**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 10-Q**

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2010

[   ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to __________

Commission File Number 000-24480

                                           

Sanguine Corporation

(Exact name of registrant as specified in its charter)

Nevada

95-4347608

(State or other jurisdiction of

(IRS Employer Identification No.)

incorporation or organization)

101 East Green Street, #6, Pasadena, California  

  91105

 (Address of principal executive offices)  (Zip Code)

(626) 405-0079

 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]   No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  The registrant is not yet part of the Interactive Data reporting system.

Yes [  ]  No  [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated filer  ̈

Accelerated filer  ̈

Non-accelerated filer   ̈ (Do not check if a smaller reporting company)

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]   No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

6,682,072 shares of $0.001 par value common stock on August 12, 2010

----

**Part I - FINANCIAL INFORMATION**

**Item 1. Financial Statements**

**Sanguine Corporation**

FINANCIAL STATEMENTS

(UNAUDITED)

June 30, 2010

The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made.  These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company.

----

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

 Consolidated Balance Sheets

 

ASSETS

|  

 

June 30,

2010

 

December 31,

2009

 

 

(Unaudited)

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

Cash

$

1,329

  $

1,928

Prepaid expense

 

123,171

 

167,701

 

 

 

 

 

  Total Current Assets

 

124,500

 

169,629

 

 

 

 

 

PROPERTY AND EQUIPMENT, NET

 

552

 

716

 

 

 

 

 

 

 

 

 

 

Long term prepaid expense

 

-

 

55,987

 

 

 

 

 

     TOTAL ASSETS

$

125,052

  $

226,332

The accompanying notes are an integral part of these consolidated financial statements. 

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

Consolidated Balance Sheets (Continued)

 

LIABILITIES AND SHAREHOLDERS’ DEFICIT

     

 

 

June 30,

2010

 

December 31,

2009

 

 

(Unaudited)

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

Accounts payable

$

336,668

  $

344,316

Related party payable

 

160,906

 

122,428

Accrued interest

 

735

 

420

Notes payable

 

9,560

 

9,000

Accrued compensation

 

5,075

 

2,931

 

 

 

 

 

  Total Current Liabilities

 

512,944

 

479,095

 

 

 

 

 

  Total Liabilities

 

512,944

 

479,095

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

Preferred stock, 10,000,000 shares authorized of

  $0.001 par value, 25,000 and 0 shares issued

  and outstanding, respectively

 

25

 

-

Common stock, 10,000,000 shares authorized   of $0.001 par value, 6,682,072  and 6,682,072 shares issued and outstanding, respectively

 

6,682

 

6,682

Additional paid in capital

 

8,561,812

 

8,531,300

Preferred stock subscribed

 

8,500

 

25,000

Deficit accumulated during the development stage

 

(8,964,911)

 

(8,815,745)

 

 

 

 

 

   Total Shareholders’ Deficit

 

(387,892)

 

(252,763)

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ 

  DEFICIT

$

125,052 

  $ 

226,332

The accompanying notes are an integral part of these consolidated financial statements. 

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

 Consolidated Statements of Operations and Other Comprehensive Income (Loss)

(Unaudited)

 

For the Three Months Ended 

June 30,

 

 

For the Six Months Ended 

June 30,

 

 

From Inception of the Development Stage on January 18, 1990 through June 30,

 

2010

 

2009

 

2010

 

2009

 

2010

REVENUES

$

-

  $

-

  $

-

$  

-

$  

191,762

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Professional fees

 

96,967

 

74,664

 

144,322

 

134,453

 

5,197,795

  Research and

   development

 

-

 

-

 

-

 

-

 

1,973,158

  Selling, general and 

   administrative

 

7,164

 

14,606

 

14,405

 

22,870

 

2,834,933

 

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

104,131

 

89,270

 

158,727

 

157,323

 

10,005,886

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(104,131)

 

(89,270)

 

(158,727)

 

(157,323)

 

(9,814,124)

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Interest income

 

-

 

-

 

-

 

2

 

40,195

  Interest expense

 

(3,058)

 

(1,628)

