As filed with the Securities and Exchange Commission on October 31, 2000. Registration No. . ------ ============================================================================== U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SANGUINE CORPORATION -------------------------------------------- (Name of small business issuer in its charter) Nevada 2835 95-4347608 ------ ---- ---------- (State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.) 101 East Green Street, #11 Pasadena, California 91105 (626) 405-0079 -------------- (Address and telephone number of principal executive offices) 101 East Green Street, #11 Pasadena, California 91105 -------------------------- (Address of principal place of business or intended principal place of business) Thomas C. Drees, Ph.D. 101 East Green Street, #11 Pasadena, California 91105 -------------------------- (Name, address and telephone number of agent for service) Copies to: Branden T. Burningham, Esq. 455 East 500 South, Suite 205 Salt Lake City, Utah 84111 (801) 363-7411 Approximate date of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] If this Form is a post effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering [_] If this Form is a post effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering [_] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] ============================================================================== CALCULATION OF REGISTRATION FEE Title of Each Proposed Proposed Class of Maximum Maximum Securities Amount of Offering Aggregate Amount of to be shares to be Price per Offering Registration Registered Registered Share (1) Price (1) Fee ---------- ---------- --------- --------- --- Common Stock(2) 17,498,701 $0.4375 $7,655,681 $2,128.28 ============================================================================== (1) Estimated solely for the purpose of calculating the registration fee under Rule 457(c) under the Securities Act on the basis of the average of the bid and asked price of our common stock as quoted on the OTC Electronic Bulletin Board on June 15, 2000. (2) Includes 3,271,940 shares of common stock that comprised a portion of certain units sold to "accredited investors" (the "Units"); 1,635,970 shares of common stock underlying certain warrants (the "Warrants")that comprised a portion of the Units; 327,194 shares of common stock that have been optioned to the placement agent on this offering; 163,597 shares of common stock underlying certain Warrants granted to the placement agent on this offering; and 12,000,000 shares of common stock underlying certain other Warrants. See the heading "Business Development" of the caption "Description of Business," and the captions "Selling Security Holders" and "Description of Securities." THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

SANGUINE CORPORATION 17,498,701 Shares of Common Stock This prospectus covers an aggregate of 17,498,701 shares of our common stock, 13,799,956 of which underlie warrants that we have granted to certain of these stockholders and one additional stockholder, Westbury Consultancy Services Limited. This prospectus has been filed with the Securities and Exchange Commission as part of a registration statement that you may examine in the Commission's EDGAR Archives at www.sec.gov. See the caption "Available Information"; the heading "Business Development" of the caption "Description of Business"; and the captions "Selling Security Holders" and "Description of Securities." Our common stock is quoted on the OTC Bulletin Board of the National Association of Securities Dealers, Inc.(the "NASD") under the symbol "SGNC." On October 31, 2000, the average bid price of our common stock as quoted on the OTC Bulletin Board was $0.4375. See the caption "Market for Common Equity and Related Stockholder Matters." These securities involve a high degree of risk. See the caption "Risk Factors," beginning on page 3 of this prospectus. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the prospectus. Any representation to the contrary is a criminal offense. The date of this prospectus is __________, 2000. 1

TABLE OF CONTENTS Prospectus Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Forward-Looking Information . . . . . . . . . . . . . . . . . . . . . . 6 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Determination of Offering Price and Dilution. . . . . . . . . . . . . . 7 Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . .7 Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . .8 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Directors, Executive Officers, Promoters and Control Persons . . . . . 11 Security Ownership of Certain Beneficial Owners and Management . . . . 13 Description of Securities . . . . . . . . . . . . . . . . . . . . . . .15 Interest of Named Experts and Counsel . . . . . . . . . . . . . . . . .17 Disclosure of Commission Position on Indemnification for Securities . .17 Act Liabilities Description of Business . . . . . . . . . . . . . . . . . . . . . . . 19 Management's Discussion and Analysis or Plan of Operation . . . . . . .27 Description of Property . . . . . . . . . . . . . . . . . . . . . . . .29 Certain Relationships and Related Transactions . . . . . . . . . . . . 30 Market for Common Equity and Related Stockholder Matters . . . . . . . 31 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . 32 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 36 Changes in and Disagreements with Accountants on Accounting and . . . .79 Financial Disclosure Available Information . . . . . . . . . . . . . . . . . . . . . . . . .79 Dealer Prospectus Delivery Obligations . . . . . . . . . . . . . . . . 79 2

PROSPECTUS SUMMARY SANGUINE CORPORATION -------------------- The Company ----------- You should carefully read our entire prospectus and consolidated financial statements and related notes. Unless the context requires otherwise, "we," "us," "our" and similar terms, as well as references to "Sanguine," refer to Sanguine Corporation, a Nevada corporation, and its 94% owned subsidiary, Sanguine Corporation, a California corporation. We are engaged in the development of a synthetic red blood cell product called "PHER-O2." Our product is in the research and development stage. No government has approved its use or the testing of its efficacy. We have never sold any PHER-O2. We have generated only limited revenues from the sale of licenses or rights to market PHER-O2 if it ever proves to be useful and its use is approved. Our offices, consisting of approximately 970 square feet of office space, are located at 101 East Green Street, #11, Pasadena, California 91105. Our telephone number is (626) 405-0079. The Offering ------------ Securities offered by us . . . None Securities that may be sold by our stockholders . . . . . . 17,498,701 shares of our common stock, including 13,799,956 shares that underlie outstanding Warrants. Use of proceeds . . . . . . . . We will not receive any money from the selling stockholders when they sell shares of our common stock; however, we may receive up to $4,229,847 from the exercise of the outstanding Warrants. See the caption "Use of Proceeds." Offering Price . . . . . . . . .Market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices or at fixed prices, all of which may change. Transfer Agent . . . . . . . . .Colonial Stock Transfer, 455 East 400 South, Suite #100, Salt Lake City, Utah 84111, serves as the transfer agent and registrar for our outstanding securities. We have agreed to pay all costs and expenses relating to the registration of our common stock, with the exception that Westbury will pay $15,000 towards the legal fees for the preparation and filing of the registration statement of which this prospectus is a part, and the selling stockholders will be responsible for any related commissions, taxes, attorney's fees and related charges relating to the offer or sale of these securities. The selling stockholders may sell their common stock through one or more broker/dealers, and these broker/dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the selling stockholders as they shall agree. See the captions "Plan of Distribution" and "Description of Securities." 3

RISK FACTORS ------------ Our present and intended business operations are highly speculative and involve substantial risks. Only investors who can bear the risk of losing their entire investment should consider buying our shares. Among the risk factors that you should consider are the following: General Risks Related To Our Business. -------------------------------------- If we do not meet our research and development goals or obtain regulatory approvals, our business will fail. ---------------------------------- We have not received any revenues from the sale of our only product, PHER-O2. Our ability to sell our product will depend on our ability to successfully develop, obtain regulatory approval for, manufacture and market it. No one has performed any tests of any kind on PHER-O2. In addition, it takes a long, uncertain amount of time to achieve regulatory approval and market success. Our product will require significant additional research and development, and extensive preclinical and clinical testing, before we will be able to obtain United States Food and Drug Administration approval for any use, if at all. We can not assure you that: our research and development activities will be successful; our product will prove to be safe or effective in any testing or trials that are conducted; we will obtain FDA approval; we will be able to manufacture our product at a cost that will make it commercially viable; or if and when it receives any approval, we will be able to market it successfully. See the caption "Financial Statements." If we do not receive additional funding, we will not be able to develop our product. ------------ We have limited operating capital. We estimate that we will need about $20,000,000 to develop our product through the anticipated FDA and comparable foreign agency approval. See the heading "Plan of Operation" of the caption "Management's Discussion and Analysis or Plan of Operation." We will need to raise these funds through equity or debt offerings, which will be very difficult for such a highly speculative enterprise. $4,229,847 of these funds may be available to us if the Warrants are exercised, but any exercise of these Warrants will depend upon the market price for our common stock being substantially higher than the exercise prices of the Warrants. We can not assure you that we will be able to get the required funding or that any funding will be on terms satisfactory to us. This funding may also cause substantial dilution to our existing stockholders. If we do not get the required funding, we believe that we will be unable to develop our product for its intended uses, and our business will fail. We face substantial governmental regulation and product approval requirements. ------------- We will face extensive regulation by several governmental authorities in the United States and foreign countries. These regulations will affect our research and development activities, as well as preclinical and clinical trials, manufacturing and marketing of our product. All trials, manufacturing and marketing of our product will have to undergo the rigorous testing and approval processes of the FDA and corresponding foreign regulatory bodies. Each clinical trial must be conducted under the auspices of an Independent Review Board, which will consider, among other factors: ethical considerations; the safety of human subjects; and the possible liability of the institution. The regulatory process, which includes pre-clinical, clinical and post- clinical testing of the product to establish its safety and efficacy, can take many years and require the expenditure of large amounts of money. Data obtained from these trials is always subject to varying interpretations, all of which can extend the process, or result in limited or denied approval. Regulations often change during the approval process, and these changes can cause further delay and additional expense, and may prohibit approval. We may encounter similar problems in foreign countries. We can not assure you that we will get regulatory approval even after spending this time and money. Even we do obtain it, we can not guarantee that we will be able to commercially and economically market the product. Even if we get approval, our product and facilities will face continual review and periodic inspections. The subsequent discovery of previously unknown problems with the product, the manufacturer or its facilities may result in further restrictions on the product or the manufacturer, and may include withdrawal of the product from the market. If we fail to adhere to the stringent governmental regulations, we may also receive fines, suspensions of regulatory approval, product recalls, operating restrictions and criminal prosecution of our principals. See the heading "Governmental Approval of Principal Products or Services" of the caption "Description of Business." Because we do not have patent protection, we may lose business to competitors with similar technologies. -------------------------------------- We have no patents on our product, and have filed only one United States patent application and one foreign patent application. We can not assure you that we will be able to prove our product to be efficacious and to obtain any required governmental approvals during the life of any patent or any extensions of any patent that may be granted. Patents offer some protection for products, but they are generally highly uncertain and involve complex legal and factual questions. To date, no consistent policy has emerged as to the breadth of claims allowed in biotechnology patents. We can not guarantee that any patent will protect us against competitors with similar technologies or who develop similar technologies. See the heading "Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts" of the caption "Description of Business." If we are unable to compete with larger competitors, our business will fail. ----- If it is proved efficacious for its intended uses and approved for use by the FDA or any corresponding foreign agencies, PHER-O2 will compete directly with established therapies for blood loss. Patients whose oxygen-carrying ability has been significantly depleted by blood loss frequently receive transfusions of red blood cells. Patients who have suffered more moderate blood loss can be treated with various intravenous solutions, such as saline or human serum albumin, which replace the volume of blood lost, but not its oxygen carrying capacity. Even if the FDA or any corresponding governmental agency approves this product for use, it may not have any significant advantages over other products to cause the medical profession to adopt it rather than continue to use established therapies. We will also be competing with many other companies, research foundations and institutions seeking to develop synthetic blood products. Almost all of these entities will have substantially greater resources, personnel and facilities than we will have, even if we succeed in raising the required capital to fund our proposed business operations. We can not assure you that we will even be able to raise the necessary funding. See the heading "Competition" of the caption "Description of Business," and the heading "Plan of Operation" of the caption "Management's Discussion and Analysis or Plan of Operation." If we lose Dr. Drees or Mr. Hargreaves, our operations will suffer. ------------------------------------------------------------------- Thomas C. Drees, Ph.D., M.B.A., our President and Chief Executive Officer, is the inventor of PHER-O2. He previously served as the President and CEO of Alpha Therapeutics Corporation, a subsidiary of Green Cross Corporation of Japan, that developed "Fluosol DA 20," the only synthetic blood product that has received FDA approval to date. He has also written a widely- acclaimed book on this subject, "Blood Plasma: The Promise and the Politics," Ashley Books, New York, 1983. Dr. Drees has been with us since inception, and his retirement, disability or death would significantly impair the development of our product and our intended business operations. Anthony G. Hargreaves, who is the Vice Chairman of the Board of Directors, and our Vice President and Secretary/Treasurer, has significant background in the medical field. This includes service as General Manager of VK Limited of Pasadena, California, where he was instrumental in securing funding for a wearable, continuously- operating artificial kidney machine. Mr. Hargreaves has been with us since our inception, and his retirement, disability or death could also hurt our operations. We also believe that our newly-appointed members of management are very important to our success. See the caption "Directors, Executive Officers, Promoters and Control Persons." Successful product liability claims would seriously impair our operations. ----------- The use of PHER-O2 in clinical trials and, if we receive regulatory approval, the manufacture and marketing of this product, may expose us to liability claims. These claims could seriously impair our business. Claims may be made by users of the product or by entities that sell it. We anticipate that PHER-O2 will be given in large doses. As a result, it must be rigorously purified because impurities may lead to serious and potentially fatal toxic reactions. We intend to seek limited product liability insurance, subject to available funding, before we begin any human clinical trials. However, this insurance coverage is expensive, and we can not assure you that we will be able to obtain it. If we can obtain it, we can not guarantee that it will be at a reasonable cost or in sufficient amounts to protect us against losses that may result from this liability. If we do not obtain insurance at an acceptable cost, or otherwise protect against potential product liability, we may not be able to commercialize our product. In addition, a product liability claim or recall could result in our bankruptcy or otherwise hurt our business. You will not be able to elect our directors or officers. -------------------------------------------------------- Our President and Chief Executive Officer, Thomas C. Drees, Ph.D., has substantial voting control of our company. He can effectively elect all of our directors, who in turn elect all of our executive officers, without regard to the votes of other stockholders. If Westbury exercises all of its outstanding Warrants and retains voting control of the shares underlying the Warrants, Dr. Drees would not have absolute voting control, but he would still be in a position to exert substantial influence on the election of all directors. See the caption "Security Ownership of Management and Certain Beneficial Owners." The auditor's "going concern" qualification in our financial statements creates additional doubt about our ability to stay in business. --------------------------------------------------------------- The Independent Auditors' Report issued on April 11, 2000, with respect to our audited financial statements for the years ended December 31, 1999 and 1998, expresses substantial doubt about our ability to continue as a going concern, due to our negative cash flows. See the caption "Financial Statements." Risks Related To Our Common Stock. ---------------------------------- Due to the great instability in our common stock price, you may not be able to sell your shares at a profit. ------------------------------------- The public market for our common stock is limited and volatile. As with the market for many other biotechnological companies, any market price for our shares is likely to continue to be very volatile. In addition, factors such as the following may significantly affect our stock price: results of our clinical trials; our competitors' announcements and successes; other evidence about the safety or efficacy of our product; announcements of new competitive products by our competitors; increased governmental regulation of our product; our competitors' developments of patents or proprietary rights; and fluctuations in our operating results. In addition, the stock markets generally have experienced and continue to experience extreme price and volume fluctuations. These fluctuations have affected the market price of many biotechnological companies and have often been unrelated to these companies' operating performance. These broad market fluctuations, as well as general economic and political conditions, may reduce the market price of our common stock. See the caption "Market for Common Equity and Related Stockholder Matters." The sale of already outstanding shares of our common stock could hurt its market price. ------------- Approximately 10,391,835 shares of our common stock are publicly traded. This number will be increased by the 2,235,970 presently outstanding shares that that may be offered by this prospectus, along with the 15,761,731 shares underlying the Warrants that also may be offered by this prospectus. In addition, 1,250,000 shares of the 1,350,000 shares of common stock that we issued and registered on May 9, 2000, for resale with the Securities and Exchange Commission on Form S-8 may be publicly sold on or after May 7, 2001. On that date, certain lock-up restrictions on these shares will expire. Furthermore, most shares that are owned by members of management have been held for a sufficient period of time that they may sell a percentage of these shares under Rule 144 of the Securities and Exchange Commission. These shares will substantially increase the number of shares that may be available for public trading. The sale of these shares in the public market may reduce the price of our common stock. See the captions "Security Ownership of Management and Certain Beneficial Owners" and "Market for Common Equity and Related Stockholder Matters." Our common stock is deemed to be "penny stock." ---------------------------------------------- Our common stock is presently deemed to be "penny stock" that can only be purchased by certain qualified persons, and broker/dealers are required to determine that the purchase of securities that are "penny stock" are suitable investments for customers before completing the purchase of any of these securities. This designation may limit the public market for our common stock. See the heading "Penny Stock" of the caption "Description of Securities." FORWARD-LOOKING INFORMATION --------------------------- This is a summary of the terms of the common stock described in and offered by this prospectus; it does not contain all of the information that may be important to you. This prospectus contains "forward-looking" information within the meaning of the "Private Securities Litigation Reform Act of 1995." Forward-looking statements contained in this prospectus involve known and unknown risks, uncertainties and other factors that could cause actual results, financial or operating performance to differ from the future results, financial or operating performance or achievements expressed or implied by these forward-looking statements. You should read the following summary and the risks outlined under the caption "Risk Factors," along with the more detailed information, financial statements and the notes to the financial statements appearing elsewhere in this prospectus before you decide whether to purchase the common stock described in this prospectus. USE OF PROCEEDS --------------- We will not receive any part of the proceeds from sale of our common stock. However, we will receive $4,229,847, if all of the Warrants are exercised. Information about the estimated projections on the use of these funds is contained under the heading "Plan of Operation" of the caption Management's Discussion and Analysis or Plan of Operation." DETERMINATION OF OFFERING PRICE AND DILUTION -------------------------------------------- We will not receive any money from the selling stockholders when they sell their shares of common stock, though we may receive funds from the exercise of the Warrants. The selling stockholders may sell all or any part of their shares in private transactions or in the over-the-counter market at prices related to the prevailing prices of our common stock at the time of negotiation. Because we cannot accurately predict the prices of these sales, we cannot accurately estimate the amount of any dilution that may result from the purchase price of any of these shares. "Dilution" is the difference between the price paid for the shares and our "net tangible book value." The net tangible book value of our common stock on September 30, 2000, was $_______ per share. Net tangible book value per share is determined by subtracting our total liabilities from our total tangible assets and dividing the remainder by the number of shares of common stock outstanding. Taking into account the exercise of all Warrants as of September 30, 2000, our net tangible book value at that date would be $_________, divided by __________outstanding shares, with a per share net tangible book value per share of $_____. The offer and sale by the selling stockholders of the common stock that is outstanding, or those shares underlying the Warrants, will not have any effect on the net tangible book value of our common stock, after taking into account the exercise of the Warrants. See the caption "Description of Securities" for a complete description of the Warrants. We can not assure you that any public market for our common stock will equal or exceed the sales price of the shares of common stock sold by our stockholders. Purchasers of the shares face the risk that their shares will not be worth what they paid for them. SELLING SECURITY HOLDERS ------------------------- The following table provides the following information for the selling stockholders: the number of shares of our common stock that is beneficially owned by each as of September 30, 2000, and covered by this prospectus; and the number of shares to be retained by each after this offering, if any. Common Stock (1) ---------------- Number of Shares Beneficially Owned Prior to Number of Shares and Registered Beneficially Owned Names of Selling Stockholders (2) in the Offering after the Offering ----------------------------- --------------- ------------------ Technogest S. A. 1,533,000 (3) -0- (3) Wegelin & Co. 1,499,910 (3) -0- (3) Sun Investment Partnership II 375,000 (3) -0- (3) Geronimo Partners, LP 1,000,000 (3) -0- (3) Laidlaw Global Securities, Inc. 490,791 (4) -0- (4) Westbury Consultancy Services Limited 12,000,000 (5) -0- (5) Michael Dancy 600,000 (6) -0- (6) (1) We assume no purchase in this offering by the selling stockholders of any shares of our common stock. (2) No director, advisory director, executive officer or any "associate" of any of any director, advisory director or executive officer has any interest, direct or indirect, by security holdings or otherwise, in any of the selling stockholders. (3) Includes these shares underlying Warrants (see the caption "Description of Securities"): Technogest S. A., 511,000; Wegelin & Co., 499,970; Sun Investment Partnership II, 125,000; and Geronimo Partners, LP, 500,000. Assumes all Warrants are exercised and all common stock owned and/or received on the exercise of the Warrants are sold. (4) Includes 163,597 shares underlying Warrants (see the caption "Description of Securities"), and assumes all Warrants are exercised and all common stock owned and/or received on the exercise of the Warrants are sold. (5) Includes 12,000,000 shares underlying Warrants (see the caption "Description of Securities"), and assumes all Warrants are exercised and all common stock received on the exercise of the Warrants are sold. (6) Assumes that all 600,000 shares that are owned will be sold. 7

