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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 September 30, 1998
[ ] 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: (626) 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:
November 13, 1998
23,018,217
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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
September 30, 1998
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SANGUINE CORPORATION
(A Development Stage Company)
Balance Sheet
September 30, 1998 Unaudited & December 31, 1997
September December
30, 1998 31, 1997
ASSETS
<S> <C> <C>
Current Assets
Cash $ 712 $ 263
Property & Equipment
Furniture 314 1,004
TOTAL ASSETS $ 1,026 $ 1,267
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ 27,973 $ 35,562
Accrued Salaries 404,000 332,000
Accrued Interest Payable 32,055 27,960
Notes Payable 125,650 103,700
Total Current Liabilities 589,678 499,222
Stockholders' Equity
Common Stock, Authorized:
100,000,000 Shares at $0.001 Par Value:
22,408,217 & 20,977,723 Shares Issued
& Outstanding Respectively 22,408 20,977
Paid In Capital 771,936 606,176
Retained Earnings Deficit ( 1,382,996) ( 1,125,108)
Total Stockholders'
Equity ( 588,652) ( 497,955)
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 1,026 $ 1,267
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Operations
For the Period July 1, 1998 to September 30, 1998 Unaudited
and the Period July 1, 1997 to September 30, 1997 Unaudited
and the Period January 1, 1998 to September 30, 1998 Unaudited
and the Period January 1, 1997 to September 30, 1997 Unaudited
<CAPTION>
July July January January
1, 1998 to 1, 1997 to 1, 1998 to 1, 1997 to
September September September September
30, 1998 30, 1997 30, 1998 30, 1997
<S> <C> <C> <C> <C>
Revenues
Interest Income $ -0- $ -0- $ -0- $ -0-
Total Revenues -0- -0- -0- -0-
Expenses
Promotion -0- -0- -0- -0-
Depreciation 230 230 690 690
Salaries 4,500 4,500 13,500 13,500
Research & Development 19,500 19,500 118,500 59,500
Office Expense 3,148 2,133 7,752 6,126
Auto Expense 270 270 720 810
Legal & Professional Fees 2,510 6,877 26,001 10,315
Rent 3,199 3,207 12,797 11,201
Interest Expense 4,301 2,479 12,202 6,837
Stock Transfer 25 48 522 392
Consultant Fees 60,000 -0- 63,710 -0-
Tax & License 70 -0- 1,168 1,184
Insurance 47 200 327 532
Total Expenses 97,800 39,444 257,889 111,087
Loss for Period ($ 97,800) ($39,444) ($ 257,889) ($ 111,087)
Profit (Loss) Per Share ($ .00) ($ .00) ($ .01) ($ .01)
Weighted Average Shares
Outstanding 22,408,217 20,877,723 22,408,217 20,877,723
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Cash Flows Unaudited
For the Periods January 1, 1998 to September 30, 1998 Unaudited and
January 1, 1997 to September 30, 1997 Unaudited
<CAPTION>
September September
30, 1998 30, 1997
<S> <C> <C>
Cash Flows from Operating Activities
Net (Loss) ($ 257,889) ($ 111,087)
Adjustments to Reconcile Net Loss to Net
Cash Used by Operations:
Depreciation 690 690
Non-Cash Expenses 60,000 -0-
Changes in Operating Assets & Liabilities:
(Decrease) Increase in Accounts Payable ( 4,830) 8,165
Increase in Interest Payable 4,095 4,095
Increase in Accrued Salaries 72,000 72,000
Net Cash Flows from Operating Activities ( 125,934) ( 26,137)
Cash Flows from Investing Activities -0- -0-
Net Cash Used by Investing Activities -0- -0-
Cash Flows from Financing Activities
Increase in Notes Payable 21,950 27,150
Sale of Common Stock 104,433 -0-
Net Cash Flows Provided by Financing Activities 126,383 27,150
Increase (Decrease) in Cash 449 1,013
Cash at Beginning of Period 263 672
Cash at End of Period $ 712 $ 1,685
Disclosure for Cash Flows from:
Interest $ 12,202 $ 6,837
Taxes -0- -0-
Non-Cash Expenses
Issued 600,000 Shares at $0.10 Per Share For Services 60,000 -0-
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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.
NOTE #2 - Sale of Shares of Common Stock
Pursuant to a Shares Purchase Agreement dated June 16, 1998, and Amended as of
October 21, 1998, the Company sold 600,000 shares of common stock at $0.10 per
share to fund the Initial Protocol with Battelle Memorial Research Institute
of Columbus, Ohio.
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, 1997, 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 September 30, 1998, 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 $97,800.
Liquidity.
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During the quarterly period ended September 30, 1998, the Company
had total expenses of $97,800, while receiving $0 in revenues.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
- - ----------------------------
There have been no material changes in the pending litigation with
H. J. Nicholas, Utah Third District Court Case No. 980901388, as described in
Part I, Item 3, of the Company's Annual Report on 10-KSB for the year ended
December 31, 1997, which was filed with the Securities and Exchange Commission
on April 15, 1998. See the Exhibit Index, Item 6 of this Report.
Item 2. Changes in Securities and Use of Proceeds.
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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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Effective March 20, 1998, the Board of Directors adopted a
resolution to issue 240,000 "unregistered" and "restricted" shares of the
Company's common stock to A. Smith & Associates, Inc. and/or Smith Consulting
Services, Inc., in consideration for expenses paid for and on behalf of the
Company amounting to approximately $60,000.
On June 17, 1998, the Company entered into an Agreement with
Battelle Memorial Institute to provide to the Company technical and research
services regarding the preparation and evaluation of fluorocarbon emulsions
for use as oxygen-carrying blood substitutes. The Agreement provides for
Battelle to begin work within 30 days after receipt of the first payment of
$60,000 and for four more payments of $60,000 due within 30 days of
presentation of Battelle's invoice. The first payment was made on June 18,
1998.
On October 14, 1998, 10,000 shares of "unregistered" and "restricted"
common stock were issued to Tyler Zwick; and on October 18, 1998, 8,000 shares
of "unregistered" and "restricted" common stock were issued to Robert J.
Ganzhorn and Ruth B. Ganzhorn.
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, 1997.*
(b) Reports on Form 8-K.
8-K Current Report dated November 4, 1998 and filed
with the Securities and Exchange Commission on November 10,
1998.*
* 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: 11/13/98 By:/s/Thomas C. Drees
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Thomas C. Drees, CEO, President and
Chairman of the Board of Directors
Date: 11/13/98 By:/s/Anthony G. Hargreaves
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Anthony G. Hargreaves
Vice President, Secretary/Treasurer
and Director
Date: 11/16/98 By:/s/David E. Nelson
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David E. Nelson
CFO and Director
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<NAME> SANGUINE CORPORATION
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