 

(5,852)

 

(2,617)

 

(681,612)

  Gain (loss) on foreign

    currency exchange

 

9,389

 

(6,185)

 

15,413

 

361

 

(1,983)

  Loss on cash deposit

 

-

 

-

 

-

 

-

 

(10,020)

  Gain on settlement of 

   debt

 

-

 

-

 

-

 

-

 

1,502,633

 

 

 

 

 

 

 

 

 

 

 

Total Other Income (Expense)

 

6,331

 

(7,813)

 

9,561

 

(2,254)

 

849,213

 

 

 

 

 

 

 

 

 

 

 

NET LOSS BEFORE 

 PROVISION FOR 

 INCOME TAX

 

(97,800)

 

(97,083)

 

(149,166)

 

(159,577)

 

(8,964,911)

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these consolidated financial statements. 

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

 Consolidated Statements of Operations - continued

(Unaudited)

 

For the Three Months Ended 

June 30,

 

 

For the Six Months Ended 

June 30,

 

 

From Inception of the Development Stage on January 18, 1990 through June 30,

 

2010

 

2009

 

2010

 

2009

 

2010

PROVISON FOR INCOME TAX

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(97,800)

  $

(97,083)

  $

(149,166)

$ 

(159,577)

$ 

(8,964,911)

 

 

 

 

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS PER SHARE

$

(0.01)

  $

(0.02)

  $

(0.02)

$ 

(0.03)

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING –BASIC AND DILUTED

 

6,682,072

 

5,731,550

 

6,682,072

 

5,449,627

 

 

The accompanying notes are an integral part of these consolidated financial statements. 

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

 Consolidated Statements of Cash Flows

(Unaudited)

 

 

For the Six Months Ended

 

From Inception of the Development Stage on January 18, 1990 through

 

2010

 

2009

 

2010

Net loss

$

(149,166)

   $

(159,577)

$

(8,964,911)

Adjustments to reconcile net loss to net cash used

 by operating activities:

 

 

 

 

 

 

  Depreciation and amortization

 

164

 

239

 

6,444

  Common stock issued for services

 

-

 

-

 

3,365,446

  Contributed capital

 

5,537

 

2,511

 

13,411

  Stock warrants granted

 

-

 

-

 

8,650

  Interest on beneficial conversion feature

 

-

 

-

 

25,000

  Legal expense related to beneficial conversion feature

 

-

 

-

 

3,750

  Note payable issued for services

 

-

 

-

 

727,950

  Gain on extinguishments of debt

 

-

 

-

 

(104,552)

  Gain on conversions of debt to equity

 

-

 

-

 

(1,398,081)

  Recognition of prepaid expenses and

    expenses prepaid with common stock

 

-

 

-

 

456,184

   Warrant extension

 

-

 

-

 

34,493

   Loss on foreign currency exchange

 

(15,413)

 

(361)

 

1,983

Changes in assets and liabilities:

 

 

 

 

 

 

  (Increase) decrease in prepaid expense

 

100,517

 

78,614

 

1,075,547

  Increase in accounts payable and related party payables

 

7,765

 

67,265

 

752,566

  Increase in accrued interest payable

 

315

 

105

 

548,014

  Increase in accrued liabilities

 

-

 

-

 

10,125

  Increase in customer deposits`

 

-

 

-

 

45,000

  Increase (decrease) in warrant liability

 

-

 

-

 

-

  Increase (decrease) in accrued salaries

 

2,144

 

1,356

 

980,142

      Net Cash Used by Operating Activities

 

(48,137)

 

(9,848)

 

(2,412,839)

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Cash paid for fixed assets

 

-

 

-

 

(6,995)

      Net Cash Used by Investing Activities

 

-

 

-

 

(6,995)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

  Proceeds from warrant conversion

 

-

 

-

 

524,700

  Proceeds from notes payable and notes payable- 

 

  related party

 

39,038

 

9,000

 

270,638

  Payments on notes payable and notes payable – 

 

  related party

 

-

 

-

 

(15,400)

  Proceeds from issuance of convertible debentures

 

