SOURCE: Caneum, Inc.

November 15, 2007 20:41 ET

Caneum Announces Third Quarter 2007 Financial Results

Information Technology and Business Process Outsourcing Company Continues on Rapid Growth Trajectory With 48% Revenue Growth Quarter Over Quarter

NEWPORT BEACH, CA--(Marketwire - November 15, 2007) - Caneum, Inc. (PINKSHEETS: CANM), a global provider of business process and information technology outsourcing services, today announced financial results for the quarter ended September 30, 2007.

"We are pleased to announce that we are continuing to grow rapidly, once again exceeding $3M in revenues this quarter," said Suki Mudan, President and Principal Executive Officer of Caneum. "On an annualized run rate our consolidated global revenues now exceed $12.5M. It is also encouraging to know that we have a strong pipeline of new customers, new contracts and new personnel to continue accelerating our growth and I am confident that 2008 should be another record year of sequential growth and expansion."

Gary Allhusen, COO and Principal Financial Officer commented, "We are also very pleased to have completed all financial restatements for 2006 tied to the transition of our auditors, and to be both current and on time with all of our public filings. "We aim to complete our next two filings on time and to then apply for either the OTC BB or one of the larger exchanges by mid-May 2008."

Q3 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, imputed interest, depreciation/amortization, minority interest and foreign exchange charges. Reconciliations of non-GAAP measures to GAAP operating income, net income and EPS are included at the end of this release.

Q3 Financial Highlights

Revenues - The Company reported revenues of $3.13M for 3 QTR 2007, representing a 48% increase over 3 QTR 2006 revenues of $2.11M.

Cost of Revenues - The Company reported cost of revenues of $2.60M for 3 QTR 2007, representing a 66% increase over 3 QTR 2006 cost of revenues of $1.57M.

Operating Expenses - The Company reported operating expenses of $1.33M for 3 QTR 2007, representing a 64% increase over 3 QTR 2006 operating expenses of $0.81M.

Stock-Based Compensation - The Company reported stock-based compensation expenses of $0.25M for 3 QTR 2007, representing a 39% increase over 3 QTR 2006 stock-based compensation expenses of $0.18M.

Operating Loss - The Company reported GAAP operating loss of $0.81M for 3 QTR 2007, representing an 189% operating loss increase over 3 QTR 2006 GAAP operating Loss of $0.27M.

The Company reported non-GAAP operating loss of $0.44M for 3 QTR 2007, compared to 3 QTR 2006 non-GAAP operating loss of $0.00M, and a 214% increase from 2 QTR 2007 non-GAAP operating loss of $0.14M.

Net Loss - The Company reported GAAP net loss of $0.92M for 3 QTR 2007, representing a 197% increase to net loss over 3 QTR 2006 GAAP net loss of $0.31M. The Company reported non-GAAP net loss of $0.51M for 3 QTR 2007, compared to 3 QTR 2006 non-GAAP net loss of $0.00M, and a 411% increase from 2 QTR 2007 non-GAAP net loss of $0.18M.

EPS - The Company reported GAAP EPS of ($0.11) for 3 QTR 2007, representing a 120% EPS loss increase compared with 3 QTR 2006 GAAP EPS of ($0.05). The Company reported non-GAAP EPS of ($0.06) for 3 QTR 2007 compared to 3 QTR 2006 non-GAAP EPS of ($0.00), and compared to 2 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 September 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 November 15, 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, imputed 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.
           Condensed Consolidated Balance Sheets
       As of September 30, 2007 and December 31, 2006



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

 CURRENT ASSETS
    Cash and cash equivalents               $       91,095  $      335,202
    Accounts receivable, net of allowance
     of $372,372 and $229,626, respectively      2,444,181       1,840,994
    Prepaid assets                                 146,477          57,673
    Other current assets                            15,160          15,000
                                            --------------  --------------

       Total current assets                      2,696,913       2,248,869

 LONG TERM ASSETS
    Property & equipment, net                      212,468         194,373
    Intangibles, net                               695,568         938,587
    Goodwill                                     1,464,805       1,464,805
    Other                                           33,489           4,592
                                            --------------  --------------

 TOTAL ASSETS                               $    5,103,243  $    4,851,226
                                            ==============  ==============