PLAN OF DISTRIBUTION -------------------- We are registering the shares of our common stock covered by this prospectus. We will pay the costs, expenses and fees of registering the common stock, with the exception that Westbury will pay $15,000 towards the legal fees for the preparation and filing of the registration statement of which this prospectus is a part, and all of the selling stockholders will be responsible for any related commissions, taxes, attorney's fees and related charges that they incur in connection with the offer or sale of these securities. The selling stockholders may sell our common stock at market prices prevailing at the time of the sale, at prices related to the prevailing market prices, at negotiated prices or at fixed prices, any of which may change. They may sell some or all of their common stock through: Ordinary broker's transactions, which may include long or short sales; Purchases by brokers, dealers or underwriters as principal and resale by those purchasers for their own accounts under this prospectus; Market makers or into an existing market for our common stock; Transactions in options, swaps or other derivatives; or Any combination of the selling options described in this prospectus, or by any other legally available means. In addition, the selling stockholders may enter into hedging transactions with broker/dealers, who may engage in short sales of our common stock in the course of hedging the positions they assume. Finally, they may enter into options or other transactions with broker/dealers that require the delivery of our common stock to those broker/dealers. Subsequently, the shares may be resold under this prospectus. In their selling activities, the selling stockholders will have to comply with applicable provisions of the Securities Exchange Act of 1934, and its rules and regulations, including Regulation M. These may limit the timing of purchases and sales of our common stock by the selling stockholders. The selling stockholders and any broker/dealers involved in the sale or resale of our common stock may qualify as "underwriters" within the meaning of Section 2(11) of the Securities Act. In addition, the broker/dealers' commissions, discounts or concessions may qualify as underwriters' compensation under the Securities Act. If any broker/dealer or selling stockholder qualifies as an "underwriter," he/it will have to deliver our prospectus as required by Rule 154 of the Securities and Exchange Commission. In addition, any broker/dealer that participates in a distribution of these shares will not be able to bid for, purchase or attempt to induce any person to bid for or purchase as long as it is participating in the distribution. The ability of participating broker/dealers to stabilize the price of our shares will also be restricted. If the selling stockholders sell our shares to or through brokers, dealers or agents, they may agree to indemnify these brokers, dealers or agents against liabilities arising under the Securities Act. We do not know of any existing arrangements between the selling stockholders and any other stockholder, broker, dealer, underwriter or agent relating to the sale or distribution of our common stock. In addition to selling their common stock under this prospectus, the selling stockholders may: Transfer their common stock in other ways not involving market/ makers or established trading markets, including by gift, distribution or other transfer; or Sell their common stock under Rule 144 of the Securities and Exchange Commission, if the transaction meets the requirements of Rule 144. We have advised the selling stockholders that, during the time they are engaged in the distribution of our common stock that they own, that they must comply with Rule 10b-5 and Regulation M promulgated by the Securities and Exchange Commission under the Exchange Act. They must do all of the following under this Rule and Regulation: Not engage in any stabilization activity in connection with our common stock; Furnish each broker who may be offering our common stock on their behalf the number of copies of this prospectus required by each broker; Not bid for or purchase any of our common stock or attempt to induce any person to purchase any of our common stock, other than as permitted under the Exchange Act; Not use any device to defraud; Not make any untrue statement of material fact or fail to state any material fact; and Not engage in any act that would operate as a fraud or deceit upon any person in connection with the purchase or sale of our shares. To the extent that any selling stockholder may be an "affiliated purchaser" as defined in Regulation M, it has been further advised that it must coordinate its sales under this prospectus with us for the purposes of Regulation M. To the extent required by the Securities Act, a supplemental prospectus will be filed, disclosing: The name of any broker/dealers; The number of securities involved; The price at which the securities are to be sold; The commissions paid or discounts or concessions allowed to the broker/dealers, where applicable; That the broker/dealers did not conduct any investigation to verify the information set out in this prospectus, as supplemented; and Other facts material to the transaction. There is no assurance that any selling stockholder will sell any of our common stock. LEGAL PROCEEDINGS ----------------- We are not a party to any pending legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against us. No director, executive officer or other person who may be deemed to be an "affiliate" of Sanguine or owner of record or beneficially of more than five percent of our common stock is a party adverse to Sanguine or has a material interest adverse to Sanguine in any proceeding. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS ------------------------------------------------------------ The following table sets forth the names of all of our current directors and executive officers. These persons will serve until the next annual meeting of the stockholders or until their successors are elected or appointed and qualified, or their prior resignations or terminations. <TABLE> <CAPTION> Directors and Executive Officers. --------------------------------- Date of Date of Positions Election or Termination Name Held Designation or Resignation ---- ---- ----------- -------------- <S> <C> <C> <C> Thomas C. Drees, CEO 6/93 * Ph.D., MBA President 1/98 * Chairman 11/95 * Director 6/93 * Anthony G. Hargreaves Vice Chairman 9/00 * Vice President 6/93 * Secretary/ 6/93 * Treasurer 6/93 * Director 6/93 * Chief Financial 6/94 3/96 Officer Rear Admiral (Retired) COO 10/00 * Merton Dick Van Orden Director 10/00 * David E. Nelson, CPA Director 3/96 * Chief Financial 3/96 * Officer Edward L. Kunkel, Esq. Director 4/94 * * These persons presently serve in the capacities indicated. </TABLE> <TABLE> Medical Advisory and Applications Board of Directors. ----------------------------------------------------- Date of Date of Positions Election or Termination Name Held Designation or Resignation ---- ---- ----------- -------------- <S> <C> <C> <C> Rear Admiral (Retired) Chairman 10/00 * Merton Dick Van Orden Craig Morrison, M.D. Member 10/00 * William D. Regelson, M.D. Member 10/00 * Leon Cass Terry, M.D., Member 10/00 * Ph.D. Herbert J. Meiselman, Member 10/00 * Sc.D. Thomas C. Drees, Ph.D., MBA, CEO, President and a Director. Dr. Drees, age 71, is the founder of Sanguine California. Dr. Drees was Vice President and General Manager of Abbott Scientific Products Division, collector of blood plasma derivatives and manufacturer of human blood derivatives from 1973 to 1978 From 1978 to 1984, he was the President and CEO of Alpha Therapeutics Corporation, a subsidiary of Green Cross Corporation of Japan and the developer of Fluosol DA 20, the only FDA-approved synthetic blood product. For 26 years, Dr. Drees has been involved at top management levels with the collection, manufacture and marketing of human blood plasma derivatives. He has written many publications on the subject, including the widely-acclaimed book "Blood Plasma: The Promise and the Politics," Ashley Books, New York, 1983. Anthony G. Hargreaves, Vice Chairman, Vice President, Secretary/Treasurer, and Director. Mr. Hargreaves is 72 years of age. He is a former Royal Marine Officer with long experience in marketing, trust department banking (with Bank of America) and group insurance sales management (with the Connecticut General Life Insurance Company). His medical background includes service as General Manager of VK Limited in Pasadena, California, where Mr. Hargreaves helped secure funding for a wearable, continuously operating artificial kidney machine. In the early 1980's, Mr. Hargreaves organized and scripted telemarketing sales of various products to retail stores throughout the United States. Admiral Merton Dick Van Orden, Chairman of the Medical Advisory Board, Chief Operating Officer and Director, is 79 years age, and a graduate of the United States Naval Academy, Class of 1945 (graduated in wartime 1944). He also holds degrees from M. I. T. (BSEE); George Washington University (MBA); and he is a graduate of the Advanced Management Program of the Harvard Graduate School of Business. He completed 31 years active duty in the United States Navy with WWII combat service aboard an Aircraft Carrier in the Pacific, followed by a Minesweeper in the Atlantic, and an Amphibious Transport in the Atlantic and Mediterranean. He then became an Engineering Duty Officer(Electronics) leading to positions primarily in Research and Development activities. He was commanding officer of the Navy Electronics Laboratory Center, and later was appointed the Chief of Naval Research. Following retirement from active Navy service, Admiral Van Orden has been employed as a management and scientific consultant, and has served on Boards of Directors of a number of small, technically-oriented companies. He served as the pro bono Research Director for the Paralysis Cure Foundation, later the American Paralysis Association, and as President of the Surgical Research Foundation. He has a number of publications in his name, and is the author of four books for young Americans on the subject of Navy and Coast Guard ships. He is also a member of the Board of Directors of Blue Sea Corporation, engaged in developing designs of innovative ship types and producing SWATH ships for the offshore oil industry. David E. Nelson, CPA, Chief Financial Officer and Director. Mr. Nelson, age 57, received a B.S. degree in accounting from the University of Utah in 1966. He has over 20 years' experience in operations, finance and regulatory compliance of stock brokerage firms. He is the past President of Covey & Company, Inc., a broker/dealer formerly registered with the Securities and Exchange Commission. Mr. Nelson has been a member of the NASD Board of Arbitrators, the American Institute of Certified Public Accountants and the Utah Association of Certified Public Accountants. Edward L. Kunkel, Esq., Director. Mr. Kunkel is 53 years of age. He graduated with a Juris Doctor degree from the University of Southern California in 1973. From 1973 to 1978, he practiced law with the firm of Karns & Karabian in Los Angeles, California. From 1978 to the present, he has practiced educational law, real estate law and general business law in his own firm. Mr. Kunkel is a member of the State Bar of California, the Los Angeles County Bar Association and the National School Board Attorneys Association; he has been a licensed real estate broker since 1979. Craig Morrison, M.D., Advisory Board Member, is 58 years of age, a surgeon practicing in the Utah County, Utah area. Dr. Morrison is currently and has been an attending Staff General Surgeon from 1978 at the following hospitals: Utah Valley Regional Medical Center, Orem Community Hospital, Colombia Timpanogos Regional Hospital, Colombia Mountainview Hospital and Brigham Young University Student Health Center. Dr. Morrison received his Doctor of Medicine Degree from the University of Oregon in 1970, which subsequently was followed by a Pediatric Internship and Surgical Residency at the University of Southern California Medical Center. Completing his surgical residency with U.S.C. in 1974, Dr. Morrison completed his second Surgical Residency at the Huntington Memorial Hospital in 1975. William D. Regelson, M.D., Advisory Board Member, is 75 years of age, an active Professor of Medicine at the Virginia Commonwealth University, College of Medicine, and a leading researcher in the field of aging. Dr. Regelson holds parallel positions as an Adjunct Professor of Microbiology and Biomedical Engineering with this University. Prior to joining the Virginia Commonwealth University Medical and Engineering Schools in 1970, Dr. Regelson was a Professor of Medicine and the Chairman of the Division of Medical Oncology at New York State University's Medical School from 1967 to 1976. Previously, Dr. Regelson was an Assistant Research Professor of Medicine for the New York State University, from 1964-1966. Dr. Regelson received his Doctor of Medicine Degree from the New York State University College of Medicine in 1952. He is particularly suited to positions of research and discovery having authored or co-authored over 200 papers on numerous medical subjects, including the discovery of amyloid plaques in the brain, which are thought to impede proper cerebral oxygenation, resulting in Alzheimer's Disease. Dr. Regelson's studies are at the forefront of current aging research. He has written or edited many books and texts that are available currently in the published market, focusing his research on the causes of the decline of the human body. Some of Dr. Regelson's publications are the following: "Dehydroepiandrosterone, 1999"; "The Superhormone Promise: Nature's Antidote to Aging. 1997"; "The Melatonin Miracle: Nature's Age- Reversing, Disease-Fighting, Sex-Enhancing, 1995"; and "Intervention in the Aging Process: Proceedings of the International Symposium on Intervention in the Aging Process, Boston, Mass, Nov 5-6, 1982." Leon Cass Terry, M.D., Ph.D., Advisory Board Member, is 59 years of age, and joined the Medical College of Wisconsin as a Professor of Neurology and Physiology in 1989; he is currently teaching, in addition to his practice at the University Medical Center. Focusing on his professorial duties, Dr. Terry recently stepped down from his position as the Chairman for the Department of Neurology, which he held from June of 1989 to May 2000. During his tenure, Dr. Terry was the Associate Dean for Ambulatory Care from January 1997 to March 1998, and was the Chief of Staff from January 1997 to January 1998. He also held previous teaching and professional positions as a Research Scientist for the University of Michigan, Institute of Gerontology; Professor of Neurology and Associate Professor of Physiology and Neurology at the University of Michigan; and Associate Professor of Neurology at the University of Tennessee Center for Health Sciences. Dr. Terry earned his Doctorate of Pharmacology from the University of Michigan, his Doctor of Medicine from Marched University Medical School and his Ph.D. in Neurological Sciences from McGill University Medical School and his Master of Business Administration from the University of South Florida. Herbert J. Meiselman, Sc.D., Advisory Board Member, is 60 years of age. He is an active Professor and Vice Chairman of the University of Southern California School of Medicine, Department of Physiology and Biophysics. Professor Meiselman graduated from Michigan Technical University with a BS degree in 1962. He received a Sc.D. degree from the Massachusetts Institute of Technology in 1965. As a Research Fellow at the California Institute of Technology, he studied in-vivo microcirculatory blood flow from 1966 to 1968. In 1968, he expanded his research studies to include in-vivo blood rheology, a program jointly administered by the California Institute of Technology and the University of Southern California Medical School. Since 1972, Dr. Meiselman's research at the University of Southern California has been concentrated in the area of red blood cell structure, using an electron microscopy technology. He has authored or co-authored over 300 papers on numerous blood-related topics. Significant Employees. ---------------------- We do not currently have any employees who are not executive officers, but who are expected to make a significant contribution to our business. Family Relationships. --------------------- There are no family relationships between any of our directors or executive officers. Involvement in Certain Legal Proceedings. ----------------------------------------- During the past five years, none of our present or former directors, executive officers or persons nominated to become directors or executive officers: (1) was a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time; (2) was convicted in a criminal proceeding or named subject to a pending criminal proceeding, excluding traffic violations and other minor offenses; (3) was subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or (4) was found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -------------------------------------------------------------- The following tables set forth the share holdings of our directors and executive officers and those persons who own more than five percent of our common stock as of the date of the prospectus: DIRECTORS AND EXECUTIVE OFFICERS -------------------------------- </TABLE> <TABLE> <CAPTION> Number of Shares Percent Name and Address Beneficially Owned of Class (1) ---------------- ------------------ -------- <S> <C> <C> Thomas C. Drees, Ph.D., MBA (2) 10,389,133 24.4% 101 East Green Street, #11 Pasadena, California 91105 Anthony G. Hargreaves (2) 1,770,642 4.2% 101 East Green Street, #11 Pasadena, California 91105 Merton Dick Van Orden (2) -0- -0- 5953 Woodscrew Court McLean, Virginia 22101-2532 David E. Nelson, CPA (2) 100,150 .2% 528 14th Avenue Salt Lake City, Utah 84103 Edward L. Kunkel, Esq. (2) 60,000 .1% 16 N. Marengo Ave, #517 Pasadena, California 91103 __________ ______ All directors and officers as a group (five persons) 12,319,925 28.9% </TABLE> FIVE PERCENT STOCKHOLDERS ------------------------- <TABLE> <CAPTION> Number of Shares Percent Name and Address Beneficially Owned of Class ---------------- ------------------ -------- <S> <C> <C> Thomas C. Drees, Ph.D., MBA (2) 10,389,133 24.4% 101 East Green Street, #11 Pasadena, California 91105 Westbury Consultancy Services 12,000,000 28.2% Limited Calle Villa Doaat 172 Cuarto 3, Barcelona, Spain Karl Smith (3) 1,600,000 3.7% 455 East 500 South, #201 Salt Lake City, Utah 84111 ----------- ----- 23,989,133 56.4% </TABLE> (1) Based upon 42,478,591 shares of outstanding common stock, and assumes that the following shares of common stock underlying options or the Warrants are outstanding: an option granted to Mr. Hargreaves to acquire 470,642 shares without registration rights at a price of $0.1275 per share, exercisable until September 22, 2001; an option granted to Mr. Kunkel to acquire 10,000 shares without registration rights at an exercise price of the average low bid price per share as quoted on the OTC Bulletin Board of the NASD on June 1, 1994, exercisable until May 31, 2002; and 14,126,761 shares underlying the Warrants of the selling stockholders. (2) See the caption "Directors, Executive Officers, Promoters and Control Persons" for information concerning the positions held by these persons with our company. (3) These shares include 400,000 shares standing in the name of Smith Consulting Services, Inc. and 600,000 shares standing in the name of A. Smith and Associates, Inc., both entities of which are controlled by Mr. Smith. Changes in Control. ------------------- To our knowledge, there are no present arrangements or pledges of our securities that may result in a change in control of our company. However, because of the number of Warrants that are owned by Westbury, the exercise of these Warrants and the continued ownership of the underlying shares by Westbury could substantially influence the control of our company. Westbury has indicated in its Schedule 13D filing with the Securities and Exchange Commission that it acquired these Warrants for investment, and not as a means of influencing the control of our company. You may examine our 8-K Current Report dated June 8, 2000, and Westbury's Schedule 13D in the EDGAR Archives. See the caption "Available Information." DESCRIPTION OF SECURITIES ------------------------- Common Stock. ------------- Our authorized capital stock consists of 100,000,000 shares of common stock, one mill ($0.001) par value per share. Our Articles of Incorporation authorize the Board of Directors to declare and pay dividends on our common stock out of funds legally available for the payment of dividends. The holders of our common stock are entitled at all stockholder meetings to one vote for each share of common stock held. Fully- paid common stock shall not be liable to any further call or assessment. Our common stock has no pre-emptive rights, and stockholders are not allowed to cumulate their votes by multiplying the number of shares owned by the number of directors being elected and casting all votes for one director. Our Articles of Incorporation and Bylaws do not contain any provision that would delay, defer, or prevent a change in the control of our company. Warrants. --------- On September 1, 2000, and effective as of August 29, 2000, we completed the offer and sale of 1,635,970 Units at a price of $0.50 per Unit. We received aggregate proceeds of $817,985. We have filed specific information about this offering, known as the Laidlaw Private Offering, with the Securities and Exchange Commission. You may examine our 8-K Current Report dated September 1, 2000, in the EDGAR Archives. See the caption "Available Information." Each Unit consisted of two shares of our common stock and one redeemable Warrant entitling the holder to purchase one share of our common stock at an exercise price equal to $.40 per share, subject to adjustment in certain circumstances. The Warrants are exercisable at any time beginning on the date of issuance and ending four years later, subject to an effective registration statement covering the exercise having been filed with the Securities and Exchange Commission. Beginning one year after their issuance, the Warrants are redeemable, in whole or in part, at our option, for $0.05 per Warrant on not less than 30 days' prior written notice, at any time, provided that: the closing bid price of our common stock is at least 200% of the then current Warrant exercise price and the public trading volume of our common stock is not less than 50,000 shares per day on each of the 20 consecutive trading days ending within 10 days from the date of the notice of redemption; and the shares underlying the Warrants have been registered for public distribution under the Securities Act. We were required to file the registration statement, at our cost, within 30 days of the closing of the Laidlaw Private Offering or September 30, 2000 (October 2, 2000, because September 30, 2000 fell on a weekend), and to cause this registration statement to be declared effective within 150 days of closing. The Warrant exercise price was to be reduced by $0.05 for each 30 day delay in the filing or effectiveness of the registration statement. Because we did not file this registration statement within 30 days of the closing, the Warrant exercise price has now been reduced to $0.35 per share. On June 8, 2000, we executed and delivered the Warrant Agreement under which we granted to Westbury Warrants to acquire 12,000,000 shares of our common stock at an exercise price of $0.30 per share. The exercise price was determined under the Warrant Agreement based upon 120% of our next private or public offering, which was the Laidlaw Private Offering. The minimum exercise price was $0.25 per share. The Warrant Agreement provided, among other things, for: the issuance of 120,000 Warrants, with each of the Warrants being convertible into 100 shares of our common stock; the Warrants to expire at 5:00 p.m. on March 20, 2005; protection against dilution in certain events, including the sale of common stock at less than market value, or in the event of any merger where we are not the survivor, or any reclassification or capital reorganization in which the adjustment would result in a decrease of the exercise price of more than $0.10 per share, and excluding certain types of transactions from any right of adjustment; and the granting of "registration rights" covering the underlying shares, with Westbury to pay the sum of $15,000 towards any such registration with the Securities and Exchange Commission. Under the Warrant Agreement, no Warrant can be exercised until the expiration of 90 days from the date of the Warrant Agreement. Penny Stock. ------------ Our common stock is "penny stock" as defined in Rule 3a51-1 of the Securities and Exchange Commission. Penny stocks are stocks: with a price of less than five dollars per share; that are not traded on a "recognized" national exchange; whose prices are not quoted on the NASDAQ automated quotation system; or in issuers with net tangible assets less than $2,000,000, if the issuer has been in continuous operation for at least three years, or $5,000,000, if in continuous operation for less than three years, or with average revenues of less than $6,000,000 for the last three years. Section 15(g) of the Exchange Act and Rule 15g-2 of the Securities and Exchange Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before making any transaction in a penny stock for the investor's account. You are urged to obtain and read this disclosure carefully before purchasing any of our shares. Rule 15g-9 of the Securities and Exchange Commission requires broker/dealers in penny stocks to approve the account of any investor for transactions in these stocks before selling any penny stock to that investor. This procedure requires the broker/dealer to: get information about the investor's financial situation, investment experience and investment goals; reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor can evaluate the risks of penny stock transactions; provide the investor with a written statement setting forth the basis on which the broker/dealer made his or her determination; and receive a signed and dated copy of the statement from the investor, confirming that it accurately reflects the investor's financial situation, investment experience and investment goals. Compliance with these requirements may make it harder for our selling stockholders and other stockholders to resell their shares. INTEREST OF NAMED EXPERTS AND COUNSEL ------------------------------------- We have included our financial statements as of December 31, 1999, 1998 and 1997 in reliance on the report of Schvaneveldt and Company of Salt Lake City, Utah, independent certified public accountants, appearing elsewhere. Schvaneveldt and Company was a sole proprietorship operated by Darrell T. Schvaneveldt, CPA, who died on September 8, 2000. The Securities and Exchange Commission has waived his consent for the use of this report. Neither Schvaneveldt and Company nor Mr. Schvaneveldt had any interest, direct or indirect in our company. Leonard W. Burningham, Esq. and Branden T. Burningham, Esq., lawyers, of Salt Lake City, Utah, father and son, associates in the practice of law and co-counsel for our company are each stockholders of our company, respectively owning 182,000 and 50,000 of our shares of common stock. Messrs. Burningham and Burningham prepared the registration statement and this prospectus and will provide any legal opinions required with respect to any related matter. All of their shares are subject to lock-up and may not be sold until on or after May 7, 2001. We have not hired any expert or counsel on a contingent basis. Except as indicated above, no expert or counsel will receive a direct or indirect interest in Sanguine, and no such person was a promoter, underwriter, voting trustee, director, officer or employee of Sanguine. