SOURCE: Caneum, Inc.

September 10, 2007 21:55 ET

Caneum Announces Second Quarter 2007 Financial Results

Information Technology and Business Process Outsourcing Company Continues on Rapid Growth Trajectory With 63% Revenue Growth Quarter Over Quarter

NEWPORT BEACH, CA--(Marketwire - September 10, 2007) - Caneum, Inc. (PINKSHEETS: CANM), a global provider of business process and information technology outsourcing services, today announced financial results for the quarter ended June 30, 2007.

"We're very pleased with the continued progress of the Company," said Suki Mudan, President and Principal Executive Officer of Caneum. "We closed the second quarter with very strong momentum in our organic sales initiatives achieving our first $1 million months in revenue generated during both May and June."

Q1 Financial Summary

The Company reports operating income, net income and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

Non-GAAP operating income, non-GAAP net income and non-GAAP EPS are computed net of stock-based compensation, bad debt allowances, interest, depreciation/amortization and minority interest. Reconciliations of non-GAAP measures to GAAP operating income, net income and EPS are included at the end of this release.

Q1 Financial Highlights

Revenues - The Company reported revenues of $3.24M for 2 QTR 2007, representing a 63% increase over 2 QTR 2006 revenues of $1.98M, and an 18% increase over 1 QTR 2007 revenues of $2.75M.

Cost of Revenues - The Company reported cost of revenues of $2.54M for 2 QTR 2007, representing a 74% increase over 2 QTR 2006 cost of revenues of $1.46M, and a 16% increase over 1 QTR 2007 cost of revenues of $2.19M.

Operating Expenses - The Company reported operating expenses of $1.19M for 2 QTR 2007, representing a 23% increase over 2 QTR 2006 operating expenses of $0.97M, and a 7% increase over 1 QTR 2007 operating expenses of $1.11M.

Stock-Based Compensation - The Company reported stock-based compensation expenses of $0.28M for 2 QTR 2007, representing a 77% increase over 2 QTR 2006 stock-based compensation expenses of $0.16M, and an 18% decrease from 1 QTR 2007 stock-based compensation expenses of $0.34M.

Operating Income - The Company reported GAAP operating income of ($0.49M) for 2 QTR 2007, representing a 11% operating loss increase over 2 QTR 2006 GAAP operating income of ($0.44M). The Company reported non-GAAP operating income of ($0.14M) for 2 QTR 2007, representing a 9% decline from 2 QTR 2006 non-GAAP operating income of ($0.13M), and a 9% decline from 1 QTR 2007 non-GAAP operating income of ($0.13M).

Net Income - The Company reported GAAP net income of ($0.60M) for 2 QTR 2007, representing a 25% net loss increase over 2 QTR 2006 GAAP net income of ($0.48M). The Company reported non-GAAP net income of ($0.18M) for 2 QTR 2007, representing a 40% net loss increase compared with 2 QTR 2006 non-GAAP net income of ($0.13M), and a 9% increase from 1 QTR 2007 non-GAAP net income of ($0.17M).

EPS - The Company reported GAAP EPS of ($0.07) for 2 QTR 2007, representing a 13% EPS loss reduction compared with 1 QTR 2006 GAAP EPS of ($0.08). The Company reported non-GAAP EPS of ($0.02) for 2 QTR 2007 compared to 2 QTR 2006 non-GAAP EPS of ($0.02), and compared to 1 QTR 2007 of ($0.02).

FORWARD-LOOKING STATEMENTS

"Safe Harbor Statement" under the Private Securities Litigation Reform Act of 1995: with the exception of historical information, the statements set forth above include forward-looking statements that involve risk and uncertainties. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The Company wishes to caution readers that a number of important factors could cause actual results to differ materially from those provided in the forward-looking statements. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, the risk factors noted in the Company's filings with the United States Securities and Exchange Commission (SEC), such as the rapidly changing nature of technology, evolving industry standards and frequent introductions of new products, services and enhancements by competitors; the competitive nature of the markets for the Company's products and services; the Company's ability to gain market acceptance for its products and services; the Company's ability to fund its operational growth; the Company's ability to attract and retain skilled personnel; the Company's ability to diversify its revenue streams and customer concentrations; the Company's reliance on third-party suppliers; and those risks and uncertainties included under the captions "Forward-Looking Statements" and "Item 2. Management's Discussion and Analysis and Plan of Operation," in our report on Form 10-QSB for the quarter ended June 30, 2007, which is on file with the SEC and is available on both our investor relations web site at www.caneum.com/investor-relations.html and the SEC's web site at www.sec.gov. All information provided in this release and in the related attachments is as of September 10, 2007, and the Company undertakes no duty to update this information.