 CURRENT LIABILITIES
    Accounts payable                        $    1,203,197  $      830,468
    Accrued expenses                                 2,110          67,098
    Bank overdraw                                  133,958               -
    Credit lines                                 1,685,626         159,966
    Accrued payroll and related expenses           278,390         119,556
    Deferred revenue                                22,880               -
    Notes payable                                    4,930          61,480
    Current portion of installment loans           942,378         785,573
    Other current liabilities                       82,012          84,522
                                            --------------  --------------

       Total current liabilities                 4,355,481       2,108,663

 LONG TERM LIABILITIES
    Installment loans, less current portion              -         665,862
    Other non current liabilities                   63,555          51,127
                                            --------------  --------------

       Total liabilities                         4,419,036       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                   8,583,222       7,592,702
    Accumulated other comprehensive income          93,184               -
    Accumulated deficit                         (8,016,242)     (5,809,604)
                                            --------------  --------------

       Total shareholders' equity                  684,207       1,794,347
                                            --------------  --------------

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $    5,103,243  $    4,851,226
                                            ==============  ==============






                               Caneum, Inc.
              Condensed Consolidated Statements of Operations
                      And Comprehensive Income (Loss)
      For the Three and Nine Months Ended September 30, 2007 and 2006


                            Three Months Ended        Nine Months Ended
                          ----------------------  ------------------------
                          September   September    September    September
                          30, 2007    30, 2006     30, 2007     30, 2006
                                     As Restated               As Restated
                          Unaudited   Unaudited    Unaudited    Unaudited
                          ----------  ----------  -----------  -----------

 Revenue                  $3,127,234  $2,112,935  $ 9,118,922  $ 4,997,138

 Cost of revenue           2,604,439   1,571,142    7,334,629    3,684,580
                          ----------  ----------  -----------  -----------

 Gross profit                522,795     541,793    1,784,293    1,312,558

 Operating expenses        1,329,297     814,590    3,627,091    2,352,912
                          ----------  ----------  -----------  -----------

 Loss from operations       (806,502)   (272,797)  (1,842,798)  (1,040,354)
                          ----------  ----------  -----------  -----------

 Other income (expense)
    Interest income
     (expense), net          (66,535)    (37,968)    (170,558)     (74,069)
    Loss on foreign
     exchange                (20,396)          -      (73,444)           -
    Other income (loss)       (7,512)          -       (7,512)           -
                          ----------  ----------  -----------  -----------
 Total other income
  (expense)                  (94,443)    (37,968)    (251,514)     (74,069)

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

 Loss before income tax     (900,945)   (310,765)  (2,174,664)  (1,114,423)

 Income tax expense          (18,242)          -      (31,974)        (800)
                          ----------  ----------  -----------  -----------

 Net loss                 $ (919,187) $ (310,765) $(2,206,638) $(1,115,223)
                          ==========  ==========  ===========  ===========

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

 Net Loss Attributable to
  Common Stockholders     $ (919,187) $ (310,765) $(2,206,638) $(1,870,271)
                          ==========  ==========  ===========  ===========


 Basic and diluted net
  loss per common share   $    (0.11) $    (0.05) $     (0.27) $     (0.31)
                          ==========  ==========  ===========  ===========

 Weighted average number
  of Common Shares
  outstanding used in
  the calculation          8,234,603   6,614,031    8,076,148    6,062,621
                          ==========  ==========  ===========  ===========


 Net loss                   (919,187)   (310,765)  (2,206,638)  (1,115,223)

 Comprehensive Income:
    Foreign currency
     translation
     adjustment (Note 2)      23,259           -       93,184            -
                          ----------  ----------  -----------  -----------
 Comprehensive Loss         (895,928)   (310,765)  (2,113,454)  (1,115,223)
                          ==========  ==========  ===========  ===========





                              Caneum, Inc.
              Condensed Consolidated Statements of Cash Flows
          For the Nine Months Ended September 30, 2007 AND 2006



