'Strong Fundamental Performance in a booming industry and sector. Since the first quarter of 2003, Caneum’s revenue has increased at a 77% aggregate quarterly growth rate (650%+ year over year growth)'

Overview

Caneum, Inc. is a global provider of business process and information technology outsourcing products and 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, onshore, near-shore and offshore, depending on the business goals and objectives of its global customers. In parallel, Caneum 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.

Investment Highlights

The Business Model

Caneum’s hybrid model differentiates from the conventional model deployed by other off-shore outsourcing firms. Developed on the experience of the management team in many previous outsourcing engagements, Caneum’s model is uniquely suited for cost efficient outsourcing solutions. In order to mitigate some of the pitfalls of outsourcing, Caneum takes a pragmatic approach labeled as its de-risked engagement model. On a going-forward basis and in order to maximize shareholder value, the business model parameters have been clearly defined by management:

STRONG FUNDAMENTAL PERFORMANCE in a booming industry and sector. Since the first quarter of 2003, Caneum’s revenue has increased at a 77% aggregate quarterly growth rate (650%+ year over year growth). A combination of organic growth, driven by the strength of its business pipeline should help drive top-line revenue growth while reducing the company’s burn.

FUTURE SUCCESS WITH ACQUISITIONS is an important component of the business model. Caneum’s healthy current deal flow demonstrates management’s ability to identify companies that both complete and enhance its product and service offerings. Management also has prior success integrating acquisitions.

UNIQUE BUSINESS MODEL. Caneum features a unique and differentiated business model providing best-of-breed services and solutions through hybrid teams of on-site resources and offsite teams provided by its trusted and proven partners. The company carefully segments its target markets to focus on the most attractive and defensible markets rather than commodity segments.

POTENTIAL FOR PRIVATE EQUITY RETURNS. Given the industry dynamics and Caneum’s business model, an investment in Caneum has the potential for private equity returns with a degree of embedded security, safety and liquidity associated with a publicly traded company.

THE TREND IS YOUR FRIEND. Strong sequential and annual revenue growth among leading outsourcing players, such as Cognizant (CYSH), Infosys (INFY), Satyam (SAY) and Wipro (WIT), validate the enormous upside in outsourcing IT services.
 

Industry

Tight capital markets and an extremely challenging macroeconomic backdrop characterize the current business climate, particularly for privately held micro cap software and technology companies. Concurrently, more and more companies of all size are looking to create incremental operating leverage in their business models by exploiting the opportunities and efficiencies afforded by outsourcing non-core business processes and operations to enhance their bottom lines.

As a result of these difficulties and the accompanying market pressures for profitable growth, many quality companies are faced with multiple operating dilemmas. Large, medium and small companies alike are equally faced with the proposition of choosing what is core to their business and focusing exclusively on those items internally while supplementing their incremental business needs with outsourcing to meet those non-core business needs that remain critical to their operational success.

In parallel, the privately held micro cap software and technology companies are faced with the harsh reality that while many of them have survived the economic downturn and still remain profitable (or cash neutral), they continue to suffer from limited financing options to grow and fundamentally have no exit strategy in sight.

• Caneum, Inc. Announces the Appointment of Former Ernst & Young Executive Roger Goulette as the Chairman of Its Advisory Board (Thu, Jan 5)

• Caneum, Inc. Adds Vinculum Communications, Inc. to Its Rapidly Growing Customer List to Expand Vinculum's Markets Into Enterprise Retail VoIP (Wed, Dec 28)

• Caneum, Inc. Chairman and Vice Chairman to Speak at 2006 International CES Trade Show (Thu, Dec 22)

• Caneum, Inc. Announces Agreement With DIRECTV for Enterprise IT Services (Wed, Dec 14)

• Caneum Inc. Announces Partnership Agreement with ClairMail, Enabling Instant One-Click Access to Enterprise Applications, Data and Services from Any Mobile Device (Mon, Dec 12)
 

• Caneum Inc. Announces 355% Year-over-Year Revenue Increase for Third Quarter 2005 (Tue, Nov 15)

• Caneum, Inc. Expands Servicing Presence in Homebuilder Industry with the Addition of Major Southern California Homebuilder to Customer Roster (Wed, Sep 28)
 

Mr. Mudan is a strategist and entrepreneur with over 25 years of wide-ranging business start-up, technology and strategy consulting experience. Mr. Mudan has been actively involved in supporting a number of start-up companies in the software, networking, e-business and telecommunications sectors. Mr. Mudan has extensive experience in fund raising, capital restructuring and developing innovative business models.

Gary D. Allhusen- Executive Vice President

Previously, Mr. Allhusen was a Director in the Communications Industry Practice with EDS selling and delivering large transformational consulting and outsourcing programs. Mr. Allhusen also set up EDS’ strategic transformational outsourcing practice focused on the business and IT transformational outsourcing market. Prior to joining EDS, Mr. Allhusen was a Principal with A. T. Kearney, a high value management consulting firm and subsidiary of EDS. While at A. T. Kearney, Mr. Allhusen focused on providing IT strategy and alignment consulting services to large multi-national organizations. He was also responsible for embedding business process transformation and IT operational excellence services into large EDS outsourcing deals. Major clients of Mr. Allhusen included Sprint, Bechtel, i2 Technologies, Hewlett-Packard, Boeing, Solar Turbines, Jet Propulsion Laboratory, Warner Brothers Studios, and Warner/Elektra/Atlantic. Prior to joining A. T. Kearney, Mr. Allhusen was employed with Ernst & Young Consulting, Hughes Space and Communications Company and New York State Energy Research and Development Authority where he held both line management and consulting positions.

Caneum, Inc.
170 Newport Center Drive, Suite 220
Newport Beach, CA 92660
(949) 273-4000 [main]
(949) 273-4001 [fax]
Email: info@caneum.com

FORWARD LOOKING STATEMENTS

This report includes forward-looking statements that reflect Caneum, Inc. current expectations about its future results, performance, prospects and opportunities. Caneum, Inc. . has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Caneum, Inc.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.

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