<PAGE>
U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB/A1
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------- ---------------
Commission File No. 0-24480
SANGUINE CORPORATION
(Name of Small Business Issuer in its Charter)
NEVADA 95-4347608
------ ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
101 East Green Street, #11
Pasadena, California 91105
---------------------------
(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
--- --- --- ---
<PAGE>
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, 2000
24,569,248
----------
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.
<PAGE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Balance Sheet
June 30, 2000 Unaudited & December 31, 1999
<CAPTION>
2000 1999
Assets
<S> <C> <C>
Current Assets
Cash $ 4,521 $ 1,062
Total Assets $ 4,521 $ 1,062
Liabilities & Stockholders' Equity
Current Liabilities
Accounts Payable $ 100,024 $ 78,680
Accrued Salaries 548,000 524,000
Accrued Interest Payable 45,258 38,880
Notes Payable 172,271 168,306
Total Current Liabilities 865,553 809,866
Stockholders' Equity
Common Stock, Authorized:
100,000,000 Shares at $0.001 Par Value:
24,569,248 & 23,162,994 Shares
Issued & Outstanding Respectively 24,569 23,163
Paid In Capital (Quasi-Reorganized
March 20, 1994 Deficit Retained
Earnings of $2,423,964 Eliminated) 1,227,438 877,444
Retained Earnings Deficit ( 2,113,039) (1,709,411)
Total Stockholders' Equity ( 861,032) ( 808,804)
Total Liabilities & Stockholders' Equity $ 4,521 $ 1,062
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Operations Unaudited
For the Period April 1, 2000 to June 30, 2000 and
the Period April 1, 1999 to June 30, 1999
For the Period January 1, 2000 to June 30, 2000
and the Period January 1, 1999 to June 30, 1999
<CAPTION>
April April January January
1, 2000 1, 1999 1, 2000 1, 1999
to June to June to June to June
30, 2000 30, 1999 30, 2000 30, 1999
<S> <C> <C> <C> <C>
Revenues $ -0- $ -0- $ -0- $ -0-
Total Revenues -0- -0- -0- -0-
Expenses
Promotion 3,805 4,226 3,805 4,226
Depreciation -0- -0- -0- 84
Research & Development 19,500 19,500 39,000 39,000
Office Expense 242 3,843 6,668 5,816
Auto Expense -0- 4,660 4,301 4,930
Salaries 4,500 4,500 9,000 9,000
Legal & Professional Fees 4,973 2,964 69,009 10,831
Rent 3,000 1,390 6,204 6,189
Interest Expense 3,178 5,074 25,118 9,956
Stock Transfer -0- -0- -0- 300
Tax & License 1,600 1,600 1,835 1,600
Travel 6,570 2,710 6,570 2,710
Insurance -0- 12,624 2,284 12,624
Consulting -0- -0- 267,500 -0-
Total Expenses 47,368 63,091 441,294 107,266
Loss for Period ($ 47,368) ($ 63,091)($441,294)($107,266)
Profit (Loss) Per Share ($ .00) ($ .00)($ .00)($ .00)
Weighted Average Shares
Outstanding 24,866,146 23,062,994 23,866,466 23,062,994
</TABLE>
<TABLE>
SANGUINE CORPORATION
(A Development Stage Company)
Statements of Cash Flows Unaudited
For the Periods January 1, 2000 to June 30, 2000
and January 1, 1999 to June 30, 1999
<CAPTION>
June June
30, 2000 30, 1999
<S> <C> <C>
Cash Flows from Operating Activities
Net (Loss) ($ 441,294) ($107,266)
Adjustments to Reconcile Net Loss to Net
Cash Used by Operations:
Depreciation -0- 84
Non Cash Expenses 334,688 -0-
Changes in Operating Assets & Liabilities:
(Decrease) Increase in Accounts Payable 51,721 33,038
Increase in Interest Payable 6,378 2,730
Increase in Accrued Salaries 48,000 48,000
Net Cash Flows from
Operating Activities ( 507) ( 23,414)
Cash Flows from Investing Activities
Net Cash Used by
Investing Activities -0- -0-
Cash Flows from Financing Activities
Increase in Notes Payable 3,966 14,096
Sale of Common Stock -0- 9,500
Net Cash Flows Provided by
Financing Activities 3,966 23,596
Increase (Decrease) in Cash 3,459 182
Cash at Beginning of Period 1,062 499
Cash at End of Period $ 4,521 $ 681
Disclosure for Cash Flows from:
Interest $ 2,730 $ 9,956
Taxes -0- -0-
</TABLE>
SANGUINE CORPORATION
Notes to Financial Statements
NOTE #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 issue 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).
NOTE #2 - Significant Accounting Policies
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period when
the goods are shipped to the customer.
C. The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Primary Earnings Per Share amounts are based on the weighted average
number of shares outstanding at the dates of the financial statements.
Fully Diluted Earnings Per Shares shall be shown on stock options and
other convertible issues that may be exercised within ten years of the
financial statement dates.
<PAGE>
SANGUINE CORPORATION
Notes to Financial Statements -Continued-
NOTE #2 - Significant Accounting Policies -Continued-
E. Inventories: Inventories are stated at the lower of cost, determined
by the FIFO method or market.