-

 

-

 

40,000

  Contributed capital

 

-

 

-

 

750

   Proceeds from preferred stock subscription

 

8,500

 

-

 

33,500

  Common stock issued for cash

 

 

 

-

 

1,566,975

Net Cash Provided by Financing Activities

 

47,538

 

9,000

 

2,421,163

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

(599)

 

(848)

 

1,329

CASH AT BEGINNING OF PERIOD

 

1,928

 

1,159

 

-

CASH AT END OF PERIOD

$

1,329

  $

311

  $

1,329

The accompanying notes are an integral part of these consolidated financial statements. 

**SANGUINE CORPORATION AND SUBSIDIARY**

(A Development Stage Company)

Consolidated Statements of Cash Flows (Continued)

(Unaudited)

 

For the Six Months Ended 

June 30,

 

From Inception of the Development Stage on January 18, 1990 through June 30,

 

2010

 

2009

 

2010

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

 

 

 

 

 

 

CASH PAID FOR:

 

 

 

 

 

 

Interest

$

-

  $

-

  $

-

   

Income taxes

$

800

  $

-

  $

-

 

 

 

 

 

 

 

NON-CASH ACTIVITIES

 

 

 

 

 

 

  Common stock issued for debt conversion

$

-

  $

-

  $

9,600

  Equity instruments issued for services rendered 

$

-

  $

-

  $

3,220,322

  Contributed capital for interest contributed

$

5,537

  $

2,511

  $

3,676

  Interest on beneficial conversion feature

$

-

  $

-

  $

25,000

  Legal related to beneficial conversion feature

$

-

  $

-

  $

3,750

  Notes payable issued for services

$

-

  $

-

  $

727,950

  Common stock issued for prepaid services

$

-

  $

348,735

  $

585,019

  Common stock issued for debt

$

-

  $

-

  $

2,822,067

The accompanying notes are an integral part of these consolidated financial statements. 

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2010 and December 31, 2009

NOTE 1 -

BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements. Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim consolidated financial statements be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its December 31, 2009 Annual Report on Form 10-KSB.  Operating results for the three and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.

NOTE 2 -

ORGANIZATION AND DESCRIPTION OF BUSINESS

Sanguine Corporation, (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 Company is engaged in developing oxygen carriers to be used by the medical profession.  The Company is conducting research and development leading to F.D.A. clinical trials.

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).  During the year ended December 31, 2001, the Company acquired the remaining 6% of the California Corporation in exchange for the issuance of 840,195 shares of common stock.

From 1974 to 1980, 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.  The Company is a development stage company and these financial statements are presented as those of a development stage company effective January 18, 1990, coinciding with the incorporation date of Sanguine Corporation.

On March 7, 2008, the Company formed a wholly owned subsidiary called Sanguine Lifescience Corporation.  As part of the formation of Sanguine Lifescience Corporation, the Company transferred $15,000 to a bank account for Sanguine Lifescience use.  At this time, Sanguine Lifescience Corporation is not engaged in any business other than normal corporate matters.

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2010 and December 31, 2009

NOTE 3 -

GOING CONCERN

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease operations.

The Company’s management has taken certain steps to maintain its operating and financial requirements in an effort to continue as a going concern until such time as revenues are sufficient to cover expenses.  Future plans include a debt or equity offering for between $1,000,000 - $1,500,000 that should enable the Company to complete the animal testing stage for FDA approval of its product.  However, management cannot provide any assurance that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.  The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 -

STOCK WARRANTS AND OPTIONS

The Company had no outstanding stock warrants during the three months ended June 30, 2010, and the year  ended December 31, 2009.  A summary of the status of the Company’s outstanding stock options as of June 30, 2010 and December 31, 2009 and changes during the periods then ended is presented below:

 

2010

 

2009

 

Shares

 

Weighted Average Exercise Price

 

Shares

 

Weighted Average Exercise Price

Outstanding, beginning of year

701,433

 

$

.10

 

250,000

 

$

1.20

Granted

-

 

 

-

 

701,433

 

 

