries, including technology, energy, government, transportation, financial services, education and healthcare. We provide a suite of business strategies and planning capabilities to assist companies with their outsourcing decisions in the areas of data, network, product development, product maintenance and customer support, and fulfill our services in-house, on-shore, near-shore and off-shore, depending on the business goals and objectives of our global customers. In parallel, we are opportunistically pursuing accretive acquisitions within our core outsourcing service suite in order to broaden our core capabilities, expand our customer base and supplement our organic growth.

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We offer our customers business process outsourcing (BPO) services and information technology outsourcing (ITO) services. BPO services are comprised of the following:

• Customer Support, including call centers and web agents for online and offline technical, customer and product support;

• Human Resources, including benefits packages, pre-employment screening, retained and contingent recruiting and information technology centric staffing;

• Sales and Marketing, including online web agents, lead generation and distribution channel expansion;

• Investor Relations and Public Relations, including audio transcription and web development, deployment and maintenance for investor communications; and

• Finance and Accounting, including data entry and back office processing.

ITO services are comprised of the following: Information Technology Enterprise Software Services, including architecting, integrating, deploying, migrating and maintaining front-end Sales Force Automation (SFA), back-end Enterprise Resource Planning (ERP), case management, expert system and enterprise application software packages; Information Technology Infrastructure Services, including systems administration, database administration, web development, network optimization, infrastructure audits and system architecture; and Product Development, including hardware, firmware and software coding, development and maintenance for existing product lines and next generation product prototyping.

Results of Operations

Three months ended March 31, 2008, versus the three months ended March 31, 2007

Revenue

Revenue was $3,236,624 and $2,750,373 for the three months ended March 31, 2008 and 2007, respectively, representing an increase of $486,251 or 18% as compared to the same period in the prior year (the “comparable prior year period”). A significant portion of increase was due to expanded operations at out largest customer, DIRECTV, which accounted for almost 43% of our total revenues for the three months ended March 31, 2008. The increase at DIRECTV was partially offset by losses at other customers, particularly Los Angeles Unified School District and Keane. For the prior year period DIRECTV accounted for approximately 13% of our total revenue, while Los Angeles Unified School District and Keane accounted for 10% and 9% of our revenue, respectively.

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Cost of Revenue and Gross Profit

Cost of revenue was $ 2,727,087 and $2,188,212 for the three months ended March 31, 2008 and 2007, respectively, representing an increase of $538,875, or 25%. The increase was due to increased activity at DirecTV as described in the preceding paragraph.

Our gross margin percentages were 16% and 20% for the three months ended March 31, 2008 and 2007, respectively. The decrease in the gross margin percentages was the result of three factors: higher commission payments to recruiters, a lower proportion of permanent placements (which are typically much higher margins) and a decline in the volume of high margin business with one of our key clients, DIRECTV.

Operating Expenses

Operating expenses were $1,079,371 and $1,109,955 for the three months ended March 31, 2008 and 2007, respectively, representing a decrease of $30,582 or 3%. A significant factor for the decrease was $172,803 less stock based compensation expense and expenses paid by stock issuance, as described below offset by higher cash expense for legal services and office rent.

The major components of our operating expenses are as follows:

• Stock-Based Compensation expense and Expenses Paid by Stock Issuance were $163,089 and $335,892 for the three months ended March 31, 2008 and 2007, respectively. This represents a decrease of $172,803 and principally results from the lower value of our stock used as incentives for services.

• U.S. Payroll and Related Expenses, (excluding stock based) amounted to $407,326 and $343,561 for the three months ended March 31, 2008 and 2007, respectively. The increase of $63,765 or 19% resulted from the increase in our infrastructure to expand our business growth. U.S, Payroll and Related Expenses is expected decrease beginning in the second quarter of 2008 as a result of the departure of three senior executives.

• U.S. Professional Services, including legal, auditing and other consulting services amounted to $186,912 and $127,278 during the first quarter of 2008 and 2007 respectively. The increase of $59,634 was primarily attributable to the legal costs associated with litigation against Innofone.com and Barron Partners LP.

