UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


_______________________





FORM
10-QSB




(Mark
One)




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




For
Quarterly period Ended: September 30, 2006;
or





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




For
the transition period __________ to __________





Commission
File Number: 0-21271


_________________________





SANGUI
BIOTECH INTERNATIONAL, INC.


________________________________________________


(Exact
name of Small Business Issuer as specified in its charter)




Colorado
            84-1330732(State or other
      Jurisdiction of Incorporation or Organization)
            (I.R.S.
      Employer Identification No.)





Alfred-Herrhausen-Str.
44, 58455 Witten, Germany


_____________________________


(Address
of principal executive offices)





011-49-2302-915-204


___________________________________


(Issuer's
telephone number, including area code)




Check whether
the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the past12 months (or for such shorter period that a
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes o   No
x




Indicate by
check mark whether the registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).   Yes o   No
x




The number of
shares outstanding of the issuer's common stock, no par value, as of May 28,
2008, was 50,000,000




Transitional
Small Business Disclosure Format. Yes o   No
x














SANGUI
BIOTECH INTERNATIONAL, INC.




Report on
Form 10-QSB




For the
Quarter Ended September 30, 2006






INDEX


----------






PagePart
      I.  Financial InformationItem
      1.  Consolidated Financial
      Statements .........................................................................................................
            2Consolidated Balance
      Sheets.........................................................................................................
            2Consolidated
      Statements of Operations and Comprehensive
      Loss ........................................
            4Consolidated
      Statements of Cash
      Flows .....................................................................................
            5Notes to the
      Consolidated Financial
      Statements .......................................................................
            6Item
      2.  Management's Discussion and Analysis or Plan of
      Operation ..........................................................
            9Item
      3.  Controls and Procedures
      ..........................................................................................................................
            11Part II. Other InformationItem
      1.  Legal Proceedings
      .....................................................................................................................................
            11Item
      2.  Unregistered Sales of Equity Securities and Use of Proceeds
      ...........................................................
            11Item
      3.  Defaults Upon Senior
      Securities .............................................................................................................
            11Item
      4.  Submission of Matters to a Vote of Security Holders
      .........................................................................
            11Item
      5.  Other
      Information ......................................................................................................................................
            11Item
      6.  Exhibits ........................................................................................................................................................
            12Signature
      Page .....................................................................................................................................................................
            12







ii







PART I - FINANCIAL INFORMATION




ITEM 1 - CONSOLIDATED FINANCIAL STATEMENTS




The
accompanying unaudited consolidated financial statements have been prepared in
accordance with the instructions to Form 10-QSB pursuant to the rules and
regulations of the Securities and Exchange Commission and, therefore, do not
include all information and footnotes necessary for a complete presentation of
our financial position, results of operations, cash flows, and stockholders'
deficit in conformity with generally accepted accounting principles in the
United States of America.  In the opinion of management, all adjustments
considered necessary for a fair presentation of the consolidated results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature.




Our
unaudited consolidated balance sheet as of September 30, 2006 and our unaudited
consolidated statements of operations for the three month periods ended
September 30, 2006 and 2005, and the unaudited consolidated statements of cash
flows for the three month periods ended September 30, 2006 and 2005, are
attached hereto and incorporated herein by this reference.






































































1







SANGUI BIOTECH INTERNATIONAL, INC.Consolidated
      Balance SheetsASSETSSeptember
      30,
              
              
              June
      30,2006
              
              
              2006CURRENT
      ASSETS
              
              (Unaudited)Cash
              
              $
              16,730
              
              
              $
              24,548Accounts
      receivable
              
              
              40,787
              
              
              
              16,601Inventory
              
              
              15,310
              
              
              
              14,720Prepaid
      expenses and other assets
              
              
              10,345
              
              
              
              15,060Total
      Current Assets
              
              
              83,172
              
              
              
              70,929FIXED
      ASSETS, NetProperty and
      equipment
              
              
              16,038
              
              
              
              11,708Total
      Fixed Assets
              
              
              16,038
              
              
              
              11,708OTHER
      ASSETSTax
      refunds receivable
              
              
              32,763
              
              
              
              23,460Deposits
              
              
              18,453
              
              
              
              17,809Other
      miscellaneous assets
              
              
              51,818
              
              
              
              -Total
      Other Assets
              
              
              103,034
              
              
              