.10

Expired/Cancelled

-

 

 

-

 

(250,000)

 

 

(1.20)

Exercised

-

 

 

-

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

Outstanding end of year

701,433

 

$

.10

 

701,433

 

$

.10

 

 

 

 

 

 

 

 

 

 

Exercisable

701,433

 

$

.10

 

701,433

 

$

.10

**SANGUINE CORPORATION & SUBSIDIARY**

(A Development Stage Company)

Notes to Consolidated Financial Statements

June 30, 2010 and December 31, 2009

NOTE 4 -

STOCK WARRANTS AND OPTIONS (continued)

 

 

Outstanding

 

Exercisable

Range of Exercise Prices

 

Number outstanding at June 30, 2010

 

Weighted Average Remaining Contractual Life

 

Number Exercisable at June 30,2010

$

.10

 

701,433

 

3.50

 

701,433

 

 

 

701,433

 

 

 

701,433

NOTE 5 - 

RELATED PARTY TRANSACTIONS

Related party payables at June 30, 2010 and December 31, 2009  represent amounts owed to officers of the Company for consulting fees and reimbursement of expenses paid of $160,906 and $122,428, respectively.  

NOTE 6 - 

SUBSEQUENT EVENTS

The Company has evaluated subsequent events per the requirements of ASC Topic 855 and has determined that there are no reportable subsequent events.

**Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations**

**Special Note Regarding Forward-Looking Statements**

This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the Plan of Operations provided below, including information regarding the Company’s financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities, and the plans and objectives of management. The statements made as part of the Plan of Operations that are not historical facts are hereby identified as "forward-looking statements."

**Critical Accounting Policies and Estimates**

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited Financial Statements and accompanying notes.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.  The Company believes there have been no significant changes during the six month periods ended June 30, 2010 and 2009, to the items disclosed as significant accounting policies since the Company’s last audited financial statements for the year ended December 31, 2009.

The Company’s accounting policies are more fully described in Note 1 of the consolidated financial statements.  As discussed in Note 1, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.  Actual differences could differ from these estimates under different assumptions or conditions.  The Company believes that the following addresses the Company’s most critical accounting policies.

We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”).  Under SAB 104, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.  We recognize revenue as services are provided.  Revenues are reflected net of coupon discounts.

We account for income taxes in accordance with ASC Topic 740.  Under ASC Topic 740, deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized.  A valuation allowance has currently been recorded to reduce our deferred tax asset to $0.  

**Plan of Operation.**

We have not commenced planned principal operations, but have made progress, in formulation and stability testing. We are moving forward with testing of our product and seeking industry partners to assist in defraying the costs of testing.  Additionally, we are looking to start selling some of our product for use in research by labs around the country.  These efforts will be dependent on additional financing.  We have had communications with several labs and are in the process of investigating potential material supply contracts with such labs.  These contracts will allow us to start receiving potential revenues which would then be applied to further development and testing of our proposed products.

**Patents**

Presently, we do not have any patents on our technology or processes.  Our prior patents have not been renewed and we are in the process of filing new patents on the new processes and formulas.  At this time, we cannot say if these applications will be successful.  Additionally, without additional funding, we will not be able to complete the patent process.

**Results of Operations**

The Company continues to not have revenues as it focuses on the development of its products.  As such, the Company has not had revenue in either the quarter ended June 30, 2010 or 2009.  We had no material operations, except the research and development activities related to our subcontracted research and development of our product, PHER-O2.

We realized a net loss of $97,800 for the quarter ended June 30, 2010, and a net loss of $97,083 for the quarter ended June 30, 2009.  For the six months ended June 30, 2010 and 2009, we had a net loss of $149,166 and $159,577, respectively. Most of our expense related to professional fees for the quarter ended June 30, 2010 and were paid for with shares of our common stock.  For the quarter ended June 30, 2009, most of our expenses also related to professional fees.  Since we have no revenue, we have had to rely on stock sales and loans to fund our operations and continue to increase our payables since we do not have the funds to pay all of our expenses.

