<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, 2000
[ ] 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, 2000
27,881,188
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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)
Index to Financial Statements
Page
Balance sheet, September 30, 2000 (unaudited) F-1
Statement of operations for the three
months and nine months ended September 30,
2000 and 1999 (unaudited) and for the
period from January 18, 1989 (date of
inception) to September 30, 2000 (unaudited) F-2
Statement of cash flows for the nine months
ended September 30, 2000 and 1999 (unaudited)
and for the period from January 18, 1989
(date of inception) to September 30, 2000 (unaudited) F-3
Notes to financial statements F-5
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<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Balance Sheet
September 30, 2000 (Unaudited)
<S> <C>
Assets
Current assets:
Cash $660,374
Total assets $660,374
Liabilities and Stockholders' Deficit
Current liabilities:
Related party accounts payable $129,394
Accrued salaries 569,000
Accrued interest payable 51,949
Deferred revenue 83,875
Notes payable 258,271
Total current liabilities 1,092,489
Stockholders' deficit:
Common stock - par value $.001 per share.
Authorized 100,000,000 shares; issued
and outstanding 27,881,188 shares 27,881
Additional paid-in capital (Quasi-
reorganized March 20, 1994 deficit
retained earnings of $2,423,964
eliminated) 1,835,547
Deficit accumulated during the
development stage (2,295,543)
Total stockholders' deficit (432,115)
Total liabilities and stockholders'
deficit $660,374
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statement of Operations (Unaudited)
<CAPTION>
Cumulative
Three Months Ended Nine Months Ended Amounts
September 30, September 30, From
2000 1999 2000 1999 Inception
<S> <C> <C> <C> <C> <C>
Revenue $ 7,625 $ - $ 7,625 $ - $162,467
Expenses:
Promotion - 12,965 3,805 17,191 55,899
Depreciation - - - 84 4,609
Research &
Development 16,800 19,500 55,800 58,500 921,605
Office expense 2,171 4,193 8,840 12,724 102,093
Auto expense 2,091 2,905 6,392 7,836 33,311
Salaries 8,500 4,500 17,500 13,500 129,608
Legal & Professional
fees 8,445 6,616 77,454 17,447 218,685
Rent 3,356 3,155 9,560 9,344 108,351
Interest expense 6,691 5,425 31,809 15,382 101,636
Stock transfer - - - 300 4,829
Taxes & License 4,537 80 6,372 1,673 31,667
Travel 5,707 - 12,277 - 33,002
Insurance 2,165 6,158 4,448 18,782 26,471
Consulting 92,000 - 359,500 - 657,020
Bad debt - - - - 10,000
Finder fees - - - - 7,825
Total expenses 152,463 65,497 593,757 172,763 2,446,611
Loss before income
taxes (144,838) (65,497) (586,132) (172,763) (2,284,144)
Income tax expense - - - - -
Net loss $(144,838)$(65,497)$(586,132)$(172,763)$(2,284,144)
Loss per share $ (.01)$ - $ (.02)$ (.01)$ (.17)
Weighted average
number of shares
outstanding 25,256,445 23,067,994 24,106,461 23,067,994 13,162,766
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statement of Cash Flows (Unaudited)
<CAPTION>
Cumulative
Nine Months Ended Amounts
September 30, From
2000 1999 Inception
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(586,132) $(172,763) $(2,295,543)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation - 84 4,609
Non cash expenses 419,500 - 857,302
Changes in operating asset & liabilities:
(Decrease) increase in accounts payable 50,714 62,225 129,394
Increase in interest payable 13,069 4,095 51,949
Increase in accrued salaries 45,000 72,000 569,000
Increase in deferred reveune 83,875 - 83,875
Net cash provided by (used in)
operating activities (26,026) (34,359) (599,414)
Cash flows from investing activities -
purchase of equipment - - (4,609)
Net cash used in
investing activities - - (4,609)
Cash flows from financing activities:
Net (payment on) proceeds from
notes payable (2,035) 25,356 166,271
Sales of common stock 635,321 9,500 1,097,376
Contributed capital - - 750
Net cash provided by
financing activities 633,286 34,856 1,264,397
Net increase (decrease) in cash 659,312 497 660,374
Cash, beginning of period 1,062 499 -
Cash, end of period $660,374 $ 996 $660,374
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statement of Cash Flows (Unaudited)
Continued
<CAPTION>
Cumulative
Nine Months Ended Amounts
September 30, From
2000 1999 Inception
<S> <C> <C> <C>
Supplemental disclosure of cash flow
information:
Interest paid $ - $15,382 $86,573
Income taxes paid $ - $ - $ -
</TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Notes to Financial Statements
September 30, 2000
1. Corporate History
The Company was incorporated January 27, 1974, in the
State of Utah, using the name Sight and Sound Systems,
Inc. On July 8, 1974, the Company changed its name to
International Health Resorts, Inc., and on June 25,
1993, the Company filed a Certificate of Amendment
changing the name to Sanguine Corporation. In May of
1992, the Company changed its domicile to the State of
Nevada.
The stated purpose of the Company is to engage without
qualification, in any lawful acts, or activity for
which a corporation may be organized under the laws of
the state of Nevada. Currently, the Company is
engaged in developing artificial blood to be used by
the medical profession. The company is conducting
research and development leading to F.D.A. clinical
trials.
The Company forward split its outstanding shares 1.5
shares for 1 on July 14, 1993. As a consequence of
this action, the Company had 1,431,000 shares issued
and outstanding prior to the Agreement and Plan of
Reorganization in which Sanguine Corporation (a
California Corporation) was acquired.
