<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 September 30, 1999
[ ] 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:
September 30, 1999
23,162,994
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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, 1999
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<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Balance Sheet
September 30, 1999 Unaudited & December 31, 1998
<CAPTION>
September December
30, 1999 31, 1998
ASSETS
<S> <C> <C>
Current Assets
Cash $ 996 $ 499
Property & Equipment
Furniture -0- 84
TOTAL ASSETS $ 996 $ 583
LIABILITIES & STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable $ 66,379 $ 14,154
Accrued Salaries 500,000 428,000
Accrued Interest Payable 37,515 33,420
Notes Payable 160,806 135,450
Total Current Liabilities 764,700 611,024
Stockholders Equity
Common Stock, Authorized:
100,000,000 Shares at $0.001 Par Value:
23,162,994 & 23,010,217 Shares
Issued & Outstanding Respectively 23,162 23,010
Paid In Capital (Quasi-Reorganized
March 20, 1994 Deficit Retained
Earnings of $2,423,964 Eliminated) 877,444 858,096
Retained Earnings Deficit (1,664,310) (1,491,547)
Total Stockholders Equity ( 763,704) ( 610,441)
TOTAL LIABILITIES &
STOCKHOLDERS EQUITY $ 996 $ 583
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Operations
For the Period July 1, 1999 to September 30, 1999 Unaudited
and the Period July 1, 1998 to September 30, 1998 Unaudited
and the Period January 1, 1999 to September 30, 1999 Unaudited
and the Period January 1, 1998 to September 30, 1998 Unaudited
<CAPTION>
July July January January
1, 1999 to 1, 1998 to 1, 1999 to 1, 1998 to
September September September September
30, 1999 30, 1998 30, 1999 30, 1998
<S> <C> <C> <C> <C>
Revenues
Interest Income $ -0- $ -0- $ -0- $ -0-
Total Revenues -0- -0- -0- -0-
Expenses
Promotion 12,965 -0- 17,191 -0-
Depreciation -0- 230 84 690
Salaries 4,500 4,500 13,500 13,500
Research & Development 19,500 19,500 58,500 118,500
Office Expense 4,193 3,148 12,724 7,752
Auto Expense 2,905 270 7,836 720
Legal & Professional Fees 6,616 2,510 17,447 26,001
Rent 3,155 3,199 9,344 12,797
Interest Expense 5,425 4,301 15,382 12,202
Stock Transfer -0- 25 300 522
Consultant Fees -0- 60,000 -0- 63,710
Tax & License 80 70 1,673 1,168
Insurance 6,158 47 18,782 327
Total Expenses 65,497 97,800 172,763 257,889
Loss for Period ($ 65,497) ($ 97,800) ($ 172,763) ($257,889)
Profit (Loss) Per Share ($0.00) ($0.00) ($0.01) ($0.01)
Weighted Average Shares
Outstanding 23,067,994 22,408,217 23,067,994 22,408,217
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Cash Flows Unaudited
For the Periods January 1, 1999 to September 30, 1999 Unaudited and
January 1, 1998 to September 30, 1998 Unaudited
<CAPTION>
September September
30, 1999 30, 1998
<S> <C> <C>
Cash Flows from Operating Activities
Net (Loss) ($172,763)($257,889)
Adjustments to Reconcile Net Loss to Net
Cash Used by Operations:
Depreciation 84 690
Non-Cash Expenses -0- 60,000
Changes in Operating Assets & Liabilities:
(Decrease) Increase in Accounts Payable 62,225 ( 4,830)
Increase in Interest Payable 4,095 4,095
Increase in Accrued Salaries 72,000 72,000
Net Cash Flows from Operating Activities ( 34,359) (125,934)
Cash Flows from Investing Activities -0- -0-
Net Cash Used by Investing Activities -0- -0-
Cash Flows from Financing Activities
Increase in Notes Payable 25,356 21,950
Sale of Common Stock 9,500 104,433
Net Cash Flows Provided by
Financing Activities 34,856 126,383
Increase (Decrease) in Cash 497 449
Cash at Beginning of Period 499 263
Cash at End of Period $ 996 $ 712
Disclosure for Cash Flows from:
Interest $ 15,382 $ 12,202
Taxes -0- -0-
Non-Cash Expenses
Issued 600,000 Shares at $0.10 Per Share For
Services 60,000
Issued 100,000 Shares at $0.10 Per Share for
Satisfaction of Accounts Payable 10,000
</TABLE>
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 1998 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.
Battelle is not conducting any research and development activities
pending receipt of further funding from the Company. 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 calendar year ended
December 31, 1998, 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, 1999, 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 ($65,497).
Liquidity.
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During the quarterly period ended September 30, 1999, the Company
had total expenses of $65,497, while receiving $0 in revenues.
Year 2000
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The use of computer programs that rely on two-digit date codes to
perform computations or decision-making functions has become widespread. Many
of these programs may fail as a result of their inability to properly
interpret date codes beginning on January 1, 2000. For example, such programs
may interpret the year code "00" as the year 1900 rather than 2000.
The Company has ceased its research and development activities
pending the receipt of the additional funding required by Battelle. At
present, the Company's computer operations are limited to word processing,
which is not highly susceptible to Year 2000 issues. However, the Company can
provide no assurance that the systems of other entities such as banks and
utilities will be modified on a timely basis, or that such an entity's failure
to properly modify its systems will not have an adverse effect on the Company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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On April 15, 1999, the parties filed a Joint Motion to Dismiss the
litigation with H. J. Nicholas, Utah Third District Court Case No. 980901388,
on the terms described in Part I, Item 3, of the Company's Annual Report on
10-KSB for the year ended December 31, 1998, which was filed with the
Securities and Exchange Commission on April 15, 1999. See the Exhibit Index,
Item 6 of this Report. The Court entered its Order of Dismissal on April 15,
1999.
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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None; not applicable.
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, 1998.*
(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: 11/5/99 By:/s/Thomas C. Drees
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Thomas C. Drees, CEO, President and
Chairman of the Board of Directors
Date: 11/5/99 By:/s/Anthony G. Hargreaves
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Anthony G. Hargreaves
Vice President, Secretary/Treasurer
and Director
Date: 11/9/99 By:/s/David E. Nelson
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David E. Nelson
CFO and Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000926287
<NAME> SANGUINE CORPORATION
<S> <C>
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<PERIOD-END> SEP-30-1999
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