• Most expenses of our wholly-owned India subsidiary are a direct cost of revenue and are recoded as such. Operating expenses of our India subsidiary, excluding depreciation and amortization, were $109,032 and $53,793 for the three months ended March 31, 2008 and 2007, respectively.

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Other Income (Expense)

Other expense, net was $45,468 and $66,795 for the three months ended March 31, 2008 and 2007, respectively. Net interest expense increased $2,814 from the prior year period due to increased borrowing under our Bridge Bank line of credit. However, the 2008 period included $9,838 of foreign exchange gain compared to $14,303 of foreign exchange loss for the prior year period. The foreign exchange gain and loss is due to our wholly owned subsidiary transacting business in currencies other than their functional currency.

Net loss

We incurred a net loss of $616,942 and $685,951 for the three months ended March 31, 2008 and 2007, respectively, as a result of the factors described above.

Liquidity and Capital Resources

Net cash used in operations was $262,005 and $192,756 for the three months ended March 31, 2008 and 2007, respectively. The increase of $69,249 for cash used by operations was primarily the result of requiring more cash to fund our operations, as discussed above, and less non-cash charges. The funds were obtained by increases on our Bridge Bank line of credit.

Net cash used in investing activities was $15,265 and $18,663 for the three months ended March 31, 2008 and 2007, respectively.

Net cash provided by financing activities was $303,639 for the three months ended March 31, 2008 compared to $416,898 for the three months ended March 31, 2007. The current year includes $284,373 from our line of credit as well as $50,000 from our promissory note offering, offset by a reduction of $49,484 principal balance of the notes payable to the prior Tier One shareholders. The prior year period included $834,054 from our line of credit, offset by a reduction of $441,381 principal balance of the notes payable to the prior TierOne shareholders. Also, in March 2008, in conjunction with our promissory note offering, we converted $200,000 of the Tier One principal balance into promissory notes due in 2011. The remaining balance of principal and accrued interest for this first installment debt on the Tier One acquisition was $23,948 and was paid off in March 2008.

In April we resumed our fund raising activities through our promissory note offering. During future periods, 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.

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We have forecast our cash requirements for 2008. We expect to begin generating positive cash from operations in the third quarter of 2008. With positive cash from operations, success with our convertible promissory note offering, we expect to have sufficient operating funds to improve our accounts payable position and support our continued operational growth. We are currently working to refinance the second installment related to our Tier One acquisition debt in the amount of $687,500, and we are currently working to negotiate a payment plan. However, there is no assurance that a settlement will be reached.

Off-Balance Sheet Arrangements

During the three months ended March 31, 2008, we did not engage in any off-balance sheet arrangements.

Recent Accounting Pronouncements

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141R (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R replaces SFAS 141 and establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, including goodwill, the liabilities assumed and any non-controlling interest in the acquiree. SFAS 141R also establishes disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business combination. This statement is effective for fiscal years beginning after December 15, 2008. We are currently evaluating the impact the adoption of SFAS 141R will have on our consolidated financial position and consolidated results of operations.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non-controlling interest, changes in a parent’s ownership interest and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. This standard is effective for fiscal years beginning after December 15, 2008, and is not expected to have any impact on our financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosure about Derivative Instruments and Hedging Activities, an amendment of SFAS 133”. This Statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company currently uses no derivative instruments.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, we have elected not to provide the information required by this item.

Item 4T. Controls and Procedures

Disclosure Controls and Procedures

Upon our initial evaluation, our senior management identified several material weaknesses in our disclosure controls and procedures and internal control over financial reporting. We continue to investigate further and to apply compensating procedures and processes, as necessary and within the constraints of our financial means, to ensure the reliability of our financial reporting and are evaluating and intend to adopt measures designed to remediate any weaknesses.

Management is also conducting an evaluation of our corporate governance and internal controls in an effort to improve the quality and transparency of our corporate governance, internal controls, and financial reporting. Such evaluation may take many months to conclude and our ability to implement any improvements in these areas is limited by our human and financial resources.