              41,269TOTAL
      ASSETS
              
              $
              202,244
              
              
              $
              123,906


The
accompanying condensed notes are an integral part of these interim consolidated
financial statements.
  2





SANGUI BIOTECH INTERNATIONAL, INC.Consolidated
      Balance Sheets (Continued)LIABILITIES AND
      STOCKHOLDERS' EQUITY (DEFICIT)September
      30,
              
              
              June
      30,2006
              
              
              2006(Unaudited)CURRENT
      LIABILITIESAccounts
      payable and accrued expenses
              
              $
              374,319
              
              
              $
              335,488Notes
      payable
              
              
              113,134
              
              
              
              172,122Total
      Current Liabilities
              
              
              487,453
              
              
              
              507,610TOTAL
      LIABILITIES
              
              
              487,453
              
              
              
              507,610STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      stock, no par value; 5,000,000 sharesauthorized,
      -0- shares issued and outstanding
              
              
              -
              
              
              
              -Common
      stock, no par value; 50,000,000 sharesauthorized,
      50,000,000 sharesissued
      and outstanding
              
              
              18,969,358
              
              
              
              18,969,358Additional
      paid-in capital
              
              
              1,958,376
              
              
              
              1,958,376Treasury
      stock
              
              
              -
              
              
              
              -Accumulated
      other comprehensive income
              
              
              700,596
              
              
              
              453,434Accumulated
      deficit
              
              
              (21,913,539
              )
              
              
              (21,764,872
              )Total
      Stockholders' Equity (Deficit)
              
              
              (285,209
              )
              
              
              (383,704
              )TOTAL
      LIABILITIES AND STOCKHOLDERS'EQUITY
      (DEFICIT)
              
              $
              202,244
              
              
              $
              123,906
































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


3




SANGUI BIOTECH INTERNATIONAL, INC.Consolidated
      Statements of Operations(Unaudited)For
      the ThreeMonths
      EndedSeptember
      30,2006
              
              
              2005REVENUES
              
              $
              119,475
              
              
              $
              -COST
      OF SALES
              
              
              77,156
              
              
              
              -GROSS
      PROFIT
              
              
              42,319
              
              
              
              -OPERATING
      EXPENSESResearch
      and development
              
              
              22,389
              
              
              
              11,557Depreciation
      and amortization
              
              
              7,187
              
              
              
              13,324General
      and administrative
              
              
              156,655
              
              
              
              118,021Total
      Operating Expenses
              
              
              186,231
              
              
              
              142,902OPERATING
      LOSS
              
              
              (143,912
              )
              
              
              (142,902
              )OTHER
      INCOME (EXPENSE)Interest
      income
              
              
              -
              
              
              
              -Interest
      expense
              
              
              (4,774
              )
              
              
              (1,816
              )Other
      income (loss)
              
              
              19
              
              
              
              554Total
      Other Income (Expense)
              
              
              (4,755
              )
              
              
              (1,262
              )NET
      LOSS
              
              
              (148,667
              )
              
              
              (144,164
              )OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation adjustments
              
              
              247,162
              
              
              
              15,036Unrealized
      gain on marketable securities
              
              
              -
              
              
              
              -Total
      Other Comprehensive Income
              
              
              247,162
              
              
              
              15,036COMPREHENSIVE
      INCOME (LOSS)
              
              $
              98,495
              
              
              $
              (129,128
              )BASIC
      AND DILUTED LOSS PER SHARE
              
              $
              (0.00
              )
              
              $
              (0.00
              )WEIGHTED
      AVERAGE NUMBEROF
      SHARES OUTSTANDING
              
              
              50,000,000
              
              
              
              47,998,254


The
accompanying condensed notes are an integral part of these interim consolidated
financial statements.
  4


SANGUI BIOTECH INTERNATIONAL, INC.Consolidated
      Statements of Cash Flows(Unaudited)For
      the ThreeMonths
      EndedSeptember
      30,2006
              
              
              2005CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
              
              $
              (148,667
              )
              
              $
              (144,164
              )Adjustments
      to reconcile net loss to net cashused
      by operating activities:Depreciation
      and amortization
              
              
              7,187
              
              
              
              13,324Common
      stock issued for services
              
              
              -
              
              
              