With the focus the last three months on evaluating our business model, our research and development expenses were $0 for the quarter ended June 30, 2010. 

**Liquidity and Capital Resources**

As of June 30, 2010, we had $1,329 in cash and $123,171 in prepaid expenses related to prepayment of consulting fees, with $512,944 in current liabilities. Our cash position is not sufficient to cover our accounts payable or other current liabilities with working capital at June 30, 2010, of negative $388,444.  If prepaid expenses are removed from current assets, our working capital position is even worse with $511,615 in negative working capital.   Since the end of the quarter, our cash position has worsened as we paid ongoing expenses. As such we will be dependent on our ability to raise additional debt or equity capital to be able to cover current liabilities.   

**Off-balance sheet arrangements**

We had no off-balance sheet arrangements during the quarter ended June 30, 2010.

**Forward-looking Statements**

Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this Annual Report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that management’s expectations will necessarily come to pass. Factors that may affect forward- looking statements include a wide range of factors that could materially affect future developments and performance, including the following:

Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions, changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally, legal and regulatory developments, such as regulatory actions affecting environmental activities, the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.

**Item 3.  Quantitative and Qualitative Disclosures About Market Risk.**

NA-Small Reporting Company

**Item 4.  Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

Our management, with the participation of our President and CFO, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our President and CFO concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President and CFO, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. 

 

**Management’s Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States. 

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives. 

 

Our management, with the participation of the President and CFO, evaluated the effectiveness of our internal control over financial reporting as of June 30, 2010.  Based on this evaluation, our management, with the participation of the President and CFO, concluded that, as of June 30, 2010, our internal control over financial reporting was effective.

**Changes in internal control over financial reporting**

There have been no changes in internal control over financial reporting.

**PART II - OTHER INFORMATION**

**ITEM 1.  Legal Proceedings**

 

None

**ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds**

**Recent Sales of Unregistered Securities**

In October 2009, we sold 20,000 shares of our preferred stock.  The sale was for proceeds of $20,000.  The shares were sold to two investors.  The preferred stock is convertible into 6 2/3 shares of common stock per preferred stock.  As 

such the preferred stock is convertible into approximately 133,333 shares of common stock.  During the three months ended  March 31, 2010, the Company received a subscription to purchase a total of 8,500 shares of preferred stock at $1 per share for total proceeds fo$8,500.  As of June 30, 2010, none of these preferred shares were issued.

**Use of Proceeds of Registered Securities**

None; not applicable.

**Purchases of Equity Securities by Us and Affiliated Purchasers**

During the three months ended June 30, 2010, we have not purchased any equity securities nor have any officers or directors of the Company.

**ITEM 3.  Defaults Upon Senior Securities**

We are not aware of any defaults upon senior securities.

**ITEM 4.  Removed and Reserved**

**ITEM 5.  Other Information.**

None

**ITEM 6.  Exhibits**

(a)

Exhibits.

The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed.

Exhibit

Number               Description

3.2

Articles of Amendment increasing the authorized shares-Definitive Information Statement filed 

12/23/2005**

3.3

Amendment to Articles of Incorporation – Designation of Rights, Privileges, and Preferences of 2009

Series A Convertible Preferred Stock – This Filing

3.4

Bylaws-8-K Current Report dated 11/28/2005**

10.1

Consulting Agreement – LKB Partners**

10.2

Consulting Agreement – Corderman**

14

Code of Ethics-Form 10KSB for the year ended December 31, 2002**

31.1

302 Certification of Thomas C. Drees, Ph.D.

31.2

302 Certification of David E. Nelson

32

906 Certification

          *    Summaries of all exhibits contained within this Report are modified in their entirety by reference to these Exhibits.

          **   These documents and related exhibits have been previously filed with the Securities and Exchange Commission and are incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Sanguine Corporation

(Registrant)

Date: August 16, 2010

By: /s/ Thomas C. Drees

Thomas C. Drees, Ph.D., MBA

CEO and Chairman of the

Board of Directors

Date: August 16, 2010

By: /s/ David E. Nelson

David E. Nelson, CPA

CFO and Director |
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