<PAGE>
                 U. S. Securities and Exchange Commission
                         Washington, D. C.  20549


                                FORM 10-QSB


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

     For the quarterly period ended September 30, 1996

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

     For the transition period from                to 
                                    --------------    ---------------

                                     
                       Commission File No. 0-24480


                           SANGUINE CORPORATION    
              (Name of Small Business Issuer in its Charter)


           NEVADA                                        95-4347608 
           ------                                        ----------    
   (State or Other Jurisdiction of                 (I.R.S. Employer I.D. No.)
    incorporation or organization)

                        101 East Green Street, #11
                        Pasadena, California  91105    
                        ---------------------------
                 (Address of Principal Executive Offices)

                Issuer's Telephone Number:  (818) 405-0079


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

(1)  Yes  X     No                 (2)  Yes  X    No 
         ---     ---                        ---     ---

















<PAGE>
             APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                PROCEEDINGS DURING THE PRECEDING FIVE YEARS

                              Not applicable.


                   APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:

                            December 11, 1996

                                20,877,723
                                ----------



                      PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements.

          The Financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management, and commence on the
following page, together with Related Notes.  In the opinion of management,
the Financial Statements fairly present the financial condition of the
Registrant.

<PAGE>
                       Sanguine Corporation
                  (A Development Stage Company)
                          Balance Sheets
       September 30, 1996 (Unaudited) and December 31, 1995

<TABLE>
<CAPTION>
                         Unaudited 
                         September           December 
                         30, 1996            31, 1995

<S>                      <C>                 <C>
 
                              ASSETS

Current Assets
     Cash                $    2,805          $    712 

Property & Equipment

     Furniture - Net          2,154             2,844 

Other Assets
     Refundable Loan
     Commitment Fee          10,000            10,000 

         Total Assets    $   14,959          $ 13,556 


                LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities
     Accounts Payable    $   41,504          $ 27,626 
     Accrued Salaries       132,500           140,000 
     Accrued Interest
     Payable                 22,095            18,000 
     Notes Payable           67,150            43,400 

     Total Current
     Liabilities       $    263,249      $    229,026 

Stockholders' Equity

 Common Stock Authorized:
   100,000,000 Shares
   at $0.001 Par Value:
   20,552,217 Shares 
   & 19,562,859 Shares
   Issued & Outstanding
   Respectively              20,751            19,562 

 Paid in Capital (Quasi-
   Reorganized 
   March 30, 1994 Deficit
   Retained Earnings of 
   $2,423,964 Eliminated)   644,662           513,847 

Retained Earnings Deficit  (913,703)         (748,879)

Total Stockholders' Equity (248,290)         (215,470)

TOTAL LIABILITIES & 
STOCKHOLDERS' EQUITY   $     14,959      $     13,556 

</TABLE>

The accompanying notes are an integral part of this financial statement

<PAGE>

                       Sanguine Corporation
                  (A Development Stage Company)
              Statements of Operations (Unaudited) 
           From July 1, 1996 to September 30, 1996 and 
              July 1, 1995 to September 30, 1995 and
            January 1, 1996 to September 30, 1996 and
              January 1, 1995 to September 30, 1995


<TABLE>
<CAPTION>
                           July 1,     July 1,      January 1,      January 1, 
                          1996 to      1995 to      1996 to        1995 to 
                        September    September      September    September 
                         30, 1996     30, 1995       30, 1996     30, 1995 

<S>                     <C>          <C>           <C>            <C>

Revenues 

  Interest Income       $       2    $        1    $        3     $       4 

       Total Revenues           2             1             3             4
 
Expenses

  Promotion                     -0-           -0-       2,500            -0- 
  Depreciation                 230           230          690           690 
  Salaries                   4,500         9,000       13,500        27,000 
  Research & Development    19,500        17,900        73,951       47,900 
  Office Expense             1,552         4,849        13,127       13,487 
  Auto Expense                 270           274           810          814 
  Legal & Professional Fees  1,204         1,705        13,777       12,244 
  Rent                       3,979         3,979        10,650       11,915 
  Interest Expense           1,992         1,454         5,293        4,236 
  Travel                        -0-          842         1,318        2,709 
  Stock Transfer               297            45           882          169 
  Consultant Fees           14,287         4,950        27,537        8,625 
  Tax & License                 -0-           70           381          447 
  Insurance                    130           131           411          498 

       Total Expenses       47,941        45,429       164,827      130,734 

       Net (Loss)        $ (47,939)    $ (45,428)  $  (164,824)  $ (130,730)