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES ----------- Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a Nevada corporation to indemnify any director, officer, employee, or corporate agent "who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation" due to his or her corporate role. Section 78.751(1) extends this protection "against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her in connection with the action, suit or proceeding if he or she acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful." Section 78.751(2) of the NRS also authorizes indemnification of the reasonable defense or settlement expenses of a corporate director, officer, employee or agent who is sued, or is threatened with a suit, by or in the right of the corporation. The party must have been acting in good faith and with the reasonable belief that his or her actions were not opposed to the corporation's best interests. Unless the court rules that the party is reasonably entitled to indemnification, the party seeking indemnification must not have been found liable to the corporation. To the extent that a corporate director, officer, employee, or agent is successful on the merits or otherwise in defending any action or proceeding referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS requires that he or she be indemnified "against expenses, including attorneys' fees, actually and reasonably incurred by him or her in connection with the defense." Section 78.751(4) of the NRS limits indemnification under Sections 78.751(1) and 78.751(2) to situations in which either (1) the stockholders, (2)the majority of a disinterested quorum of directors, or (3) independent legal counsel determine that indemnification is proper under the circumstances. Pursuant to Section 78.751(5) of the NRS, the corporation may advance an officer's or director's expenses incurred in defending any action or proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides that the rights to indemnification and advancement of expenses shall not be deemed exclusive of any other rights under any bylaw, agreement, stockholder vote or vote of disinterested directors. Section 78.751(6)(b) extends the rights to indemnification and advancement of expenses to former directors, officers, employees and agents, as well as their heirs, executors, and administrators. Regardless of whether a director, officer, employee or agent has the right to indemnity, Section 78.752 allows the corporation to purchase and maintain insurance on his or her behalf against liability resulting from his or her corporate role. Article V of our Bylaws requires us to indemnify our directors and executive officers, former directors and executive officers and directors and executive officers of subsidiaries against expenses necessarily incurred by them in defending any action in which they are made parties due to their service as directors or executive officers, except in relation to matters as to which such directors or executive officers are adjudged to be liable for negligence or misconduct. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, executive officers and controlling persons the foregoing provisions or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission that indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against these liabilities, other than our payment of expenses incurred or paid by any of our directors, executive officers or controlling persons in the successful defense of any action, suit or proceeding, is asserted by the director, executive officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of that issue. DESCRIPTION OF BUSINESS ----------------------- Business Development. --------------------- We were organized under the laws of the State of Utah on January 24, 1974, under the name "Sight and Sound Systems, Inc." We had an initial authorized capital of $50,000 comprised of 5,000,000 shares of $0.001 par value common stock. We commenced a public offering of our common stock on March 7, 1974. The offering was completed in June, 1974. We changed our name to "Kricket Corporation" on July 8, 1974. On April 9, 1976, we increased our authorized capital to $250,000, comprised of 25,000,000 shares of $0.01 par value per share common stock. We again increased our authorized capital on December 22, 1996, to $1,000,000, comprised of 100,000,000 shares of $0.01 par value common stock. On December 5, 1977, we changed our name to "International Health Resorts, Inc." We organized a wholly-owned subsidiary under the laws of the State of Nevada, and on May 11, 1992, we merged into this subsidiary to change our domicile from the State of Utah to the State of Nevada. As a part of this merger, our authorized capital was reduced to $100,000, comprised of 100,000,000 shares of $0.001 par value common stock, and we effected a one for 20 reverse split of our outstanding shares of common stock. On June 14, 1993, we entered into an Agreement and Plan of Reorganization under which we acquired 94% of the outstanding shares of Sanguine California in exchange for shares of our common stock. We effected a 1.5 for one forward split of our outstanding securities and changed our name to "Sanguine Corporation" on June 25, 1993. On September 1, 2000, we completed the Laidlaw Private Offering of 1,635,970 units at $0.50 per unit, for aggregate proceeds of $817,985. Each unit consisted of two shares of our common stock and one redeemable warrant entitling the holder to purchase one share of our common stock at an exercise price of $.40 per share. On June 8, 2000, we executed and delivered a Warrant Agreement under which we granted Westbury warrants to acquire 12,000,000 shares of our common stock at an exercise price of $0.30 per share, exercisable until March 20, 2005. David E. Nelson, one of our directors, has told us that he will not consent to the Westbury Warrant Agreement because of the length of the Warrant term. The purchasers of Units under the Laidlaw Private Offering had no prior notice of the granting of the Westbury Warrants, and may have a right of rescission of their purchase of the Units. However, we have subsequently advised these purchasers of all material information about the Westbury Warrants and we anticipate 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 wishes to retain the ownership of the purchased Units; and that none wishes to accept the rescission offer. As of the date of this prospectus, no purchasers under the Laidlaw Private Offering have expressed any interest in rescission. Business. --------- We are engaged in the development of a synthetic red blood cell product called "PHER-O2." The development of this product presently comprises our sole business operations. PHER-O2 is composed of perfluoro-decalin molecules, or synthetic red blood cells, purified water and a proprietary, synthetic, fluorinated surfactant, or wetting agent, 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. We believe that PHER-O2 can carry three to four times the oxygen of human blood per unit volume. This increased oxygen-carrying capacity would make PHER-O2 useful in the treatment of heart attacks, strokes, cancer and other diseases for which increased oxygenation is beneficial. We also believe that perfluoro-decalin is effective as an imaging agent in X-ray imaging, nuclear magnetic resonance imaging and CAT scans, without side effects. Our management estimates that PHER-O2 has several other advantages over human blood: that it can be sterilized to be free of disease; that it has the quality of a universal match for all blood types; that it can be mass-produced; and that it can be stored much longer than human blood. We are concentrating our research and development efforts on completing the emulsion of perfluoro-decalin and the synthetic surfactants that make up PHER-O2. We anticipate that upon completion of the compounding of PHER-O2, we will perform initial gross animal tests, which do not require regulatory approval prior to commencement. However, regulatory agencies may review the data gathered from any of these tests. We plan to manufacture the experimental doses of PHER-O2 required to conduct these tests. Our first phase of development will involve: compounding PHER-O2; seeking regulatory approval for gross animal testing and conducting this testing; and the manufacturing of available product for this testing. In our second phase of operations, we intend to continue developing the perfluorocarbon compounds in PHER-O2 in order to optimize its quality. We expect to begin animal safety and efficacy trials in accordance with FDA guidelines and comparable foreign regulatory requirements. In our final phase, we intend to: complete United States testing of PHER-O2; seek 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. We have licensed BioLogix Development Partners to manufacture and market PHER-O2 in Canada, including any future Canadian patent rights, and the exclusive right to market PHER-O2 in United States military pre-hospital markets. In our final phase, we also intend to continue trials to test PHER- O2 for other applications, including transplant organ preservation and treatment of carbon monoxide poisoning, sickle cell anemia, heart attack and stroke. We will have to conduct similar rigorous testing and clinical trials of PHER-O2 for each desired application. PHER-O2 is still in the research and development stage. It has not been tested on animals or humans; nor have we submitted any application to any federal, state or foreign agency to seek authority for such testing. The development process will be time consuming and expensive. It will also be subject to extreme governmental regulation. We will have to prove that our product is safe and efficacious for human use. Until then, we will have no potential for revenues from operations. We can not assure you that we will be able to raise the money necessary to develop PHER-O2 or that, if we raise sufficient funds, that we will ever receive the necessary federal, state or foreign agency approval to manufacture or market the product. See the caption "Risk Factors," and the headings "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 this "Business" heading. Principal Products or Services and Their Markets. ------------------------------------------------- We have only one product, PHER-O2, which is still in the research and development stage. Our success hinges solely on the success of this product. We can not assure you that it will ever be successful. PHER-O2 is made up of perfluoro-decalin, which is a type of perfluorocarbon that is harmless to humans and the atmosphere, purified water and a proprietary surfactant to hold the emulsion together. Perfluoro-decalin gives the product its oxygen carrying ability. The surfactant is non-toxic and, being fluorinated, helps increase PHER-O2's oxygen carrying capacity and emulsion stability. We believe that the unique chemical nature of PHER-O2 will make it ideal for many medical applications, although each application will be subject to the same types of rigorous testing, clinical trials and governmental regulatory approval process. We believe that PHER-O2 has the following advantages over human blood: may carry three to four times the oxygen of human blood per unit volume; free of HIV, hepatitis and other blood-borne disease; universal match for all blood types; may be mass-produced; may have a three-year shelf life; may be stored at room temperature; has controllable circulatory half-life; and may be 1/900th the size of a red blood cell. PHER-O2 is a second generation drug from Fluosol-DA, the only synthetic red blood cell approved by the FDA. This process was completed under the management of our President and CEO, Thomas C. Drees, Ph.D. We believe that its unique qualities may make PHER-O2 ideal for blood transfusions and numerous other medical applications, including: nuclear magnetic resonance imaging; CAT scans; cardioplegia, or the priming of heart-lung machines in open heart surgery; and treatment of heart attacks, strokes, head and neck tumors and hemorrhagic shock. We intend to fully exploit the immense worldwide market for these applications. Blood transfusion represents a vast market for synthetic blood. The limited supply of safe donated blood is the largest constraint on the number of transfusions given annually. If a safe blood substitute were widely available, more transfusions could be given to those who desperately need them. We hope to fulfill this need with PHER-O2. The key ingredients in PHER-O2are readily available in the United States from many manufacturers. When combined, using our proprietary emulsion process, we hope that the result will be a plentiful alternative to donated human blood. Another disadvantage to the use of human blood in transfusions is the waiting period while the donor's blood is being matched to the recipient's. Because we believe that PHER-O2 does not need to be matched to the recipient's blood type, the use of PHER-O2 would eliminate this potentially fatal wait, and increase its use in ambulances. As HIV, hepatitis and other diseases have infected the world's blood supply, the need for an absolutely sterile blood product has become increasingly apparent. There is currently no 100% effective method for detecting blood-borne diseases and sterilization of donated blood is not possible. In light of these facts, PHER-O2's potential sterility makes it especially attractive in comparison to donated blood. PHER-O2's anticipated ability to carry up to four times the oxygen of human blood makes it promising for many medical applications in which increased oxygenation is vital. PHER-O2 molecules are up to 900 times smaller than human red blood cells. Management believes that this fact will make PHER-O2 particularly useful for oxygenating organs through blocked arteries, which are the primary cause of heart attack and stroke. One of our competitors has obtained FDA approval for the use of a similar product in angioplasty, the treatment of blocked arteries with small inflated balloons. This application involves the injection of the blood substitute into the artery past the inflated balloon. As a result, the heart receives more oxygen, the treating physician can keep the balloon inflated longer and the angioplasty is more effective than it would otherwise be. This competitor has announced that it will no longer manufacture its product, leaving Sanguine well positioned in this market segment. See the caption "Competition" of this heading, "Business." Management also believes that PHER-O2 will be ideal for use in open-heart surgery. Cardiac surgeons need an oxygen-carrying fluid that can be used to prime the heart-lung bypass machines that are used to mechanically pump and oxygenate heart patients' blood. This procedure is known as "cardioplegia." Surgeons currently use saline, dextrose or hydroxyethyl starch solutions for this purpose, but these fluids can dilute the red blood cells in the body, and thus decrease the ability of the blood to carry oxygen. Moreover, the risk of infection from whole blood or its derivatives makes them undesirable for use as priming fluids. PHER-O2's significant oxygen-carrying ability and its sterility address both of these concerns. The treatment of head and neck tumors is another promising application for PHER-O2. Increased oxygenation of these tumors makes them more susceptible to the effects of radiation and chemotherapeutic drugs. Another potential benefit of PHER-O2, though little understood, is the ability of oxygen-rich blood to cause a tumor to produce hydrogen peroxide, which in turn tends to shrink the tumor. The perfluoro-decalin molecule in PHER-O2 also works as a radiopaque agent in X-ray imaging and as a contrast agent in nuclear magnetic resonance imaging and CAT scans. However, unlike many currently-available imaging agents, PHER-O2 has no known side effects. Distribution Methods Of Our Product. ------------------------------------ We will not determine distribution methods of our product unless and until we are near receiving any required regulatory approval of our product. We can not guarantee that we will ever receive any regulatory approval. Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements Or Labor Contracts. ---------------- We filed United States Application Patent No. 07/952/403, covering PHER- O2, with the United States Patent Office on September 28, 1992. No patent has been issued, and we will have to amend our patent application before any patent is issued, if ever. We filed European Application Patent No. (UK)EPO261802, covering PHER-O2, with the European Patent Office on August 25, 1997. No patent has been issued and, and we will have to amend our patent application before any patent is issued, if ever. We have formulated certain proprietary surfactants during the course of our research and development activities. The surfactant is mixed with the basic chemical of our product, perflourodecalin, to maintain the small particle size in the emulsion of PHER-O2 because the particle size of decalin in the blood stream can quickly increase in size and block arteries and veins. These surfactants are: Fluorsurfactants based on Phosphatidyl Choline or Glycerophos- phorylcholine, Accession No. 94012; Stable Amide bond-Lined Perfluoro Phosphatidyl Choline Surfactants, Accession No. 94013; New Polyvinylpyrrolidone Oligomer-Based Fluorosurfactants, Accession No. 94014; Self-Aggregating Extended Lifetime Hydrophilic Fluorocarbon Ampiphiles for Blood Oxygen or Drug Delivery; Perfluorosurfactants with Enhanced Prevention of Volaile Fluorocarbon Diffusion for Preparation of Fluorocarbon Emulsions with Improved Stability; Highly Branched (e.g. Dendritic) Hydrophilic Oligomers/Polymers with Covalently Attached Fluorocarbon-philic or Lipophilic Components for Preparation of Human Blood Circulatory System Extended Lifetime Perfluorocarbon Emulsions, or Very Small Particle Lipid Dispersions, for Prolonged (greater than one week) Oxygen or Drug Delivery; and Method to Prepare Branched Water and Blood Soluble Oligomers with Mono-primary End Groups and their Use to Prepare New Perfluoro or Fatty Group-Based Surfactants. There is a dispute over the ownership of the last four of these inventions with Battelle Memorial Institute, the firm that we previously engaged to conduct research and development for us on PHER-O2. We intend to pursue our rights to all of these inventions. Status Of Any Publicly Announced New Product Or Service. -------------------------------------------------------- We have no new products or any additional proprietary rights, but we anticipate that we may acquire additional proprietary rights during our future research and development activities. Competitive Business Conditions. -------------------------------- Several other companies, both domestic and foreign, are working to develop alternatives to human blood. They include: Alliance Pharmaceutical Corporation of San Diego, California; Biopure Corporation of Cambridge, Massachusetts ; and Northfield Laboratories, Inc. of Evanston, Illinois. Each of these competitors files reports with the Securities and Exchange Commission and these reports are available for review on the Commission's web site: www.sec.gov. These competitors are involved in the development of a wide variety of human blood substitutes, including synthetic compounds, recycled human blood and recombinant hemoglobin. Neither the list of competitors nor the list of human blood substitutes is exhaustive. Furthermore, some of our existing or potential competitors have significantly greater technical and financial resources than we do and may be better able to develop, test, produce and market products. These competitors may develop products that are competitive with or better than our product and that may render our product obsolete. We can provide no assurance that we will be able to compete successfully. Sources And Availability Of Raw Materials. ------------------------------------------ We plan to purchase medical-grade perfluorocarbons and surfactants from reliable vendors and to emulsify these ingredients in our own facilities, depending upon funding. Air Products and Chemicals, Inc.; Fluori-Seal, Inc.; PCR, Inc.; and FZ Chemicals, Ltd. are qualified medical grade perfluorocarbon vendors. Surfactants are available through several vendors. Because intravenous solutions plants are very expensive and FDA approval of these plants is a lengthy process, we intend to hire a third party to package the product in sterile plastic bags with intravenous sets attached. Abbott Laboratories; Baxter; McGaw; and Fresenius Kabi are a few of the companies with the qualifications and capacity to perform this function. However, we can not assure you that any of these ingredients or services will be available or that they will be available at prices that are low enough to make Sanguine's operations profitable. We Do Not Have Any Present Customers Or Material Contracts For Research And Development Of Our Product. --------------------------- We do not presently have any customers. We believe that there are a number of firms that are able to conduct the necessary research and development for our product, but we have not concluded any active negotiations with any firm for these services. Our Product Will Require Governmental Approval. ----------------------------------------------- The FDA and comparable foreign agencies require laboratory testing, clinical testing and other costly and time-consuming procedures before biomedical products such as PHER-O2 can be marketed. To date, we have not begun any of these procedures. Our plan for obtaining FDA and overseas approval of PHER-O2 is set forth under the heading "Plan of Operation" of the caption "Management's Discussion and Analysis or Plan of Operation." We can not assure you that these testing procedures will be successfully completed, that if completed, they will show PHER-O2 to be safe and efficacious, or that we will obtain any required governmental approvals. Nor can we assure you that we will ever be permitted to market PHER-O2 in the United States or most foreign countries. The same holds true for any other related products or proprietary rights that we may develop. See the heading "Effects Of Existing Or Probable Governmental Regulations" of heading, "Business," below. Effects Of Existing Or Probable Governmental Regulations. --------------------------------------------------------- Regulation by governmental authorities