              10,837Changes
      in operating assets and liabilitiesDecrease
      (Increase) in accounts receivable
              
              
              (24,186
              )
              
              
              458Decrease
      (Increase) in inventories
              
              
              (590
              )
              
              
              15Decrease
      (Increase) in prepaid expenses and other assets
              
              
              (57,050
              )
              
              
              48,926Increase
      (Decrease) in accounts payableand
      accrued expenses
              
              
              38,831
              
              
              
              18,271Net
      Cash Used by Operating Activities
              
              
              (184,475
              )
              
              
              (52,333
              )CASH
      FLOWS FROM INVESTING ACTIVITIES
              
              
              (11,517
              )
              
              
              -CASH
      FLOWS FROM FINANCING ACTIVITIESSale
      of common stock for cash
              
              
              -
              
              
              
              64,163Payment
      of notes payable
              
              
              (58,988
              )
              
              
              (24,132
              )Net
      Cash Provided by Financing Activities
              
              
              (58,988
              )
              
              
              40,031EFFECT
      OF EXCHANGE RATE CHANGES
              
              
              247,162
              
              
              
              15,036NET
      INCREASE (DECREASE) IN CASH
              
              
              (7,818
              )
              
              
              2,734CASH
      AT BEGINNING OF PERIOD
              
              
              24,548
              
              
              
              9,497CASH
      AT END OF PERIOD
              
              $
              16,730
              
              
              $
              12,231SUPPLIMENTAL
      DISCLOSURES OFCASH
      FLOW INFORMATIONCASH
      PAID FOR:Interest
              
              $
              -
              
              
              $
              1,816Income
      Taxes
              
              $
              -
              
              
              $
              -NON
      CASH FINANCING ACTIVITIES:Common
      stock issued for debt
              
              $
              -
              
              
              $
              24,132





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




5


SANGUI BIOTECH INTERNATIONAL,
INC.
  Notes to
the Consolidated Financial
Statements


NOTE 1 -
BASIS OF PRESENTATION




The
accompanying consolidated financial statements have been prepared without audit
in accordance with accounting principles generally accepted in the United States
of America for interim financial information.  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 pursuant to such rules and
regulations.  The unaudited consolidated financial statements and notes
should, therefore, be read in conjunction with the consolidated financial
statements and notes thereto in the Company's Form 10-KSB for the year ended
June 30, 2006.  In the opinion of management, all adjustments (consisting
of normal and recurring adjustments) considered necessary for a fair
presentation, have been included.  The results of operations for the
three-month period ended September 30, 2006 are not necessarily indicative of
the results that may be expected for the full fiscal year ending June 30,
2007.




NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES




Nature
of Business




Sangui
Biotech International, Inc., incorporated in Colorado in 1995, and its wholly
owned subsidiaries, Sangui Biotech, Inc., SanguiBioTech AG, GlukoMediTech AG,
and Sangui BioTech PTE Ltd., (collectively, the "Company") were engaged in the
development of artificial oxygen carriers (external applications of hemoglobin,
blood substitutes and blood additives) as well as in the development of glucose
implant sensors.




On
June 30, 2003, GlukoMediTech AG ("Gluko AG") was merged into Sangui BioTech AG
("Sangui AG").  Effective November 4, 2003, Sangui AG was converted into
Sangui BioTech GmbH (Sangui GmbH).  After completion of the restructuring,
Sangui GmbH, which is headquartered in Witten, Germany, has
been engaged in the research, development, manufacture, and sales of
medical and cosmetic products.




The
operations of Sangui BioTech, Inc. and Sangui BioTech PTE Ltd Singapore, two
former wholly-owned subsidiaries, were discontinued and dissolved during
2002.




The
operations of Sangui BioTech, Inc. ("Sangui USA") were discontinued during 2002
upon the sale of its in vitro immunodiagnostics business and the subsequent
merger of Sangui USA with and into the parent company, Sangui BioTech
International, Inc., effective December 31, 2002.  Sangui BioTech PTE Ltd
("Sangui Singapore") was a regional office for the Company that carried out
research and development projects in conjunction with Sangui GmbH and Sangui
Singapore.  The Company discontinued the operations of Sangui Singapore in
August 2002. The Singapore office was closed effective December 31,
2002.