F. Depreciation: The cost of property and equipment is depreciated over
the estimated useful lives of the related assets. The cost of leasehold
improvements is depreciated (amortized) over the lesser of the length of
the related assets or the estimated lives of the assets. Depreciation
is computed on the straight line method for reporting purposes and for
tax purposes.
G. Estimates: The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could
differ from those estimates.
NOTE #3 - 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 1999 10-K
report.
NOTE #4 - Grant of Warrants
On June 8, 2000, the Company executed and delivered a Warrant Agreement (the
"Warrant Agreement") whereby it granted Westbury Consultancy Services Limited
("Westbury") warrants to acquire 12,000,000 shares of the Company's common
stock at an exercise price of $0.30 per share (the "Warrants"). The exercise
price was determined under the Warrant Agreement based upon 120% of the next
private or public offering of the Company, which was the private placement
conducted by it as reported in its 8-K Current Report dated September 1, 2000,
which has been previously filed with the Securities and Exchange Commission.
The minimum exercise price was $0.25 per share. In consideration of the grant
of the Warrants, Westbury agreed to provide the Company with services in the
areas of endorsing, sponsoring and finding joint venture partners or
affiliates to assist Sanguine in its research and development efforts of its
principal product, "PHER-O2," a synthetic red blood cell product. The average
bid price for the common stock of Company as quoted on the OTC Bulletin Board
of the National Association of Securities Dealers, Inc. (the "NASD") on the
date of the Warrant Agreement was $1.00. No value has been attributed to
these services for the quarter ended June 30, 2000, as the warrants were not
exercisable for a period of 90 days; however, there will be a recognition of
this transaction in the financial statements of the Company for the quarter
ended September 30, 2000.
NOTE #5 - Subsequent Events
The Company has entered into a Private Placement Offering Agreement with
Laidlaw Global Securities, Inc., the offering was closed on August 29, 2000.
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. Laidlaw was paid
$65,438.80 in sales commissions, plus accountable expenses of $8,188.19; it
was also granted warrants to acquire 10% of the number of units sold for $0.01
per warrant, or 163,597 units.
In addition to the $691,506 net proceeds after offering expenses expected to
be received on September 1, 2000, 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.
The purchasers of units on this offering had no prior notice of the granting
of the Westbury Warrants described in Note #4 above, and may have a right of
rescission of their purchase of the units; however, the Company has
subsequently advised these purchasers of all material information regarding
the Westbury Warrants, and anticipates receiving agreements signed by these
purchasers acknowledging that each has been privately offered the right to
rescind the purchase of these securities, together with applicable interest as
provided by law; that each desires to retain the ownership of the purchased
units; and that none wishes to accept the rescission offer.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
--------------------------------------------------------------------
Plan of Operation.
------------------
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, 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 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 June 30, 2000, 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 ($47,368).
Liquidity.
----------
During the quarterly period ended June 30, 2000, the Company
had total expenses of $47,368, while receiving $0 in revenues; compared to
the period ended June 30, 1999, the Company had total expenses of $63,091,
while receiving $0 in revenues.
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; an additional $691,506 net proceeds after
offering expenses was received on September 1, 2000,
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
----------------------------
None; not applicable.
Item 2. Changes in Securities and Use of Proceeds.
---------------------------------------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
------------------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
--------------------------------------------------------------
None; not applicable.
Item 5. Other Information.
----------------------------
On June 8, 2000, Sanguine executed and delivered a Warrant Agreement
(the "Warrant Agreement") whereby it granted Westbury Consultancy Services
Limited ("Westbury") warrants to acquire 12,000,000 shares of Sanguine's
common stock at an exercise price of $0.30 per share (the "Warrants"). The
exercise price was determined under the Warrant Agreement based upon 120% of
the next private or public offering of Sanguine, which was the private
placement conducted by Sanguine as reported in its 8-K Current Report dated
September 1, 2000, which has been previously filed with the Securities and
Exchange Commission and is incorporated herein by reference. See Item 7. The
minimum exercise price was $0.25 per share. In consideration of the grant of
the Warrants, Westbury agreed to provide Sanguine with services in the areas
of endorsing, sponsoring and finding joint venture partners or affiliates to
assist Sanguine in its research and development efforts of its principal
product, "PHER-O2," a synthetic red blood cell product. The average bid price
for the common stock of Sanguine as quoted on the OTC Bulletin Board of the
National Association of Securities Dealers, Inc. (the "NASD") on the date of
the Warrant Agreement was $1.00.
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.
See the 8-K Current Report dated September 1, 2000. See Item 7.
Item 6. Exhibits and Reports on Form 8-K.
-------------------------------------------
(a) Exhibits.
10-SB-A1 Registration Statement.*
Form 10-KSB Annual Report for the
Fiscal Year ended December 31, 1998.*
Form 10-KSB Annual Report for the
Fiscal Year ended December 31, 1999.*
(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: 10/31/00 By:/s/Thomas C. Drees
---------- -------------------------------------
Thomas C. Drees, CEO, President and
Chairman of the Board of Directors
Date: 10/31/00 By:/s/Anthony G. Hargreaves
---------- -------------------------------------
Anthony G. Hargreaves
Vice President, Secretary/Treasurer
and Director
Date: 10/31/00 By:/s/David E. Nelson
---------- -------------------------------------
David E. Nelson
CFO and Director