       (Loss) Per Share       (.00)         (.00)         (.01)        (.01)

  Weighted Average
    Shares Outstanding  19,562,859    16,721,851    19,562,859   16,721,859 

</TABLE>

The accompanying notes are an integral part of this financial statement

<PAGE>

                       Sanguine Corporation
                  (A Development Stage Company)
               Statements of Cash Flows (Unaudited)
    For the Period January 1, 1996 to September 30, 1996 and 
              January 1, 1995 to September 30, 1995

<TABLE>
<CAPTION>
         
                                             September              September 
                                                  1996                   1995

<S>                                          <C>                    <C>
 
Cash Flows from Operating Activities

  Net (Loss)                                 $ (164,824)            $(130,730)
  Adjustments to Reconcile Net Loss
  to Net Cash Used by Operations:
   Depreciation                                     690                   690 
    Non Cash Expenses                            14,087                 1,550 
    Write Off - Offshore Corporation                 -0-                3,300 
  Changes in Operating Assets & Liabilities:
    Increase in Accounts Payable                 49,795               118,198 
    Increase in Interest Payable                  4,095                 4,095 
    Increase in Accrued Salaries                 72,000                   -0- 

Cash Flows from Operating Activities            (24,157)               (2,897)

Cash Flows from Investing Activities

  Purchase of Equipment                             -0-                   -0- 

   Cash Used by Investing Activities                -0-                   -0- 

Cash Flows from Financing Activities

  Increase in Notes Payable                      23,750                3,000 
  Contributed Capital                             2,500                    -0- 

    Cash Provided by Financing Activities        26,250                3,000 

    Increase (Decrease) in Cash                   2,093                  103 

    Cash at Beginning of Period                     712                1,654 

    Cash at End of Period                    $    2,805          $     1,657 

Disclosures for Cash Flows from
  Interest                                    $   5,293          $     4,236 
  Taxes                                              -0-                  -0- 

Non Cash Events
  Issued 529,355 Shares In Lieu of 
    Cash for Salaries Payable                 $  79,500           $       -0- 

  Issued 200,000 Shares in Lieu of 
    Cash for Accounts Payable                    35,917                    -0- 
  
</TABLE>

The accompanying notes are an integral part of this financial statement

<PAGE>

                       Sanguine Corporation
                  (A Development Stage Company)
                  Notes to Financial Statements

NOTE #1 - Statement of Preparation

 The Company has prepared the accompanying financial statements with
interim financial reporting requirement promulgated by the Securities and
Exchange Commission.  The information furnished reflects all adjustments which
are, in the opinion of management, necessary for a fair presentation of
financial position and results of operations. 

 The consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's 1995 10-K report. 

<PAGE>

Item 2.   Management's Discussion and Analysis or Plan of Operation.
--------------------------------------------------------------------

Plan of Operation.
------------------

          The Company has conducted all of its business operations through its
majority owned subsidiary, Sanguine Corporation, a California corporation
("Sanguine California").  Sanguine California is engaged in the development of
a synthetic red blood cell product called "PHER-O2."  The development of this
product presently comprises its sole business operations.  PHER-O2 is composed
of perfluoro-decalin molecules (i.e., synthetic red blood cells), purified
water and a proprietary, synthetic, fluorinated surfactant to hold the
emulsion together.  Perfluoro-decalin has great oxygen-carrying capacity, yet
it can be as much as 900 times smaller than a red blood cell.  Management
believes that PHER-O2 may carry three to four times the oxygen of human blood
per unit volume. This increased oxygen-carrying capacity may make PHER-O2
useful in the treatment of heart attacks, strokes, cancer and other diseases
for which increased oxygenation is beneficial.  Furthermore, the Company
believes that perfluoro-decalin may be effective as an imaging agent in X-ray
imaging, nuclear magnetic resonance (NMR) imaging and CAT scans, without side
effects. Management also believes that PHER-O2 has several other advantages
over human blood:  it can be sterilized to be free of disease; is believed to
have the quality of a universal match for all blood types; can be
mass-produced; and may be stored much longer than human blood.

          Battelle Memorial Institute, through its Battelle Columbus
Operations ("Battelle"), was retained to assist the Company in completing the
emulsion of perfluoro-decalin and the synthetic surfactants that make up
PHER-O2; it is anticipated that on completion of the compounding of PHER-O2,
Battelle will perform initial gross animal tests, which do not require
regulatory approval prior to commencement; however, the data gathered from any
such tests will be subject to regulatory review in the future.  The Company
anticipates that it will manufacture experimental doses of PHER-O2 required to
conduct gross animal testing.