in the United States and foreign countries will significantly affect our ability to manufacture and market our product and to conduct our ongoing research and product development activities. Our only product, PHER-O2, will require regulatory approval by appropriate governmental agencies before it can be commercialized. Human therapeutic products are subject to rigorous pre-clinical and clinical testing and other approval procedures by the FDA and similar health authorities in foreign countries. Various federal, state and foreign statutes also govern or influence the manufacturing, safety, labeling, storage, record-keeping and marketing of such products. The process of obtaining these approvals is costly and time consuming. In addition, ongoing compliance with these requirements can require the expenditure of substantial resources. If we or our collaborators or licensees fail to obtain, or delay in obtaining, required regulatory approvals the marketing of our product and our ability to derive product or royalty revenue would be severely limited. Pre-clinical testing is generally conducted in animal or in vitro models to evaluate the potential efficacy and safety of a compound before it is administered to humans. The results of these studies are submitted to the FDA as part of an Investigational New Drug application, which must be approved before human clinical testing can begin. No tests of any nature whatsoever have yet been run on PHER-O2. Clinical trials involve the administration of the investigational new drug to healthy volunteers or to patients, under the supervision of a qualified principal investigator. Clinical trials are conducted in accordance with certain standards under protocols that detail the objectives of the study, the parameters to be used to monitor safety and the efficacy criteria to be evaluated. Each protocol must be submitted to the FDA as part of the IND. Further, each clinical study must be conducted under the auspices of an independent IB at the institution where the study will be conducted. The IB will consider, among other things, ethical factors, the safety of human subjects and the possible liability of the institution. Clinical trials are typically conducted in three sequential phases, but the phases may overlap. In the first phase, the product is usually infused into a limited number of human subjects and will be tested for safety or adverse effects, dosage tolerance and pharmacokinetics, or clinical pharmacology. The second phase involves studies in a somewhat larger patient population to identify possible adverse effects and safety risks and to begin gathering preliminary efficacy data. The third phase of trials is designed to further evaluate clinical efficacy and to further test for safety within an expanded patient population at geographically dispersed clinical study sites. Although we believe that our product is substantially different from other synthetic blood products, we may encounter problems in clinical trials which will cause us to delay or suspend them. In the case of biologic products such as PHER-O2, the results of pharmaceutical development and the pre-clinical and clinical testing are submitted to the FDA in the form of a Product License Application. The PLA must be approved before commercial sales may begin. We must also file an Establishment License Application, which describes the manufacturing process for the product and the facility at which the product will be produced. The FDA may respond to the PLA and the ELA by granting a license for the manufacture of the product from a designated facility and the commercial sale of the product. It may also deny the application if it finds that the application does not meet the criteria for regulatory approval, requires additional testing or information or requires post-marketing testing and surveillance to monitor the safety of the product if it does not believe that the PLA contains adequate evidence of the safety and efficacy of the drug. Despite the submission of this data, the FDA may ultimately decide that the application does not satisfy its regulatory criteria for approval. The testing and approval process is likely to require substantial time and effort. We can not guarantee that approval will be granted for our product or our proposed facilities on a timely basis, if at all. In addition to regulations enforced by the FDA, we may also be subject to regulation under the Occupational Safety and Health Act; the Environmental Protection Act; the Toxic Substances Control Act; the Resource Conservation and Recovery Act; the Comprehensive Environmental Response, Compensation and Liability Act; the National Environmental Policy Act; the Clean Air Act; the Medical Waste Tracking Act; the federal Water Pollution Control Act and other present and potential federal, state and local regulations. Cost And Effect Of Compliance With Environmental Laws. ------------------------------------------------------ Management believes all of the substances making up PHER-O2 are inert and non-toxic and that no toxic or hazardous materials will be byproducts of the manufacturing process of PHER-O2. PHER-O2 is totally inert. Accordingly, we do not believe that we will have any material expenditures for compliance with environmental laws, rules or regulations. Research And Development Expenses. ---------------------------------- In calendar years ended 1998 and 1999, we spent a total of approximately $276,000 on research and development, $78,000 in 1999 and $198,000 in 1998. None of these costs were borne by customers or others. Number Of Employees. -------------------- We presently have three employees, our President, Thomas C. Drees, Ph.D., MBA; our Chief Financial Officer, David E. Nelson; and our Vice President and Secretary/Treasurer, Anthony G. Hargreaves. Dr. Drees and Mr. Hargreaves are employed full time. If we are able to complete the development of PHER-O2 and commence initial animal testing and manufacturing of this product for these tests, we will need additional employees. We are presently unable to estimate the exact number of employees that we may need for these services. Reports To Security Holders. ---------------------------- The NASD requires that all issuers maintaining quotations of their securities on the OTC Bulletin Board file periodic reports under the Exchange Act, and we do file periodic reports with the Securities and Exchange Commission under Section 13 of the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission at its Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains an Internet site, the "EDGAR Archives," that contains reports, proxy and information statements and other information about issuers that file electronically with the Securities and Exchange Commission. The address of that site is www.sec.gov. We intend to furnish to our stockholders annual reports containing financial statements audited and reported upon by our independent accounting firm and other periodic reports as we may determine to be appropriate or as may be required by law. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION --------------------------------------------------------- Plan of Operation. ------------------ We have not commenced planned principal operations, and have made little progress since the end of fiscal 1998. Our proposed plan of operation is composed of three "phases," each of which coincides with a specific milestone in the process of developing PHER- O2. Each of these phases will begin subject to available funding. Each phase, and the projected cost of each, is as follows: Phase I (approximately one year): In the first six months, we plan to complete the development of perfluoro-decalin and the synthetic surfactants that make up PHER-O2, manufacture experimental doses and perform preliminary animal tests in accordance with FDA and overseas regulations. In the second six months, we intend to continue developing the perfluorocarbon compounds in PHER-O2 in order to produce optimal qualities and to conduct animal safety and efficacy trials in accordance with FDA and overseas requirements. During the course of Phase I, we estimate that our increased technical, administrative, sales/marketing and manufacturing requirements will require us to the hire a few additional employees. Estimated cost is $1,500,000, divided as follows: Completing the surfactant formulation and the manufacture of sufficient product for initial testing, $500,000; animal safety and efficacy trials through a sub- contractor, $600,000; and administrative, patent and proprietary right protection and marketing costs, $400,000. Phase II (approximately one year): In the second year, we intend to prepare Investigational New Drug applications for FDA and European approval, conduct trials for cardioplegia, cancer treatment and cardiology treatment in the United States and conduct transfusion trials offshore. During this period, we also plan to submit license applications for transfusion with overseas authorities, begin production of PHER-O2 itself or with our subcontractors and submit an IRD for PHER-O2 in the United States. During the course of Phase II, we estimate that we will need to hire a few additional employees. Estimated cost is $3,500,000, divided as follows: Prepare and file United States and European IRD's, $300,000; conduct human safety and efficacy trials through a subcontractor in the United States and overseas, $2,000,000; set-up pilot facility, or subcontract, to manufacture small quantities of PHER-O2 for use in testing and in connection with the IRD's, $500,000; submit license applications for use of PHER-O2 in transfusions overseas, $200,000; and administrative, patent and proprietary right protection and marketing costs, $500,000. Phase III (approximately one year): In the third year, we plan to complete overseas testing of PHER-O2, begin sales in Europe and other overseas areas that may have approved PHER-O2 by this time and may begin construction of facility for manufacturing, storing, inspecting and shipping PHER-O2. During the course of Phase III, we estimate that we will need to hire additional employees. During the third year, we plan to complete testing of PHER-O2 in the United States and receive all necessary FDA approvals and begin American and Canadian sales for cancer treatment and angioplasty. During this period, we also plan to complete construction of our manufacturing facility, unless we determine to subcontract this process, and continue trials of other PHER-O2 applications, including transplant organ preservation and treatment of carbon monoxide poisoning, sickle cell anemia, stroke and heart attack. We also estimate that further additional employees will need to hired. The estimated cost for Phase III is $15,000,000, divided as follows: Complete human safety and efficacy clinical trials and obtain United States and overseas agency approval of PHER-O2, $9,000,000; construct manufacturing facility or subcontract with major emulsifying firm, $3,000,000; recruit and train sales force of the United States and foreign markets, $1,500,000; and administrative, patent and proprietary right protection and marketing costs, $1,500,000. These cost estimates are based upon the prior experience of Thomas C. Drees, Ph.D., MBA, our President and CEO. Dr. Drees has more than 25 years' experience in the blood industry. Our plan of operation for the next 12 months is to: begin Phase I and to complete the synthesis of the PHER-O2 surfactant and its emulsion with perfluoro-decalin; manufacture experimental doses of PHER-O2; and perform preliminary animal tests in accordance with FDA and comparable foreign overseas regulations. Our ability to begin and to carry out our plan depends entirely upon our ability to obtain substantial equity or debt financing. We can not assure you that we will receive this financing. If we do not receive it, we will not be able to proceed with our business plans. Results of Operations. ---------------------- During the quarterly period ending June 30, 2000, our only business operations were those of our California subsidiary. During this period, we received total revenues of $0 and sustained a net loss of ($47,368). Revenues for the calendar years ending December 31, 1999 and 1998 were $0 and $0, respectively. We had no material operations, except the limited research and development activities related to our subcontracted research and development activities. We realized a net loss from operations of $(217,864), a loss of $(0.01) per share during the calendar year ended December 31, 1999, and a net loss from operations of $(366,439), a loss of $(0.02) per share for the year ending December 31, 1998. Our research and development expenses were $78,000 in 1999, compared to $198,000 in 1998; the difference between these expenditures is the primary difference in expenses between 1999 and 1998. Liquidity. ---------- During the quarterly period ended June 30, 2000, we had total expenses of $47,368, while receiving $0 in revenues. In the period ended June 30, 1999, we had total expenses of $63,091, while receiving $0 in revenues. We received $91,500 on August 3, 2000, for the sale of the rights to represent us and our product and to receive a 1% royalty on sales in Greece for a period of three years. On September 1, 2000, we received an additional $691,506 in net proceeds, after offering expenses, from the Laidlaw Private Offering. During the calendar year ended December 31, 1999, we had expenses of $217,864, while receiving $0 in revenues. We received no revenues, and had total expenses of $366,439 during the calendar year ended December 31, 1998. The amount of research and development in 1998 exceeded these expenses in 1999 by $120,000. Cash resources at December 31, 1999 and 1998 were $1,062 and $499, respectively. We issued approximately 52,777 shares of our common stock in consideration of cash in the amount of $9,500; and 100,000 shares of our common stock in consideration of services valued at $10,000. DESCRIPTION OF PROPERTY ----------------------- Sanguine leases approximately 970 square feet of office space located at 101 East Green Street, Suite 11, Pasadena California, 91105, at a base rent of $1,695.75 per month. The lease runs through April 30, 2001. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ---------------------------------------------- Transactions with Management and Others. ---------------------------------------- Except as outlined under the caption "Executive Compensation," during the past two years, there have been no material transactions, series of similar transactions or currently proposed transactions, to which our company or any of our subsidiaries was or is to be a party, in which the amount involved exceeded $60,000 and in which any director or executive officer, or any security holder who is known to us to own of record or beneficially more than five percent of our common stock, or any member of the immediate family of any of the foregoing persons, or any promoter or founder had a material interest. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS -------------------------------------------------------- Market Information. ------------------- Until the quarter ended June 30, 1994, and for at least five years previously, there had been no "public market" for our shares of common stock. Our common stock began to trade on the OTC Bulletin Board of the NASD in the second quarter of 1994 under the symbol "SGNC." The range of high and low bid quotations for our common stock during the each quarter of the year ended December 31, 1998, each quarter of the calendar year ended December 31, 1999, and the first three quarters of 2000, is shown below. Prices are inter-dealer quotations as reported by the NASD and do not necessarily reflect transactions, retail markups, mark downs or commissions. <TABLE> <CAPTION> STOCK QUOTATIONS BID Quarter ended: High Low -------------- ---- --- <S> <C> <C> March 31, 1998 $0.5312 $0.125 June 30, 1998 $1.0937 $0.25 September 30, 1998 $0.75 $0.1562 December 31, 1998 $0.3437 $0.1562 March 31, 1999 $0.16 $0.10 June 30, 1999 $0.11 $0.08 September 30, 1999 $0.09 $0.07 December 31, 1999 $0.50 $0.09 March 31, 2000 $1.90625 $0.23 June 30, 2000 $1.50 $0.625 September 30, 2000 $0.8125 $0.3125 </TABLE> Resales of Restricted Securities. --------------------------------- Approximately 10,391,835 shares of our common stock are publicly traded. This amount will increase by the 2,235,970 outstanding shares that may be offered by this prospectus, along with the 15,761,731 shares underlying the Warrants that also may be offered by this prospectus. In addition, 1,250,000 of the 1,350,000 shares of common stock that we issued and registered with the Securities and Exchange Commission on May 9, 2000, on Form S-8 may be publicly sold on or after May 7, 2001. On that date, certain lock-up restrictions on these securities will expire. Members of management have also held most of their shares for a sufficient period of time that they may publicly sell a percentage of these shares under Rule 144. The shares will substantially increase the number of shares of common stock that may be available for public trading. Public sales of these shares may significantly reduce the market price of our shares. See the caption "Security Ownership of Management and Certain Beneficial Owners." Holders. -------- As of the date of this prospectus, we have about 496 stockholders. This figure does not include an indeterminate number of stockholders who may hold their shares in "street name." Dividends. ---------- We have not declared any cash dividends on our common stock, and do not intend to declare dividends in the foreseeable future. Management intends to use all available funds for the development of Sanguine's business. There are no material restrictions limiting, or that are likely to limit, our ability to pay dividends on our common stock. EXECUTIVE COMPENSATION ---------------------- Cash Compensation. ------------------ The following table shows the aggregate compensation that we have paid to directors and executive officers for services rendered during the periods indicated: <TABLE> <CAPTION> SUMMARY COMPENSATION TABLE <S> <C> <C> <C> <C> <C> <C> <C> <C> Long Term Compensation Annual Compensation Awards Payouts (a) (b) (c) (d) (e) (f) (g) (h) (i) Name and Year or Other Restricted Option\LTIP All Principal Period $ $ Annual Stock SAR's Payouts Other Position Ended Salary Bonus Compen- Awards ($) (#) ($) Compensa- sation($) tion ($) Thomas C. 12/31/98 * -0- -0- -0- -0- -0- -0- Drees, Ph.D. 12/31/99 * -0- -0- -0- -0- -0- -0- MBA 9/30/00 -0- -0- -0- -0- -0- -0- -0- CEO, President and Chairman of the Board of Directors Anthony G. 12/31/98 * -0- -0- -0- -0- -0- -0- Hargreaves, 12/31/99 * -0- -0- -0- -0- -0- -0- Vice Pres., 9/30/00 * -0- -0- 300,000 -0- -0- -0- Sec./Treas. shares and Director David E. 12/31/98 -0- -0- -0- -0- -0- -0- -0- Nelson, CPA 12/31/99 -0- -0- -0- -0- -0- -0- -0- CFO and 9/30/00 -0- -0- -0- 100,000 -0- -0- -0- Director shares Edward L. 12/31/98 -0- -0- -0- -0- -0- -0- -0- Kunkel, Esq. 12/31/99 -0- -0- -0- -0- -0- -0- -0- Director 9/30/00 -0- -0- -0- -0- -0- -0- -0- </TABLE> * See the heading "Employment Contracts and Termination of Employment and Change-in-Control Arrangements" of this caption. Bonuses and Deferred Compensation. ---------------------------------- See the heading "Employment Contracts and Termination of Employment and Change-in-Control Arrangements" of this caption. Compensation Pursuant to Plans. ------------------------------- We have no incentive or bonus plans. Pension Table. -------------- We have no pension plans. Other Compensation. ------------------- Other than as discussed below, we have no other compensation arrangements with any of our directors or executive officers or Advisory Board members. Compensation of Directors. -------------------------- Effective June 15, 1994, our Board of Directors adopted resolutions providing for us to pay our directors $500 per month. At the option of each director, we may pay the fee in "unregistered" and "restricted" shares of our common stock. Directors shall also be reimbursed for direct out-of-pocket expenses for attendance at Board meetings and for expenses incurred on our behalf. Due to lack of funding, we have not made any payments pursuant to these resolutions. We will not make any payments to our directors until we have received substantial additional funding for our operations. We can not guarantee that we will ever receive this funding. Effective October 1, 2000, Merton Dick Van Orden will receive 25,000 "unregistered" and "restricted" shares of our common stock per quarter, and Messrs. Morrison, Meiselman, Regelsen and Terry will receive 12,500 unregistered" and "restricted" shares of our common stock per quarter, for service on the Medical Advisory and Applications Board of Directors. Employment Contracts. --------------------- On September 23, 1993, our Board of Directors entered into Employment Agreements with Dr. Drees and Mr. Hargreaves for a seven-year period beginning on August 1, 1993. These Employment Agreements have been extended through January 22,2004. The Employment Agreements call for a base salary of $120,000 to Dr. Drees and $72,000 to Mr. Hargreaves annually. We are to provide insurance benefits, home office reimbursement, and an automobile and to reimburse Dr. Drees and Mr. Hargreaves for out of pocket expenses. On June 2, 1994, Dr. Drees and Mr. Hargreaves agreed to cancel all outstanding accruals for expenses under the Employment Agreements and to accept as full satisfaction of all of their claims against us the payments they received in November, 1993. In addition the Employment Agreements were modified to provide that for June, July, and August of 1994, salary shall be paid at one fourth the amount specified by the Employment Agreements. Beginning September 1, 1994, Dr. Drees and Mr. Hargreaves will be entitled to receive one half the salary specified until we have raised $1,500,000 in debt or equity funding. All funds raised since the completion of our Agreement and Plan of Reorganization are being counted in arriving at this sum. As of December 31, 1998, a total of $428,000 in salaries had accrued to Messrs. Drees and Hargreaves. As of December 31, 1999, a total of $524,000 in salaries had accrued. On September 24, 1996, our Board of Directors resolved to issue to Mr. Hargreaves 529,358 "unregistered" and "restricted" shares in consideration of services rendered over the previous six years. Sanguine and Edward L. Kunkel, Esq., who is one of our directors, executed an Employment Agreement on June 1, 1994. The Employment Agreement provided for Mr. Kunkel to receive $500 per month or $500 worth of our "unregistered" and "restricted" common stock, provided that no compensation was to be payable until we had received operating funds totaling at least $1,000,000 cash. We have been unable to get the funding and we have not yet paid this compensation. The Employment Agreement was for a one year term, subject to renewal by the parties. As of the date of this prospectus, we have not renewed the Employment Agreement. Mr. Kunkel's Employment Agreement irrevocably granted to Mr. Kunkel the option to purchase 10,000 "unregistered" and "restricted" shares of our common stock, exercisable in whole or in part until May 31, 1997. This date has been extended to May 31, 2002. The exercise price is the average low bid price per share as quoted on the OTC Bulletin Board of the NASD on June 1, 1994. As of the date of this prospectus, Mr. Kunkel had not exercised the option in whole or in part. Termination of Employment and Change of Control Arrangements. ------------------------------------------------------------- We have no special arrangements involving any change of control of our company or termination of any director, executive officer or Advisory Board member. Compliance with Section 16(a) of the Exchange Act. -------------------------------------------------- To our knowledge, during our past fiscal year and since then, all filings required to be made by members of management or others pursuant to Section 16(a) of the Exchange Act, have been duly filed. However, the following filings were filed later than their due date: <TABLE> <CAPTION> Date Report Date Report Filer Transaction Due Filed ----- ----------- --- ----- <S> <C> <C> <C> Thomas C. Drees Disposition of 6/10/00 10/3/00 230,000 shares Anthony G. Acquisition of Hargreaves 300,000 shares 6/10/00 10/3/00 </TABLE> FINANCIAL STATEMENTS -------------------- (i) Financial Statements for the years ended December 31, 1999, and December 31, 1998 Independent Auditors Report Balance Sheet - December 31, 1999 and 1998 Statements of Operations Accumulated for the Period January 18, 1989 to December 31, 1999 and the Years ended December 31, 1999, 1998 and 1997 Statements of Stockholders' Equity January 1, 1990 to December 31, 1999 Statements of Cash Flows Accumulated for the Period January 18, 1989 to December 31, 1999 and the Years Ended December 31, 1999, 1998 and 1997 Notes to Financial Statements (ii) Financial Statements June 30, 2000 and December 31, 1999 Balance Sheets Statements of Operations Statements of Cash Flows Notes to the Financial Statements SANGUINE CORPORATION (A Development Stage Company) FINANCIAL STATEMENTS December 31, 1999 & December 31, 1998

