<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-24480
SANGUINE CORPORATION
(Name of Small Business Issuer in its Charter)
NEVADA 95-4347608
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
101 East Green Street, #11
Pasadena, California 91105
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (818) 405-0079
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
June 30, 1997
20,877,723
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes. In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.
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SANGUINE CORPORATION
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 1997
&
December 31,
1996
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Balance Sheet
June 30, 1997 (Unaudited) and December 31, 1996
<CAPTION>
Unaudited
1997 1996
<S> <C> <C>
ASSETS
Current Assets
Cash $ 677 $ 672
Property & Equipment
Furniture 1,464 1,924
Other Assets
Refundable Loan Commitment Fee
(See Note #10) 10,000 10,000
TOTAL ASSETS $12,141 $12,596
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $29,173 $25,373
Accrued Salaries 284,000 236,000
Accrued Interest Payable 25,230 22,500
Notes Payable 86,200 69,800
Total Current Liabilities 424,603 353,673
Stockholders Equity
Common Stock, Authorized:
100,000,000 Shares at $0.001 Par
Value: 20,877,723 Shares Issued
& Outstanding 20,877 20,877
Paid In Capital (Quasi-Reorganized
March 20, 1994 Deficit Retained
Earnings of $2,423,964 Eliminated) 596,942 596,942
Retained Earnings Deficit (1,030,281) (958,896)
Total Stockholders Equity (412,462) (341,077)
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $12,141 $12,596
</TABLE>
The accompanying notes are an integral part of these financial statements
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Operations
For the Period April 1, 1997 to June 30, 1997 Unaudited
and the Period April 1, 1996 to June 30, 1996 Unaudited
and the Period January 1, 1997 to June 30, 1997 Unaudited
and the Period January 1, 1996 to June 30, 1996 Unaudited
<CAPTION>
April April January January
1, 1997 1, 1996 1, 1997 1, 1996
to June to June to June to June
30, 1997 30, 1996 30, 1997 30, 1996
<S> <C> <C> <C> <C>
Revenues
Interest Income $ -0- $ -0- $ -0- $ 1
Total Revenues -0- -0- -0- 1
Expenses
Promotion $ -0- 2,500 -0- 2,500
Depreciation 230 230 460 460
Research & Development 8,500 25,950 40,000 54,451
Office Expense 1,779 3,906 3,150 6,747
Auto Expense 270 270 540 540
Salaries 4,500 4,500 9,000 9,000
Legal & Professional Fees 875 10,772 3,438 17,573
Rent 4,070 3,979 7,994 6,671
Interest Expense 2,791 1,759 5,275 3,301
Travel -0- 1,318 -0- 1,318
Stock Transfer 264 584 344 584
Consultant Fees (12,000) 7,450 -0- 13,250
Tax & License 1,184 496 1,184 490
Total Expenses 12,463 63,714 71,385 116,885
Loss for Period $(12,463) $(63,714) $(71,385)$(116,884)
Profit (Loss) Per Share (.00) (.00) (.00) (.00)
Weighted Average Shares
Outstanding 20,877,723 19,562,859 20,877,723 19,562,859
</TABLE>
The accompanying notes are an integral part of these financial statements
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Cash Flows Unaudited
For the Periods January 1, 1997
to
June 30, 1997 and
January 1, 1996 to June 30, 1996
<CAPTION>
June June
30, 1997 30, 1996
<S> <C> <C>
Cash Flows from Operating Activities
Net (Loss) $ (71,385) $(116,884)
Adjustments to Reconcile Net Loss to Net
Cash Used by Operations:
Depreciation 460 460
Changes in Operating Assets & Liabilities:
Increase in Accounts Payable 3,800 48,841
Increase in Interest Payable 2,730 2,730
Increase in Accrued Salaries 48,000 48,000
Net Cash Flows from
Operating Activities (16,395) (16,853)
Cash Flows from Investing
Activities -0- -0-
Net Cash Used by
Investing Activities -0- -0-
Cash Flows from Financing Activities
Increase in Notes Payable 16,400 17,050
Net Cash Flows Provided by
Financing Activities 16,400 17,050
Increase (Decrease) in Cash 5 197
Cash at Beginning of Period 672 712
Cash at End of Period $ 677 $ 909
Disclosure for Cash Flows from:
Interest $ 5,275 $ 3,301
Taxes -0- -0-
</TABLE>
The accompanying notes are an integral part of these financial statements
SANGUINE CORPORATION
Notes to Financial Statements
NOTE #1 - Statement Preparation
The Company has prepared the accompanying financial statements with
interim financial reporting requirements promulgated by the Securities &
Exchange Commission. The information furnished reflects all adjustments which
are, in the opinion of management, necessary for a fair presentation of
financial position and results of operations.
The financial statements should be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
1997 10-K report.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
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Plan of Operation.
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The Company has conducted all of its business operations through its
majority owned subsidiary, Sanguine Corporation, a California corporation
("Sanguine California"). Sanguine California is engaged in the development of
a synthetic red blood cell product called "PHER-O2." The development of this
product presently comprises its sole business operations. PHER-O2 is composed
of perfluoro-decalin molecules (i.e., synthetic red blood cells), purified
water and a proprietary, synthetic, fluorinated surfactant to hold the
emulsion together. Perfluoro-decalin has great oxygen-carrying capacity, yet
it can be as much as 900 times smaller than a red blood cell. Management
believes that PHER-O2 may carry three to four times the oxygen of human blood
per unit volume. This increased oxygen-carrying capacity may make PHER-O2
useful in the treatment of heart attacks, strokes, cancer and other diseases
for which increased oxygenation is beneficial. Furthermore, the Company
believes that perfluoro-decalin may be effective as an imaging agent in X-ray
imaging, nuclear magnetic resonance (NMR) imaging and CAT scans, without side
effects. Management also believes that PHER-O2 has several other advantages
over human blood: it can be sterilized to be free of disease; is believed to
have the quality of a universal match for all blood types; can be
mass-produced; and may be stored much longer than human blood.