          It is anticipated that continued research and development of PHER-O2
will depend upon the Company's ability to obtain substantial additional equity
or debt funding, as to which no assurance can be given.  See the captions
"Business Development," "Future Capital Requirements; Uncertainty of Future
Funding" and "Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements or Labor Contracts" of the Company's Annual Report on Form
10-KSB-A1 for the fiscal year ended December 31, 1995, which has previously
been filed with the Securities and Exchange Commission.

          In its second phase of operations, management intends to continue
developing the perfluorocarbon compounds in PHER-O2 in order to optimize its
quality, and expects to begin animal safety and efficacy trials in accordance
with guidelines of the United States Food and Drug Administration ("FDA") and
comparable foreign regulatory requirements.  

          In the final phase of the Company's proposed business operations, it
intends to complete its United States testing of PHER-O2, receive all
necessary FDA approvals and begin American and Canadian sales for cancer
treatment and angioplasty; and complete overseas testing, begin overseas sales
and begin the construction of manufacturing facilities.  Sanguine California
has previously licensed BioLogix Development Partners, an unaffiliated
California limited partnership, to manufacture and market PHER-O2 in Canada,
including any future Canadian patent rights, and the exclusive right to market
PHER-O2 in U.S. military pre-hospital markets.  In this final phase, the
Company also intends to continue trials to test PHER-O2  for other
applications, including transplant organ preservation and the treatment of
carbon monoxide poisoning, sickle cell anemia, heart attack and stroke.  The
Company will be required to conduct similar rigorous testing and clinical
trials of PHER-O2 for each desired application for which it is sought to be
used.  

          PHER-O2 is still in the research and development stage.  It has not
been tested on animals or humans; nor has any application been submitted to
any federal, state or foreign agency to seek authority for such testing.  This
development process will be time consuming, costly, subject to extreme
governmental regulation and must prove that this product is safe and
efficacious for human use.  Until then, the Company will have no potential for
revenues from operations.  No assurance can be given that the Company will be
able to raise the capital it will need to develop PHER-O2, or that if
sufficient funds are raised, the Company will ever receive requisite federal,
state or foreign agency approval to manufacture or market this product.  See
the captions "Business Development," "Special Risk Factors," "Principal
Products or Services and their Markets," "Competition," "Patents, Trademarks,
Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts" and
"Governmental Approval of Principal Products or Services" of the Company's
Registration Statement on Form 10-SB-A1, which has previously been filed
with the Securities and Exchange Commission, and which is incorporated herein
by reference. 

Results of Operations.
----------------------

          During the quarterly period ending September 30, 1996, the Company's
only business operations were those of Sanguine California.  During this
period, the Company received total revenues of $2 and sustained a net
loss of $34,302.

Liquidity.
----------

          During the quarterly period ended September 30, 1996, the Company
had total expenses of $34,304, while receiving $2 in revenues.

                        PART II - OTHER INFORMATION

Item 1.   Legal Proceedings.
----------------------------

          None; not applicable.

Item 2.   Changes in Securities.
--------------------------------

          None; not applicable.

Item 3.   Defaults Upon Senior Securities.
------------------------------------------

          None; not applicable.

Item 4.   Submission of Matters to a Vote of Security Holders.
--------------------------------------------------------------

          None; not applicable.
          
Item 5.   Other Information.
----------------------------

          None; not applicable.

Item 6.   Exhibits and Reports on Form 8-K.
-------------------------------------------

          (a)  Exhibits.

               10-SB-A1 Registration Statement.*

               Form 10-KSB-A1 Annual Report for the 
               Fiscal Year ended December 31, 1995.*

          (b)  Reports on Form 8-K.

               None.

               *  Incorporated herein by reference.


                               SIGNATURES

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

                                      SANGUINE CORPORATION



Date: 12/18/96                        By  /s/ Thomas C. Drees
     --------------                     -------------------------------------
                                        Thomas C. Drees, CEO and Chairman of   
                                        the Board of Directors
                                  

Date: 12/18/96                        By  /s/ A.G. Hargreaves
     --------------                     -------------------------------------
                                        Anthony G. Hargreaves
                                         Vice President, Secretary/Treasurer   
                                        and Director


Date: 12-18-96                        By  /s/ Edward L. Kunkel
     --------------                     -------------------------------------
                                        Edward L. Kunkel, Esq.
                                        Director