/Letterhead/ Schvaneveldt & Company Certified Public Accountant 275 East South Temple, Suite #300 Salt Lake City, Utah 84111 (801) 521-2392 Darrell T. Schvaneveldt, C.P.A. Independent Auditors Report Board of Directors Sanguine Corporation (A Development Stage Company) I have audited the accompanying balance sheets of Sanguine Corporation, as of December 31, 1999 and 1998, and the related statements of operations, stockholders' equity, and cash flows for the accumulated period of January 18, 1989 to December 31, 1999, and the years ended December 31, 1999, 1998, and 1997. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statements presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Sanguine Corporation, as of December 31, 1999 and 1998, and the results of its operations and its cash flows for the accumulated period of January 18, 1989 to December 31, 1999, and the years ended December 31, 1999, 1998, and 1997, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #9 to the financial statements, the Company has an accumulated deficit and a negative net worth at December 31, 1999. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note #9. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /S/ Schvaneveldt & Company Salt Lake City, Utah April 11, 2000

<TABLE> SANGUINE CORPORATION (A Development Stage Company) Balance Sheet December 31, 1999 and 1998 <CAPTION> 1999 1998 Assets <S> <C> <C> Current Assets Cash $ 1,062 $ 499 Property & Equipment Furniture -0- 84 Total Assets $ 1,062 $ 583 Liabilities & Stockholders' Equity Current Liabilities Accounts Payable $ 78,680 $ 14,154 Accrued Salaries 524,000 428,000 Accrued Interest Payable 38,880 33,420 Notes Payable 168,306 135,450 Total Current Liabilities 809,866 611,024 Stockholders' Equity Common Stock, Authorized: 100,000,000 Shares at $0.001 Par Value: 23,162,994 & 23,010,217 Shares Issued & Outstanding Respectively 23,163 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 (1,709,411) (1,491,547) Total Stockholders' Equity (808,804) (610,441) Total Liabilities & Stockholders' Equity $ 1,062 $ 583 </TABLE> <TABLE> SANGUINE CORPORATION (A Development Stage Company) Statements of Operations Accumulated for the Period January 18, 1989 to December 31, 1999 and the Years Ended December 31, 1999, 1998 and 1997 <CAPTION> Accumulated January 18, 1989 to December December December December 31, 1999 31, 1999 31, 1998 31, 1997 <S> <C> <C> <C> <C> Revenues Interest Income $ 4,842 $ -0- $ -0- $ -0- Sales Market Rights 150,000 -0- -0- -0- Total Revenues 154,842 -0- -0- -0- Expenses Depreciation $ 4,609 $ 84 $ 920 $ 920 Research & Development 865,805 78,000 198,000 79,000 Insurance 22,023 23,794 467 672 Office Expenses 93,253 12,627 9,585 8,987 Auto Expenses 26,919 9,922 990 1,170 Legal & Professional Fees 141,231 19,067 30,550 9,773 Rent 98,791 12,564 17,596 16,000 Interest Expenses 69,827 16,746 16,732 10,255 Bad Debts 10,000 -0- -0- 10,000 Travel 20,725 7,570 136 -0- Stock Transfer 4,829 300 1,770 618 Consultant Fees 297,520 -0- 63,710 9,633 Salaries & Wages 112,108 18,000 18,000 18,000 Taxes & Licenses 25,295 1,999 1,167 1,184 Finders Fees 7,825 -0- -0- -0- Promotions 52,094 17,191 6,816 -0- Total Expenses 1,852,854 217,864 366,439 166,212 Net Profit (Loss) From Operations ($1,698,012) ($217,864) ($366,439) ($166,212) Profit (Loss) Per Share ($.01) ($.02) ($.01) Weighted Average Shares Outstanding 23,078,735 21,943,900 20,877,723 </TABLE> <TABLE> SANGUINE CORPORATION (A Development Stage Company) Statement of Stockholders' Equity January 1, 1990 to December 31, 1999 <CAPTION> Common Shares Paid In Accumulated Shares Amount Capital Deficit <S> <C> <C> <C> <C> Balance, January 1, 1990 Retroactively Restated 1,428,364 $ 1,428 $2,423,214 ($2,464,642) Balance, December 31, 1990 1,428,364 1,428 2,423,214 ( 2,464,642) Net Profit Year Ended December 31, 1991 73,917 Balance, December 31, 1991 1,428,364 1,428 2,423,214 ( 2,390,725) Shares Issued for Services $0.001 Per Share 2,720 2 Contributed Capital by Officer 750 Net Loss Year Ended December 31, 1992 ( 77,011) Balance, December 31, 1992 1,431,084 1,430 2,423,964 ( 2,467,736) Shares Issued to Acquire 94% of Outstanding Shares of Sanguine Corporation (A California Corporation)14,589,775 14,590 (14,590) Shares Issued for Cash $.20 Per Share 500,000 500 99,500 Shares Issued for Cash $1.00 Per Shares 10,000 10 9,990 Net Loss Year Ended December 31, 1993 ( 92,895) Balance, December 31, 1993 16,530,859 16,530 2,533,454 ( 2,575,221)