Our controls and procedures are inadequate to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods. Our disclosure controls and procedures are not designed to reasonably assure that such information is accumulated and communicated to our management, including the Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure. Based on an initial assessment that has not been completed yet, management has determined that the Company’s disclosure controls as of March 31, 2008, were ineffective because of, but not limited to, the material weaknesses discussed below.

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Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

Material weaknesses were identified during the audit of our December 31, 2007, financial statements. A material weakness is a significant deficiency (within the meaning of Public Company Accounting Oversight Board Auditing Standard No. 5), or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. Since 2003 there had been a lack of personnel with sufficient knowledge of US generally accepted accounting principles and SEC reporting requirements to ensure proper and timely evaluation of our financial activities and transactions. There has also been inadequate knowledge by these individuals of the application of certain technical interpretations of certain generally accepted accounting principles. To mitigate this weakness, in April 2007, we hired a full time Vice President of Finance and Accounting to oversee the preparation of the financial statements, SEC reports, and other accounting issues. As a result, our last three SEC filings have been filed on a timely basis.

Management has not conducted a complete evaluation of internal control over financial reporting for the three months ended March 31, 2008, but has clearly identified a lack of segregation of duties to be a potential material weakness in internal controls. Lack of segregation of duties is inherent to our company due to the small number of employees.

Our management will continue its efforts to remediate these material weaknesses through ongoing process improvements and the implementation of enhanced policies, engaging third-party financial and financial system consultants, and improving standards. Accordingly, the material weaknesses have not all been identified and are not yet remediated. No material weaknesses will be considered remediated until the remedial procedures have operated for an appropriate period, have been tested, and management has concluded that they are operating effectively. We cannot be certain that any measures we take will ensure that we implement and maintain adequate controls over our financial reporting processes and that we will remediate the material weakness. Any failure to implement required new or improved controls or to remediate the material weaknesses, or difficulties encountered in their implementation, could prevent us from accurately reporting our financial results, result in material misstatements in our financial statements, or cause us to fail to meet our reporting obligations.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting which were identified in connection with the evaluation that occurred during the last quarter ended March 31, 2008, which materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION

Item 1. Legal Proceedings

Barron Litigation

On May 19, 2008 Caneum and Barron Partners reached a settlement agreement. Under the terms of the settlement agreement all claims against Barron Partners by Caneum and all claims against Caneum by Barron Partners are paid in full and final satisfaction. Caneum has agreed to pay to Barron Partners a $500,000 settlement amount, of which forty percent will be paid within forty-eight hours of receipt of certain common stock certificates and common stock purchase warrants. The remaining balance is to be paid with three additional payments of twenty percent of the total settlement amount each within 30, 60, and 90 days after receipt of such common stock certificates and warrant. Barron Partners has agreed that following the initial forty percent payment, all common stock purchase warrants shall be cancelled, terminated, and of no future force or effect. In addition, Barron Partners shall relinquish any claim of ownership or right to any Caneum Series A Convertible Preferred Stock, Caneum common stock or warrants to purchase shares of Caneum common stock still held by Barron Partners, its agents, or representatives.

Publishing Concepts, L.P.

No Changes to those reported previously (10K 2007)

Item 2, Sale of Unregistered Securities

During the three months ended March 31, 2008 we issued $250,000 of promissory notes. The notes bear interest at 10% per annum payable quarterly in cash and have a March 31, 2011 maturity date. The Company will have the right to retire the notes for cash or to convert the principal and any unpaid interest into common shares of the Company at the lesser rate of a 25% discount to the ten-day average closing price of the common stock preceding the Maturity Date or $0.50. In the event of a change of control of the Company prior to the Maturity Date, 150% of the principal amount of the Note and any unpaid interest will be paid in cash as of the date of the change of control.

Item 6. Exhibits

The following exhibits are included as part of this report:

31.1	Rule 13a-14(a) Certification by Principal Executive Officer
31.2	Rule 13a-14(a) Certification by Principal Financial Officer
32.1	Section 1350 Certification of Principal Executive Officer
32.2	Section 1350 Certification of Principal Financial Officer

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Caneum, Inc.
Date: May 20, 2008	By	/s/ Suki Mudan
		Suki Mudan, President
		(Principal Executive and Financial Officer)

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