ABOUT 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 "make versus buy" decisions in the areas of data, network, product development, product maintenance and customer support, and fulfills its services in-house, on-shore, near-shore and off-shore, depending on the business goals and objectives of its global customers. In parallel, the Company is opportunistically pursuing accretive acquisitions within its core outsourcing product and service suite in order to broaden its core capabilities, expand its customer base and supplement its organic growth. For more information, please visit the Company's web site at www.caneum.com.

ABOUT NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements, which statements are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP net income and non-GAAP EPS. The presentation of this financial information is not intended to be considered in isolation, or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables included at the end of this release.

We use these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain expenses and expenditures that may not be indicative of our "recurring core business operating results," meaning our operating performance excluding not only non-cash charges such as stock-based compensation and non-cash consulting expenses that may occur opportunistically from time to time. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance, as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional and retail investors and the analyst community to help them analyze the health of our business.

Non-GAAP Operating Income. We define non-GAAP operating income as operating income minus stock-based compensation, non-cash consulting expenses, bad debt allowances and depreciation/amortization. The Company considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude items that cloud the ability of the Company's management and investors to compare the Company's recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, stock-based compensation, that are recurring. Stock-based compensation has been and will continue to be for the foreseeable future a significant recurring expense in the Company's business. Second, stock-based compensation is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.

Non-GAAP Net Income and Non-GAAP EPS. We define non-GAAP net income as net income minus stock-based compensation, bad debt allowances, non-cash consulting expenses, unpaid interest, depreciation/amortization, minority interest and foreign exchange loss. We define non-GAAP EPS as non-GAAP net income divided by the weighted average shares, on a basic and fully diluted basis, outstanding as of the end of the period. We consider these non-GAAP financial measures to be a useful metric for management and investors for the same reasons that the Company uses non-GAAP operating income. The same limitations described above regarding the Company's use of non-GAAP operating income apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.

CANEUM, INC. SUMMARY FINANCIAL TABLES

The accompanying tables have more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.


                               CANEUM, INC.
                        CONSOLIDATED BALANCE SHEETS
                AS OF JUNE 30, 2007 AND DECEMBER 31, 2006


                                                June 30,     December 31,
                                                  2007           2006
                                                Unaudited
                                              -------------  -------------

 CURRENT ASSETS
    Cash and cash equivalents                 $     117,313  $     335,202
    Accounts receivable, net of allowance of
     $331,356 and $229,626, respectively          2,943,753      1,840,994
    Prepaid assets                                  122,736         57,673
    Other current assets                             15,000         15,000
                                              -------------  -------------

       Total current assets                       3,198,802      2,248,869

 LONG TERM ASSETS
    Property & equipment, net                       209,149        194,373
    Intangibles, net                                742,524        938,587
    Goodwill                                      1,464,805      1,464,805
    Other                                             4,592          4,592
                                              -------------  -------------

 TOTAL ASSETS                                 $   5,619,872  $   4,851,226
                                              =============  =============

 CURRENT LIABILITIES
    Accounts payable                          $   1,591,873  $     830,468
    Accrued expenses                                 12,288         67,098
    Credit lines                                  1,392,636        159,966
    Accrued payroll and related expenses            117,382        119,556
    Notes payable                                    16,223         61,480
    Current portion of installment loans          1,018,288        785,573
    Other current liabilities                        81,357         84,522
                                              -------------  -------------

       Total current liabilities                  4,230,047      2,108,663

 LONG TERM LIABILITIES
    Installment loans, less current portion               -        665,862
    Other non current liabilities                    61,193         51,127
                                              -------------  -------------

       Total liabilities                          4,291,240      2,825,652
                                              -------------  -------------