SANGUINE CORPORATION (A Development Stage Company) Statement of Stockholders' Equity -Continued- January 1, 1990 to December 31, 1999 <CAPTION> Common Shares Paid In Accumulated Shares Amount Capital Deficit <S> <C> <C> <C> <C> Quasi-Reorganization Restated of Equity Accounts (2,423,964) 2,423,964 Cash Received of Exercise of Option to Purchase Shares at $.36 Per Share 175,000 175 62,825 Cash Received from Sale of Stock at $.75 Per Share 16,000 16 11,984 Net Loss Year Ended December 31, 1994 (230,779) Balance, December 31, 1994 16,721,859 16,721 184,299 (382,036) Shares Issued in Satisfaction of Accounts Payable at $0.17 Per Share 500,000 500 83,585 Shares Issued in Satisfaction of Accounts Payable at $.05 Per Shares 700,000 700 31,238 Shares Issued for Services at $.125 Per Share 1,625,000 1,625 201,500 Shares Issued in Satisfaction Notes Payable at $.75 Per Share 16,000 16 13,225 Net Loss Year Ended December 31, 1995 (366,843) Balance, December 31, 1995 19,562,859 19,562 513,847 (748,879) Shares Issued for Cash $0.25 Per Share 10,000 10 2,490

SANGUINE CORPORATION (A Development Stage Company) Statement of Stockholders' Equity -Continued- January 1, 1990 to December 31, 1999 <CAPTION> Common Shares Paid In Accumulated Shares Amount Capital Deficit <S> <C> <C> <C> <C> Shares Issue for Services $0.001 Per Share 450,000 450 Shares issued in Satisfaction of Accrued Expenses $0.25 Per Share 125,506 126 31,251 Shares Issued In Satisfaction of Services Rendered $0.001 Per Share 529,358 529 Shares Issued in Satisfaction of Accounts Payable $0.247 Per Share 200,000 200 49,354 Rounding ( 1) Net Loss for Year Ended December 31, 1996 (210,016) Balance, December 31, 1996 20,877,723 20,877 596,942 (958,896) Shares Issued for Services 100,000 100 9,234 Net Loss for Year Ended December 31, 1997 (166,212) Balance, December 31, 1997 20,977,723 20,977 606,176 (1,125,108) Shares Issued for Services $.025 Per Share 32,281 32 8,038 Shares Issued for Services $0.25 Per Share 31,183 31 7,766 Shares Issued for Services $0.25 Per Share 11,030 11 2,747 Shares Issued in Satisfaction of Accounts Payable $0.21 Per Share 240,000 240 52,887