                                              For the Nine Months Ended
                                            ------------------------------
                                            September 30,   September 30,
                                                 2007            2006
                                                              As Restated
                                              Unaudited       Unaudited
                                            --------------  --------------
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                 $   (2,206,638) $   (1,115,223)
   Adjustments to reconcile net loss to net
    cash used in operating activities
      Stock-based compensation expense             435,990         379,902
      Expenses paid by common stock
       issuances or committed issuances            431,730         107,164
      Interest accreted to TierOne
       installment loans                            52,548          65,962
      Depreciation and amortization                 61,264          20,985
      Amortization of acquired intangibles
       from business combinations                  172,888         143,200
      Impairment of property and equipment           7,512               -
      Bad debt expense                              40,000          90,721
      Minority interest                             80,352               -
      (Increase) decrease in
         Accounts receivable                      (947,824)       (749,280)
         Prepaid assets and other current
          assets                                  (108,575)        112,084
      Increase in
         Accounts payable and accrued
          expenses                                 649,826          69,884
         Accrued payroll and related
          expenses                                 170,727         118,412
         Deferred revenue                           22,880               -
                                            --------------  --------------

Net cash used in operating activities           (1,137,320)       (756,189)
                                            --------------  --------------

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                (71,487)        (17,161)
                                            --------------  --------------

Net cash used in investing activities             (160,773)     (1,355,788)
                                            --------------  --------------

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                                (650,870)        (64,602)
   Addition to debt                                 24,225               -
   Bank overdraft                                  133,958               -
   Exercise of options                                   -         132,250
   Exercise of warrants                                  -         105,000
   Increase in credit lines                      1,525,660         168,967
                                            --------------  --------------

Net cash provided by financing activities        1,032,973       2,481,619
                                            --------------  --------------

     Effect of changes in foreign currency
      exchange rates on cash                        21,013               -

Net increase (decrease) in cash and cash
 equivalents                                      (244,107)        369,642

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

CASH AND CASH EQUIVALENTS, END OF PERIOD    $       91,095  $      469,402
                                            ==============  ==============

 SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION

    Interest paid                           $      121,306  $       17,881

    Income taxes paid                       $      (31,974) $          800




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


                           Three Months Ended       Nine Months Ended
                        ------------------------  ------------------------
                          Sept 30,     Sept 30,     Sept 30,     Sept 30,
                            2007         2006         2007         2006
                         Unaudited    Unaudited    Unaudited    Unaudited
                                     As Restated               As Restated
                        -----------  -----------  -----------  -----------

 Revenue                $ 3,127,000  $ 2,113,000  $ 9,119,000  $ 4,997,000

 Cost of revenue          2,604,000    1,571,000    7,335,000    3,685,000
                        -----------  -----------  -----------  -----------

 Gross profit               523,000      542,000    1,784,000    1,312,000

 Operating expenses       1,329,000      815,000    3,627,000    2,353,000

 Adjustments to
  operating expenses:
    Stock-based
     compensation          (252,000)    (185,000)    (868,000)    (487,000)
    Depreciation and
     amortization           (78,000)     (68,000)    (234,000)    (164,000)
    Bad debt                (40,000)     (18,000)     (40,000)     (91,000)
                        -----------  -----------  -----------  -----------
 Pro forma operating
  expenses                  959,000      544,000    2,485,000    1,611,000
                        -----------  -----------  -----------  -----------

 Pro forma loss from
  operations               (436,000)      (2,000)    (701,000)    (299,000)
                        -----------  -----------  -----------  -----------

 Other expense, net        (113,000)     (38,000)    (364,000)     (75,000)
 Adjustments to
  non-operating
  expenses:
    Minority interest             -            -       80,000            -
    Interest expense
     accreted to notes       18,000       33,000       53,000       66,000
    Loss on foreign
     exchange                20,000            -       73,000            -

                        -----------  -----------  -----------  -----------
 Pro forma net loss     $  (511,000) $    (7,000) $  (859,000) $  (308,000)
                        ===========  ===========  ===========  ===========

 Basic and diluted net
  loss per common share $     (0.06) $         -  $     (0.11) $     (0.05)
                        ===========  ===========  ===========  ===========

 Weighted average
  number of Common
  Shares outstanding
  used in the
  calculation             8,234,603    6,614,031    8,076,148    6,062,621
                        ===========  ===========  ===========  ===========


Contact Information

  • Contacts:

    Caneum, Inc.
    Gary Allhusen
    EVP, COO & Principal Financial Officer
    (949) 273-4000
    Email Contact