 Minority Interest                                        -        231,227

 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,
      8,212,859 and 7,918,921 shares issued
      and outstanding                                 8,211          7,917
    Common stock committed                           12,500              -
    Additional paid-in capital                    8,331,719      7,592,702
    Accumulated other comprehensive income           69,925              -
    Accumulated deficit                          (7,097,055)    (5,809,604)
                                              -------------  -------------

       Total shareholders' equity                 1,328,632      1,794,347
                                              -------------  -------------

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   $   5,619,872  $   4,851,226
                                              =============  =============





                               Caneum, Inc.
              Condensed Consolidated Statements of Operations
                      And Comprehensive Income (Loss)
              For the Six Months ended June 30, 2007 AND 2006


                        Three Months Ended           Six Months Ended
                    --------------------------  --------------------------
                      June 30,      June 30,      June 30,      June 30,
                        2007          2006          2007          2006
                      Unaudited     Unaudited     Unaudited     Unaudited
                                  As Restated                 As Restated
                    ------------  ------------  ------------  ------------

 Revenue            $  3,241,315  $  1,983,528  $  5,991,688  $  2,884,203

 Cost of revenue       2,541,978     1,460,542     4,730,190     2,113,438
                    ------------  ------------  ------------  ------------

 Gross profit            699,337       522,986     1,261,498       770,765

 Operating expenses    1,187,839       967,760     2,297,794     1,538,322
                    ------------  ------------  ------------  ------------

 Loss from
  operations            (488,502)     (444,774)   (1,036,296)     (767,557)
                    ------------  ------------  ------------  ------------

 Other income
  (expense)
    Interest income
     (expense), net      (51,531)      (36,132)     (104,023)      (36,101)
    Loss on foreign
     exchange            (38,745)            -       (53,048)            -
                    ------------                ------------  ------------
 Total other income
  (expense)              (90,276)      (36,132)     (157,071)      (36,101)

 Minority Interest       (11,974)            -       (80,352)            -
                    ------------  ------------  ------------  ------------

 Loss before income
  tax                   (590,752)     (480,906)   (1,273,719)     (803,658)

 Income tax expense      (10,748)            -       (13,732)         (800)
                    ------------  ------------  ------------  ------------

 Net loss           $   (601,500) $   (480,906) $ (1,287,451) $   (804,458)
                    ============  ============  ============  ============

 Beneficial
  Conversion
  Charge upon
  Issuance of
  Preferred Shares             -             -             -       755,048
                    ============  ============  ============  ============

 Net Loss
  Attributable to
  Common
  Stockholders      $   (601,500) $   (480,906) $ (1,287,451) $ (1,559,506)
                    ============  ============  ============  ============


 Basic and diluted
  net loss per
  common share      $      (0.07) $      (0.08) $      (0.16) $      (0.27)
                    ============  ============  ============  ============

 Weighted average
  number of Common
  Shares
  outstanding used
  in the
  calculation          8,045,480     6,216,346     7,996,050     5,746,676
                    ============  ============  ============  ============


 Net loss               (601,500)     (480,906)   (1,287,451)     (804,458)

 Comprehensive
  Income:
    Foreign
     currency
     translation
     adjustment           55,869             -        69,925             -
                    ------------  ------------  ------------  ------------
 Comprehensive Loss     (545,631)     (480,906)   (1,217,526)     (804,458)
                    ============  ============  ============  ============





                             CANEUM, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006


                                                For the Six Months Ended
                                              ----------------------------
                                                June 30,       June 30,
                                                  2007           2006
                                                Unaudited      Unaudited
                                                              As Restated
                                              -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                   $  (1,287,451) $    (804,458)
   Adjustments to reconcile net loss to net
    cash used in operating activities
      Stock-based compensation expense              299,212        237,785
      Expenses paid by stock issuances or
       committed issuances                          317,003         64,600
      Interest accreted to TierOne notes             34,538         32,527
      Depreciation and amortization                  33,946         18,258
      Amortization of acquired intangibles
       from business combinations                   122,354         77,850
      Bad Debt expense                                    -         72,721
      Minority interest                              80,352              -
      (Increase) decrease in
         Accounts receivable                     (1,070,247)      (540,568)
         Prepaid assets and other current
          assets                                    (58,584)       102,822
      Increase in
         Accounts payable and accrued
          expenses                                  698,495         92,302
         Accrued payroll and related expenses         6,514        140,717
                                              -------------  -------------