SANGUINE CORPORATION (A Development Stage Company) Statement of Stockholders' Equity -Continued- January 1, 1990 to December 31, 1999 <CAPTION> Common Shares Paid In Accumulated Shares Amount Capital Deficit <S> <C> <C> <C> <C> Shares Issued for Cash $0.13 Per Share 8,000 8 1,192 Shares Canceled ( 100,000) ( 100) 100 Share Issued for Services at $0.10 Per Share 600,000 600 59,400 Shares Issued for Cash at $0.10 Per Share 10,000 10 990 Shares Issued for Cash at $0.10 Per Share 1,200,000 1,200 118,800 Rounding Adjustment 1 Net Loss for Year Ended December 31, 1998 ( 366,439) Balance, December 31, 1998 23,010,217 23,010 858,096 (1,491,547) Shares Issued for Cash at $0.19 Per Share 52,777 53 9,447 Shares Issued for Legal Services at $0.10 Per Share 100,000 100 9,900 Net Loss for Year Ended December 31, 1999 ( 217,864) Balance, December 31, 1999 23,162,994 $23,163 $ 877,443 ($1,709,411) </TABLE> <TABLE> SANGUINE CORPORATION (A Development Stage Company) Statements of Cash Flows Accumulated for the Period January 18, 1989 to December 31, 1999 and the Years Ended December 31, 1999, 1998 and 1997 <CAPTION> Accumulated January 18, 1989 to December December December December 31, 1999 31, 1999 31, 1998 31, 1997 <S> <C> <C> <C> <C> Cash Flows from Operating Activities Net (Loss) ($1,491,547) ($217,864) ($366,439) ($166,212) Adjustments to Reconcile Net (Loss) to Net Cash: Rounding -0- 1 (2) -0- Depreciation 4,525 84 920 920 Non Cash Expense 427,801 10,000 78,625 19,334 Changes in Operating Assets & Liabilities: Increase (Decrease) Accounts Payable 14,154 64,526 31,722 10,189 Increase in Interest Payable 33,420 5,460 5,460 5,460 Increase in Accrued Salaries 428,000 96,000 96,000 96,000 Net Cash Flows from Operating Activities (583,647) ( 41,793) ( 153,714) ( 34,309) Cash Flows from Investing Activities Purchase of Equipment (4,609) -0- -0- -0- Cash Flows from Financing Activities (Decrease) Increase in Notes Payable 135,450 32,856 31,750 33,900 Sale of Common Stock 452,555 9,500 122,200 -0- Contributed Capital 750 -0- -0- -0- Net Cash Flows from Financing Activities 588,755 42,356 153,950 33,900 Increase (Decrease) in Cash 499 563 236 ( 409) Cash at Beginning of Period -0- 499 263 672 Cash at End of Period $ 499 $1,062 $ 499 $ 263 Disclosure for Cash Flows from Interest $ 69,827 $16,746 $16,732 $ 10,255 Taxes -0- -0- -0- -0- Disclosures from Non Cash Transactions Operating Activities Payment of Accounts Payable $ -0- $ -0- $49,930 $ -0- Issued Shares for Services -0- 10,000 78,625 9,333 </TABLE> SANGUINE CORPORATION (A Development Stage Company) 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. E. Inventories: Inventories are stated at the lower of cost, determined by the FIFO method or market.

SANGUINE CORPORATION (A Development Stage Company) Notes to Financial Statements -Continued- NOTE #2 - Significant Accounting Policies -Continued- 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 - Common Stock Public Offering In June of 1974, the Company completed a public offering of 3,000,000 shares of its common stock at $0.02 per share. NOTE #4 - Net Operating Losses for Tax Carryforward The Company had net operating losses to carryforward to years expiring in 1985. Sanguine Corporation (California) has had operating losses to carryforward as scheduled below. Year of Expiration Loss Amount Date 1992 $ 3,094 2007 1993 149,162 2008 1995 186,779 2009 1995 165,343 2010 1996 209,488 2016 1997 156,878 2017 1998 366,439 2018 1999 217,864 2019 The Company has adopted FASB 109 to account for income taxes. The Company currently has no issues that create timing differences that would mandate deferred tax expenses. Net operating losses would create possible tax assets in future years. Due to the uncertainty as to the utilization of net operating loss carryforwards an evaluation allowance has been made to the extent of any tax benefit that net operating losses may generate. 1999 1998 1997 Current Tax Asset Value of Net Operating Loss Carryforwards at Current Prevailing Federal Tax Rate $ 494,717 $ 420,643 $ 296,053 Evaluation Allowance (494,717) (420,643) (296,053) Net Tax Assets $ -0- $ -0- $ -0- Current Income Tax Expense -0- -0- -0- Deferred Income Tax Expense -0- -0- -0-

SANGUINE CORPORATION (A Development Stage Company) Notes to Financial Statements -Continued- NOTE #5- Notes Payable - Short Term The Company has three notes payable to three entities. Amounts 1999 1998 Note #1 to an individual, due on demand, interest at 10% per annum, with option to the holder to convert to 35,277 shares of common stock to $0.4252 per share. $ 15,000 $ 15,000 Note #2 to a partnership, due on demand, but not later than August 10, 1994, at 12% per annum interest. 25,000 25,000 Note #3 to an individual, (related party) due on demand, interest at 12% per annum. 128,306 95,450 Total Current Notes Payable $168,306 $135,450 NOTE #6 - Property & Equipment The Company capitalized the purchase of equipment and fixtures for major purchases in excess of $1,000 per item. Capitalized amounts are depreciated over the useful life of the assets using the straight-line method of depreciation. Scheduled below are the assets, costs, lives, and accumulated depreciation at December 31, 1999 and 1998. December 31, Depreciation Accumulated 1999 1998 Expense Depreciation Assets Cost Cost Life 1999 1998 1999 1998 Furniture $ 4,609 $ 4,609 5 $ 84 $ 920 $4,609 $4,525 NOTE #7 - Stock Option The Company has set aside 1,500,000 shares of its common stock options at a price not to exceed $5.00 per share. The Corporation has issued 893,449 warrants as follows: 587,715 at $0.8504 per share. 305,734 at $0.4252 per share. The exercise period of warrants issued expired in August 1998 with no warrants being exercised. Pursuant to the Agreement and Plan of Reorganization dated June 14, 1993, the Company issued an option to purchase 470,642 shares of its common stock at $0.1275 per share. The option has been extended by the Company and expires on September 22, 2001. The option issued by Sanguine Corporation (Nevada Corporation) replaced options issued by the California Corporation to an officer

SANGUINE CORPORATION (A Development Stage Company) Notes to Financial Statements -Continued- NOTE #7 - Stock Option -Continued- as part of his compensation for services. When the option was issued by the Company the shares of the Company had no market value. On November 10, 1995, the Company issued an option to its legal counsel for 200,000 shares at $.25 per share for a period of five years. In 1996 and 1998 counsel exercised its option to purchase the 200,000 shares at $0.25 per share. On September 23, 1998, the Company issued an option to its legal counsel for 100,000 shares at $0.10 per share for a period of three years from the date of the grant. The Company's counsel exercised the option for the 100,000 shares at $10,000 for services. NOTE #8 - Lease Commitment The Company rents office space on a month to month arrangement for $1696. The total annual cost of the space is $19,764. At the present time the Company's President reimburses the Company $601 each month for space he utilizes for non company purposes. NOTE #9 - Going Concern The Company had an accumulated deficit of $1,709,411 at December 31, 1999 and negative cash flows for the year and the proceeding year. Until the Company commences business operations, management anticipates that negative cash flows will continue. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company seeks to find a business opportunity to acquire or merge with that will provide operating capital. NOTE #10 - Minority Interest Sanguine Corporation (California) had a total of 6,586,800 shares of its common stock issued and outstanding. Pursuant to the Agreement and Plan of Reorganization, Sanguine Corporation (Nevada) acquired 6,200,000 of the issued and outstanding shares. The resulting 386,800 shares of minority interest in the California Corporation represents approximately six percent (6%) of the Company's outstanding stock. No provision for minority interest has been made on the financial statements because of the losses incurred in the presented periods and the deficit stockholder's equity. NOTE #11 - Employment Agreement The Company has employment agreements with Dr. Thomas Drees and Anthony G. Hargreaves dated January 22, 1990. The agreements call for a base salary of $120,000 to Dr. Drees and $72,000 to Mr. Hargreaves annually. Insurance benefits, home office reimbursement, and an automobile are to be provided by the Company and reimbursement for out of pocket expenses will be paid to Dr. Drees and Anthony G. Hargreaves. Subject to an agreement of June 2, 1994, Dr. Drees and Mr. Hargreaves agreed to cancel all outstanding accruals for expenses under the provision of the Agreements and to accept as full satisfaction of all of their claims against Sanguine Corporation the

SANGUINE CORPORATION (A Development Stage Company) Notes to Financial Statements -Continued- NOTE #11 - Employment Agreement -Continued- payments they received in November 1993. In addition the Agreements were modified to provide that for June, July, and August of 1994, salary shall be paid at one fourth the amount specified by the Agreements. Commencing September 1, 1994, Dr. Drees and Mr. Hargreaves will be entitled to receive one half the salary specified until such time as Sanguine Corporation shall have raised $1,500,000 in debt or equity funding. All funds raised since the completion of the Agreement and Plan of Reorganization between Sanguine Corporation (California), and Sanguine Corporation (Nevada), are being counted in arriving at this sum. NOTE #12 - Non Cash Investing & Financing Activities In 1993, the Company issued 14,589,775 shares of its common stock to finance the acquisition of Sanguine Corporation (a California Corporation). In 1995, the Company issued 1,625,000 shares of its common stock at par value in payment of services received from several vendors. In 1996, the Company issued 450,000 shares of stock for services valued at $450 and 854,864 shares for settlement of accounts payable and accrued expenses. In 1997, the Company issued 100,000 shares of its common stock for services rendered to the Company valued at $9,334.00. In 1998, the Company issued 674,494 shares of its common stock for services valued at $78,625. The Company issued 240,000 shares of its common stock for satisfaction of accounts payable valued at $49,930. In 1999, the Company issued 100,000 shares of its common stock for legal services valued at $10,000. NOTE #13 - Subsequent Events In March of 2000, the Company agreed to grant options to purchase shares of common stock to the following; to the Company's Legal Counsel the option to purchase 300,000 shares, an Officer of the Company the option to purchase 100,000 shares and an unrelated party the option to purchase 700,000 shares of common stock. The Option price of the shares is $0.25 per share and may be exercised for 180 days from the grant date.

Sanguine Corporation (A Development Stage Company) Financial Statements June 30, 2000 (Unaudited) SANGUINE CORPORATION (A Development Stage Company) Balance Sheet June 30, 2000 Unaudited & December 31, 1999 <TABLE> <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.