Battelle Memorial Institute, through its Battelle Columbus
Operations ("Battelle"), was retained to assist the Company in completing the
emulsion of perfluoro-decalin and the synthetic surfactants that make up
PHER-O2; it is anticipated that on completion of the compounding of PHER-O2,
Battelle will perform initial gross animal tests, which do not require
regulatory approval prior to commencement; however, the data gathered from any
such tests will be subject to regulatory review in the future. The Company
anticipates that it will manufacture experimental doses of PHER-O2 required to
conduct gross animal testing.
It is anticipated that continued research and development of PHER-O2
will depend upon the Company's ability to obtain substantial additional equity
or debt funding, as to which no assurance can be given. See the captions
"Business Development," "Future Capital Requirements; Uncertainty of Future
Funding" and "Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts" of the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1996, which has previously
been filed with the Securities and Exchange Commission.
In its second phase of operations, management intends to continue
developing the perfluorocarbon compounds in PHER-O2 in order to optimize its
quality, and expects to begin animal safety and efficacy trials in accordance
with guidelines of the United States Food and Drug Administration ("FDA") and
comparable foreign regulatory requirements.
In the final phase of the Company's proposed business operations, it
intends to complete its United States testing of PHER-O2, receive all
necessary FDA approvals and begin American and Canadian sales for cancer
treatment and angioplasty; and complete overseas testing, begin overseas sales
and begin the construction of manufacturing facilities. Sanguine California
has previously licensed BioLogix Development Partners, an unaffiliated
California limited partnership, to manufacture and market PHER-O2 in Canada,
including any future Canadian patent rights, and the exclusive right to market
PHER-O2 in U.S. military pre-hospital markets. In this final phase, the
Company also intends to continue trials to test PHER-O2 for other
applications, including transplant organ preservation and the treatment of
carbon monoxide poisoning, sickle cell anemia, heart attack and stroke. The
Company will be required to conduct similar rigorous testing and clinical
trials of PHER-O2 for each desired application for which it is sought to be
used.
PHER-O2 is still in the research and development stage. It has not
been tested on animals or humans; nor has any application been submitted to
any federal, state or foreign agency to seek authority for such testing. This
development process will be time consuming, costly, subject to extreme
governmental regulation and must prove that this product is safe and
efficacious for human use. Until then, the Company will have no potential for
revenues from operations. No assurance can be given that the Company will be
able to raise the capital it will need to develop PHER-O2, or that if
sufficient funds are raised, the Company will ever receive requisite federal,
state or foreign agency approval to manufacture or market this product. See
the captions "Business Development," "Special Risk Factors," "Principal
Products or Services and their Markets," "Competition," "Patents, Trademarks,
Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts" and
"Governmental Approval of Principal Products or Services" of the Company's
Registration Statement on Form 10-SB-A1, which has previously been filed
with the Securities and Exchange Commission, and which is incorporated herein
by reference.
Results of Operations.
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During the quarterly period ending June 30, 1997, the Company's
only business operations were those of Sanguine California. During this
period, the Company received total revenues of $0 and sustained a net
loss of $12,463.
Liquidity.
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During the quarterly period ended June 30, 1997, the Company
had total expenses of $12,463, while receiving $0 in revenues.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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None; not applicable.
Item 2. Changes in Securities.
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None; not applicable.
Item 3. Defaults Upon Senior Securities.
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None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
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None; not applicable.
Item 5. Other Information.
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On April 16, 1997, the Company agreed to extend the due date on a
$25,000 note held by McPherson Enterprises Limited Partnership, to December
31, 1997, in consideration of the issuance of warrants to purchase a total of
90,000 shares of the Company's common stock at a price of $0.63 per share.
The warrants will expire on August 10, 1999.
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
10-SB-A1 Registration Statement.*
Form 10-KSB Annual Report for the
Fiscal Year ended December 31, 1996.*
(b) Reports on Form 8-K.
None.
* Incorporated herein by reference.
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 thereunto duly authorized.
SANGUINE CORPORATION
Date: 8/14/97 By:/s/Thomas C. Drees
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Thomas C. Drees, CEO and Chairman of
the Board of Directors
Date: 8/14/97 By:/s/Anthony G. Hargreaves
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Anthony G. Hargreaves
Vice President, Secretary/Treasurer
and Director
Date: 8/14/97 By:/s/Edward L. Kunkel
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Edward L. Kunkel, Esq.
Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000926287
<NAME> SANGUINE CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 677
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 677
<PP&E> 1464
<DEPRECIATION> 0
<TOTAL-ASSETS> 12141
<CURRENT-LIABILITIES> 424603
<BONDS> 0
0
0
<COMMON> 20877
<OTHER-SE> (433339)
<TOTAL-LIABILITY-AND-EQUITY> 12141
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12463
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2791
<INCOME-PRETAX> (12463)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12463)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
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