On June 14, 1993, the Company entered into an
Agreement and Plan of Reorganization, wherein it was
agreed that Sanguine Corporation (a Nevada
Corporation) would issued 14,589,775 shares of its
common stock to acquire 94% of the issued and
outstanding shares of stock of Sanguine Corporation (a
California Corporation).
From 1974 to 1989, the Company engaged in several
business ventures. These business activities resulted
in the loss of all Company assets. Because of the
search for a new business venture, the Company has
entered into the "development stage company" status
again. Sanguine Corporation (California) is a
development stage company and these financial
statements are presented as those of a development
stage company effective January 18, 1989, coinciding
with the incorporation date of Sanguine Corporation
(California).
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2. Statement Preparation
The Company has prepared the accompanying financial
statements with interim financial reporting
requirements promulgated by the Securities and
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.
Certain information and footnote disclosures normally
included in financial statements prepared in
accordance with generally accepted accounting
principles have been condensed or omitted. It is
suggested that these condensed financial statements be
read in conjunction with the financial statements and
notes thereto included in the Company's December 31,
1999 Annual Report on Form 10-KSB. The results of
operations for the period ended September 30, 2000 are
not necessarily indicative of the operating results
for the full year.
3. Deferred Revenue
During the period ended September 30, 2000, the Company received
$91,500 for the sale of the rights to represent the Company and to
receive a 1% royalty on sales in Greece for a period of three years.
Accordingly, the revenue associated with this agreement will be
recognized over the three year term. As of September 30, 2000, a
balance of $83,875 remained in deferred revenue.
4. Related Party Loan
During the period ended September 30, 2000, the Company retained
Starpoint Procurement Company as a marketing and joint venture
corporate advisor in exchange for $92,000. The payment of $92,000
was made by an officer of the Company and is therefore reflected as
a note payable at September 30, 2000.
5. Private Placement
During September 2000, the Company closed a Private Placement
Offering Agreement with Laidlaw Global Securities, Inc. The
amount of securities subscribed for and accepted was
$817,985 for 1,635,970 units. Each unit consists of
two shares of common stock at $0.001 par value per
share, and one redeemable common stock purchase
warrant entitling the holder to purchase one share of
common stock. The warrants are exercisable at $0.40
per share and expire on August 29, 2004. Net proceeds
received after offering expenses was $611,421.
6. Subsequent Event
In June 2000, the Company entered into an agreement to grant
warrants to purchase twelve million shares of common stock at an
exercise price of $0.30 in relation to consulting services. The
warrant grant was approved by the board of directors on November 10,
2000, and amended to reduce the exercise period from five years to
one year after the registration of such warrants. In addition, the
exercise price was reduced from $0.30 per share to $0.25 per share.
A significant expense of approximately $4.5 million related to the
grant of these warrants will be recorded in the fourth quarter when
the grant was approved by the board of directors.
<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 second generationn 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.
It is anticipated that on completion of the compounding of PHER-O2,
the Company, through a subcontractor, 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 calendar year ended December 31, 1999, which has previously been filed
with the Securities and Exchange Commission and is incorporated herein. A
portion of the funds derived from its recent private placement that was
completed on August 29, 2000, will also be utilized for this research and
development.
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 blood
transfusions, 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.
----------------------
During the quarterly period ending September 30, 2000, the Company's
only business operations were those of Sanguine California. During this
period, the Company received total revenues of $7,625 from the sale of rights
to represent the Company and receive a 1% royalty on sales in Greece for three
years and sustained a net loss of ($144,838).
Liquidity.
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During the quarterly period ended September 30, 2000, the Company
had total expenses of $152,463, while receiving $7,625 in revenues; compared
to the period ended September 30, 1999, the Company had total expenses of
$65,497, while receiving $0 in revenues.
The Company as of September 30, 2000, had $660,374 in cash, with
$1,092,489 in current liabilities.
The Company received $91,500 on August 3, 2000, for the sale of the
rights to represent the Company and to receive a 1% royalty on sales in Greece
for a period of three years; and an additional $691,506 net proceeds after
a private offering, less expenses was received on September 1, 2000.
During the period ended September 30, 2000, the Company retained
Starpoint Procurement Company as a marketing and joint venture corporate
advisor in exchange for $92,000. The payment of $92,000 was made by an
officer of the Company and is therefore reflected as a note payable at
September 30, 2000.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
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None; not applicable.
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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The Company recently completed a private placement of units that was
closed on August 29, 2000. The amount of securities subscribed for and
accepted was $817,985 for 1,635,970 units. Each unit consisted of two shares
of common stock at $0.001 par value per share, and one redeemable common stock
purchase warrant entitling the holder to purchase one share of common stock.
The warrants are exercisable at $0.40 per share and expire on August 29, 2004.
An 8-K Current Report dated September 1, 2000, regarding the offer and sale of
these securities has been filed with the Securities and Exchange Commission
and is incorporated herein by reference.
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, 1999.*
(b) Reports on Form 8-K.
8-K dated June 8, 2000.*
8-K dated September 1, 2000.*
8-K dated September 18, 2000.*
* 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: 11/20/00 By:/s/Thomas C. Drees
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Thomas C. Drees, CEO, President and
Chairman of the Board of Directors
Date: 11/20/00 By:/s/Anthony G. Hargreaves
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Anthony G. Hargreaves
Vice President, Secretary/Treasurer
and Director
Date: 11/20/00 By:/s/David E. Nelson
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David E. Nelson
CFO and Director