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 $0.25 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. 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. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ---------- Schvaneveldt and Company, Certified Public Accountants, of Salt Lake City, Utah, audited our financial statements for the calendar years ended December 31, 1999, 1998 and 1997. These financial statements accompanied our Annual Reports on Form 10-KSB for the calendar years ended December 31, 1999, 1998 and 1997, which we have previously filed with the Securities and Exchange Commission. See the caption "Available Information." Darrell T. Schvaneveldt, CPA, who owned and operated Schvaneveldt and Company as a sole proprietorship, died on September 8, 2000. During our two most recent calendar years, and since then, our principal independent accountant had not resigned or declined to stand for re-election, and we have not dismissed any principal independent accountant during that period. You may rely only on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of the prospectus nor the sale of common stock means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy these shares of common stock in any circumstances under which the offer or solicitation is unlawful. AVAILABLE INFORMATION --------------------- We file periodic reports with the Securities and Exchange Commission. You may inspect and copy these documents at the Public Reference Room of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Commission at 1-800-SEC-0330 for additional information. Our Commission filings are also available from the Commission's web site: http://www.sec.gov. We have filed a registration statement with the Commission on Form SB-2, under the Securities Act of 1933, with respect to the securities described in this prospectus. This prospectus is filed as part of the registration statement. It does not contain all of the information set forth in the registration statement and the exhibits and schedules filed with it. For further information about us and the common stock described by this prospectus, we refer you to the registration statement and to the exhibits and schedules filed with it. You may inspect or copy these documents at the Public Reference Branch. DEALER PROSPECTUS DELIVERY OBLIGATION ------------------------------------- Until _________, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. ------------------------------------------------------------------------------- ---------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 24. Indemnification of Directors And Officers. ------------------------------------------ Section 78.751(1) of the NRS authorizes a Nevada corporation to indemnify any director, officer, employee, or corporate agent "who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation" due to his corporate role. Section 78.751(1) extends this protection "against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful." Section 78.751(2) of the NRS also authorizes indemnification of the reasonable defense or settlement expenses of a corporate director, officer, employee or agent who is sued, or is threatened with a suit, by or in the right of the corporation. The party must have been acting in good faith and with the reasonable belief that his actions were not opposed to the corporation's best interests. Unless the court rules that the party is reasonably entitled to indemnification, the party seeking indemnification must not have been found liable to the corporation. To the extent that a corporate director, officer, employee, or agent is successful on the merits or otherwise in defending any action or proceeding referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS requires that he be indemnified "against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense." Section 78.751(4) of the NRS limits indemnification under Sections 78.751(1) and 78.751(2) to situations in which either (1) the stockholders, (2)the majority of a disinterested quorum of directors, or (3) independent legal counsel determine that indemnification is proper under the circumstances. Pursuant to Section 78.751(5) of the NRS, the corporation may advance an officer's or director's expenses incurred in defending any action or proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides that the rights to indemnification and advancement of expenses shall not be deemed exclusive of any other rights under any bylaw, agreement, stockholder vote or vote of disinterested directors. Section 78.751(6)(b) extends the rights to indemnification and advancement of expenses to former directors, officers, employees and agents, as well as their heirs, executors, and administrators. Regardless of whether a director, officer, employee or agent has the right to indemnity, Section 78.752 allows the corporation to purchase and maintain insurance on his behalf against liability resulting from his corporate role. Article V of our Bylaws requires us to indemnify our directors and officers, former directors and officers and directors and officers of subsidiaries against expenses necessarily incurred by them in defending any action in which they are made parties due to their service as directors or officers, except in relation to matters as to which such directors or officers are adjudged to be liable for negligence or misconduct. Each of the Employment Agreements between Sanguine California and Dr. Drees Mr. provides for the payment by the losing party of attorneys' fees, costs and other necessary disbursements incurred by the prevailing party in any litigation or arbitration necessary to enforce or interpret the terms of that Employment Agreement. See the heading "Employment Contracts and Termination of Employment and Change-in-Control Arrangements" of the caption "Executive Compensation." Item 25. Other Expenses of Issuance And Distribution. -------------------------------------------- The following table sets forth the expenses which we expect to incur in connection with the registration of the shares of common stock being registered by this Registration Statement. All of these expenses, except for the Commission registration fee, are estimated: Securities and Exchange Commission registration fee........$ 2,128.28 Legal fees and expenses....................................$50,000 Accounting fees............................................$ 3,500 Printing and engraving expenses............................$ 0 Transfer agent fees........................................$ 500 Miscellaneous..............................................$ 500 -------- Total................................................$56,628.28 Item 26. Recent Sales of Unregistered Securities. ---------------------------------------- Sanguine sold the following "restricted securities" during the past two calendar years: Aggregate Name Number of Shares Date Consideration ---- ---------------- ---- ------------- SCS, Inc. 240,000 6/19/98 $ 53,127 Various subscribers 66,494 08/98 $ (1) Four subscribers 1,216,000 9/24/98 $124,000 under Rule 506 offering Sunrise Financial, 600,000 10/26/98 $ 60,000 Inc. Tyler Zinck and 18,000 11/2/98 $ 3,240 Robert L. Ganzhorn Nine subscribers 52,777 4/28/99 $ 9,499 under Rule 506 offering 12 subscribers 46,329 5/31/00 $ 13,898.70 under Rule 506 offering Four subscribers 1,635,970 (2) 9/1/00 $817,985 under Laidlaw Offering (1) Various prices from $0.10 to $0.25 per share in cash and/or services (See the Statements of Stockholders' Equity in our financial statements that accompany this Registration Statement, under the caption "Financial Statements.") (2) We sold 1,635,970 Units. Each Unit consisted of two shares of our common stock and one redeemable warrant entitling the holder to purchase one share of our common stock at a price of $0.40 per share. See the heading "Warrants" under the caption "Description of Securities" of this Registration Statement. We issued all of these securities to persons who were either "accredited investors," or "sophisticated investors" who, by reason of education, business acumen, experience or other factors, were fully capable of evaluating the risks and merits of an investment in our company; and each had prior access to all material information about us. We believe that the offer and sale of these securities was exempt from the registration requirements of the Securities Act, pursuant to Sections 4(2) and 4(6) thereof, and Regulation D of the Securities and Exchange Commission and from various similar state exemptions. Sales of "restricted securities" by members of management and others could adversely affect the public market for our common stock. With the exception of the "restricted securities" issued as outlined above in 1999, all of our remaining outstanding shares of common stock that are designated as "restricted securities" have been held for a sufficient period of time for resale under Rule 144 of the Securities and Exchange Commission, subject to compliance with the volume limitations of subparagraph (e) of this Rule. Item 27. Exhibits -------- The following exhibits are filed as a part of this Registration Statement: <TABLE> <CAPTION> Exhibit Number Description ------ ------------ <S> <C> 2.1 Articles and Agreement of Merger whereby 10-SB the Company changed its domicile from the State of Utah to the State of Nevada and effecting a one for twenty reverse split of its outstanding voting securities, effective July 13, 1992 2.2 Agreement and Plan of Reorganization between 10-SB us and Sanguine Corporation, a California corporation, effective June 14, 1993 3.1 Initial Predecessor Articles of Incorporation 10-SB filed January 24, 1974 3.2 Amendment to Predecessor Articles of 10-SB Incorporation filed July 8, 1974, reflecting a name change to "Kricket Corporation" 3.3 Amendment to Predecessor Articles of 10-SB Incorporation filed October 13, 1977, increasing the authorized capital to $250,000 3.4 Amendment to Predecessor Articles of 10-SB Incorporation filed December 22, 1986, increasing the authorized capital to $1,000,000 3.5 Amendment to Predecessor Articles of 10-SB Incorporation filed December 5, 1977, reflecting a name change to "International Health Resorts, Inc." 3.6 Initial Articles of Incorporation of 10-SB International Health Resorts, Inc., a Nevada corporation ("International Nevada," now our Article of Incorporation) filed February 5, 1992 3.7 Bylaws of International Nevada (now the 10-SB Our Bylaws) 3.8 Certificate of Amendment to our 10-SB Articles of Incorporation reflecting a name change to "Sanguine Corporation" effective June 25, 1993, and effecting a 1.5 for one forward split of our outstanding common stock, effective June 28, 1993 3.9 Certificate of Amendment to our 10-SB Articles of Incorporation decreasing the required number of directors from a minimum of three to not less than one director, effective November 10, 1993 5 Opinion of Branden T. Burningham, Esq. regarding legality 10.1 License Agreement between Sanguine Corporation, 10-SB a California corporation ("Sanguine California" [a majority owned subsidiary of the Company]), and BioLogix Development Partners, a California limited partnership, dated March 28, 1991 10.2 First Amendment to the License Agreement between 10-SB Sanguine California and BioLogix Development Partners, dated September 28, 1991 10.6 Employment Agreement with Dr. Thomas C. Drees 10-SB 10.7 Employment Agreement with Anthony G. Hargreaves 10-SB 21 Subsidiaries of the Registrant 23 Consent of Branden T. Burningham, Esq. 27 Financial Data Schedule 99.2 8-K Current Report dated June 8, 2000, regarding Westbury Warrant Agreement 99.3 8-K Current Report dated September 1, 2000, regarding the Laidlaw Private Offering 99.3 8-K Current Report dated September 18, 2000, regarding the death of our independent accountant and the selection of replacement independent auditors Item 28. Undertakings ------------ Sanguine hereby undertakes: (1) To file, during any period in which it offers or sells securities, a post-effective amendment to this Registration Statement to: (i) include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and, notwithstanding the foregoing, any increase or decrease in volume of securities offered, if the total dollar value of securities offered would not exceed that which was registered, and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; and (iii) include any additional or changed material information on the plan of distribution. (2) For determining liability under the Securities Act, to treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time shall be deemed to be the initial bona fide offering. (3) To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. (4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, executive officers and controlling persons the foregoing provisions or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission that indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against these liabilities, other than our payment of expenses incurred or paid by any of our directors, executive officers or controlling persons in the successful defense of any action, suit or proceeding, is asserted by the director, executive officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question whether indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of that issue. SIGNATURES ---------- In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing of Form SB-2 and authorized this registration statement to be signed on its behalf by the undersigned in the City of Pasadena, State of California, on October 31, 2000. SANGUINE CORPORATION Date: October 31, 2000 By /s/ Thomas C. Drees --------------- ------------------------------------- Thomas C. Drees, Ph.D., MBA Chairman, CEO and President In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated. Date: October 31, 2000 By /s/ Thomas C. Drees --------------- ------------------------------------- Thomas C. Drees, Ph.D., MBA Chairman, CEO and President Date: October 31, 2000 By /s/ Anthony G. Hargreaves -------------- ------------------------------------- Anthony G. Hargreaves, Vice Chairman, Vice President, Secretary/Treasurer and Director Date: October 31, 2000 By /s/ David E. Nelson --------------- ------------------------------------ David E. Nelson, CPA CFO and Director

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 EXHIBITS TO FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SANGUINE CORPORATION </TABLE>


                                  [LETTERHEAD OF BRANDEN T. BURNINGHAM]



October 31, 2000

Thomas C. Drees, Ph.D., MBA, President
Sanguine Corporation
110 East Green Street, #11
Pasadena, California 91105

Re:          Sanguine Corporation, a Nevada corporation (the "Company")


Ladies and Gentlemen:

       I refer to the Company's Registration Statement on Form SB-2 under
the Securities Act (the "Registration Statement"), which will be filed with
the Securities and Exchange Commission.  The Registration Statement relates to
the registration of approximately 17,498,701 shares of the Company's $0.001
par value common stock (the "Common Stock"), to be offered and sold by one of
the holders thereof (the "Selling Stockholders").

                           Assumptions

       In rendering the opinion expressed below, I have assumed, with
your permission and without independent verification or investigation:

       1.     That all signatures on documents I have examined in
connection herewith are genuine and that all items submitted to me as original
are authentic and all items submitted to me as copies conform with originals;

       2.      Except for the documents stated herein, there are no
documents or agreements between the Company and/or any third parties which
would expand or otherwise modify the respective rights and obligations of the
parties as set forth in the documents referred to herein or which would have
an effect on the opinion;

       3.     That each of the documents referred to constitutes the
legal, valid and binding obligation of the party executing the same; and

       4.     That as to all factual matters, each of the representations
and warranties contained in the documents referred to herein is true, accurate
and complete in all material respects, and the opinion expressed herein is
given in reliance thereon.

       I have examined the following documents in connection with this
matter:

       1.  Articles of Incorporation of the Company, as amended;

       2.  Bylaws of the Company;

       3.  The Registration Statement;

       4.  Resolutions of the Board of Directors of the Company; and

       5.  All reports filed with the Securities and Exchange Agreement
and related exhibits that are pertinent hereto.

       I have also examined various other documents, books, records,
instruments and certificates of public officials, directors, executive
officers and agents of the Company, and have made such investigations as I
have deemed reasonable, necessary or prudent under the circumstances.  Also,
in rendering this opinion, I have reviewed various statutes and judicial
precedence as I have deemed relevant or necessary.

       Based upon my examination mentioned above, and relying on the
statements of fact contained in the documents that I have examined, I am of
the opinion that the Common Stock, when sold, will be legally issued, fully
paid and non-assessable.

       I hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and the reference to me in the Prospectus under the
caption "Legal Opinions."


                                Sincerely yours,

                                          /s/ Branden T. Burningham

                                Branden T. Burningham


Sanguine Corporation, a California corporation


                     [Letterhead of Branden T. Burningham]


October 31, 2000

Thomas C. Drees, Ph.D., MBA, President
Sanguine Corporation
110 East Green Street, #11
Pasadena, California 91105


Re:  Opinion letter, dated October 31, 2000, regarding shares of common stock
     of Sanguine Corporation, a Nevada corporation (the "Company")


Dear Dr.Drees:

     I hereby consent to being named in the Prospectus included in the
Company's Registration Statement on Form SB-2 as having rendered the above-
referenced opinion and as having represented the Company in connection with
such Registration Statement.

                                                  Sincerely yours,

                                                  /s/ Branden T. Burningham

                                                  Branden T. Burningham

WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.

<TABLE> <S> <C>

<ARTICLE>    5

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<PERIOD-TYPE>                   12-MOS               6-MOS
<FISCAL-YEAR>              DEC-31-1999           DEC-31-2000
<PERIOD-END>               DEC-31-1999           JUN-30-2000
<CASH>                            1062                  4521
<SECURITIES>                         0                     0
<RECEIVABLES>                        0                     0
<ALLOWANCES>                         0                     0
<INVENTORY>                          0                     0
<CURRENT-ASSETS>                  1062                  4521
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<CURRENT-LIABILITIES>           809866                865553
<BONDS>                              0                     0
<PREFERRED-MANDATORY>                0                     0
<PREFERRED>                          0                     0
<COMMON>                         23163                 24569
<OTHER-SE>                     (831967)              (885601)
<TOTAL-LIABILITY-AND-EQUITY>      1062                  4521
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<CGS>                                0                     0
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<EPS-DILUTED>                    (0.01)                (0.00)


</TABLE>