Net cash used in operating activities              (823,868)      (505,444)
                                              -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Cash paid for acquisition of TierOne
    Consulting, Inc., net of cash acquired                -     (1,338,627)
   Cash paid for acquisition of remaining
    interest of Continuum                           (89,286)             -
   Purchase of property & equipment                 (36,802)       (17,834)
                                              -------------  -------------

Net cash used in investing activities              (126,088)    (1,356,461)
                                              -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Issuance of common stock and warrants for
    cash                                                  -        350,004
   Issuance of Series A Preferred Shares and
    warrants for cash, net                                -      1,790,000
   Payment of debt                                 (543,857)       (31,819)
   Addition to debt                                  24,225              -
   Exercise of options                                    -        132,250
   Increase in credit lines                       1,232,671         84,650
                                              -------------  -------------

Net cash provided by financing activities           713,039      2,325,085
                                              -------------  -------------

     Effect of changes in foreign currency
      exchange rates on cash                         19,028              -

Net increase (decrease) in cash and cash
 equivalents                                       (217,889)       463,180

CASH AND CASH EQUIVALENTS, BEGINNING OF
 PERIOD                                             335,202         99,760
                                              -------------  -------------

CASH AND CASH EQUIVALENTS, END OF PERIOD      $     117,313  $     562,940
                                              =============  =============

 SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION
    Interest paid                             $      72,745  $      24,906

    Income taxes paid                         $      13,732  $         800




                            Caneum, Inc.
        Pro Forma Condensed Consolidated Statements of Operations
                      And Comprehensive Income (Loss)
        For the Three and Six Months ended June 30, 2007 and 2006



                           Three Months Ended         Six Months Ended
                        ------------------------  ------------------------
                          June 30,     June 30,     June 30,     June 30,
                            2007         2006         2007         2006
                         Unaudited    Unaudited    Unaudited    Unaudited
                                     As Restated               As Restated
                        -----------  -----------  -----------  -----------

 Revenue                $ 3,241,000  $ 1,984,000  $ 5,992,000  $ 2,884,000

 Cost of revenue          2,542,000    1,461,000    4,730,000    2,113,000
                        -----------  -----------  -----------  -----------

 Gross profit               699,000      523,000    1,262,000      771,000

 Operating expenses       1,188,000      968,000    2,298,000    1,538,000

 Adjustments to
  operating expenses:
    Stock-based
     compensation          (280,000)    (158,000)    (616,000)    (302,000)
    Depreciation and
     amortization           (72,000)     (91,000)    (156,000)     (96,000)
    Bad debt                      -      (70,000)           -      (73,000)
                        -----------  -----------  -----------  -----------
 Pro forma operating
  expenses                  836,000      649,000    1,526,000    1,067,000
                        -----------  -----------  -----------  -----------

 Pro forma loss from
  operations               (137,000)    (126,000)    (264,000)    (296,000)
                        -----------  -----------  -----------  -----------

 Other income (expense)    (113,000)     (36,000)    (251,000)     (37,000)
 Adjustments to
  non-operating
  expenses:
    Minority interest        12,000            -       80,000            -
    Interest expense
     accreted to notes       18,000       33,000       35,000       33,000
    Loss on foreign
     exchange                39,000            -       53,000            -

                        -----------  -----------  -----------  -----------
 Pro forma net loss     $  (181,000) $  (129,000) $  (347,000) $  (300,000)
                        ===========  ===========  ===========  ===========

 Basic and diluted net
  loss per common share $     (0.02) $     (0.02) $     (0.04) $     (0.05)
                        ===========  ===========  ===========  ===========

 Weighted average
  number of Common
  Shares outstanding
  used in the
  calculation             8,045,480    6,216,346    7,996,050    5,746,676
                        ===========  ===========  ===========  ===========

Contact Information

  • Investor / Press / Media Contact:

    Gary Allhusen
    (949) 273-4000
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