Consolidation




The
consolidated financial statements include the accounts of Sangui BioTech
International, Inc. and its wholly owned subsidiaries.  All significant
intercompany accounts and transactions have been eliminated in
consolidation.




6
  
  SANGUI BIOTECH INTERNATIONAL,
INC.
 Notes to
the Consolidated Financial
Statements


NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Foreign
Currency Translation




Assets
and liabilities of the Company's foreign operations are translated into U.S.
dollars at period-end exchange rates.  Net exchange gains or losses
resulting from such translation are excluded from net loss but are included in
comprehensive income (loss) and accumulated in a separate component of
stockholders' equity.  Income and expenses are translated at weighted
average exchange rates for the period.




Risk
and Uncertainties




The
Company's line of future pharmaceutical products (artificial oxygen carriers or
blood substitute and additives) and in vivo biosensors (glucose implant sensor)
being developed by Sangui GmbH, are deemed as medical devices or biologics, and
as such are governed by the Federal Food and Drug and Cosmetics Act and by the
regulations of state agencies and various foreign government agencies.  The
pharmaceutical and biosensor products, under development in Germany, will be
subject to more stringent regulatory requirements, because they are in vivo
products for humans.  The Company and its subsidiaries have no experience
in obtaining regulatory clearance on these types of products.  Therefore,
the Company will be subject to the risks of delays in obtaining or failing to
obtain regulatory clearance.




The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the normal
course of business.  The Company has accumulated deficit of
$21,913,539  as of September 30, 2006 and has been significantly
reducing its working capital since June 30, 2004.  The Company incurred a
net loss applicable to common stockholders of $148,667 during the three months
ended September 30, 2006 and used cash in operating activities of $184,475 for
the three months ended September 30, 2006.  These conditions raise
substantial doubt about the Company's ability to continue as a going
concern.  The Company expects to continue to incur significant capital
expenses in pursuing its business plan to market its products and expand its
product line, while obtaining additional financing through stock offerings or
other feasible financing alternatives.  In order for the Company to
continue its operations at its existing levels, the Company will require
significant additional funds over the next twelve months.  Therefore, the
Company is dependent on funds raised through equity or debt offerings.
 Additional financing may not be available on terms favorable to the
Company, or at all.  If these funds are not available the Company may not
be able to execute its business plan or take advantage of business
opportunities.  The ability of the Company to obtain such additional
financing and to achieve its operating goals is uncertain.  In the event
that the Company does not obtain additional capital or is not able to increase
cash flow through the increase of sales, there is a substantial doubt of its
being able to continue as a going concern.  The accompanying condensed
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.




Cash
and Cash Equivalents




The
Company maintains its cash in bank accounts in Germany.  Cash and cash
equivalents include time deposits for which the Company has no requirements for
compensating balances.  The Company has not experienced any losses in its
uninsured bank accounts.  At September 30, 2006 the Company had no
cash equivalents.




7
  
  SANGUI BIOTECH INTERNATIONAL,
INC.
 Notes to
the Consolidated Financial
Statements


NOTE 2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)




Revenue
Recognition




Revenue
is recognized when the sales amount is determined, shipment of goods to the
customer has occurred and collection is reasonably assured.  Product is
shipped FOB origination.




Research
and Development




Research
and development costs are charged to operations as they are
incurred.  Legal fees and other direct costs incurred in obtaining and
protecting patents are expensed as incurred.




Basic
and Diluted Earnings (Loss) Per Common Share




Basic
earnings (loss) per common share is computed by dividing income (loss) available
to common stockholders by the weighted average number of common shares
outstanding during the period of computation.  Diluted earnings (loss) per
share gives effect to all potential dilutive common shares outstanding during
the period of compensation.  The computation of diluted earnings (loss) per
share does not assume conversion, exercise or contingent exercise of securities
that would have an antidilutive effect on earnings.  As of September 30,
2006 and 2005, the Company had no potentially dilutive securities that would
affect the loss per share if they were to be dilutive.




Comprehensive
Income (Loss)




Total
comprehensive income (loss) represents the net change in stockholders' equity
during a period from sources other than transactions with stockholders and as
such, includes net earnings (loss).  For the Company, the components of
other comprehensive income (loss) are the changes in the cumulative foreign
currency translation adjustments and unrealized gains (losses) on marketable
securities and are recorded as components of stockholders'
equity.




NOTE 3 -
COMMITMENTS AND CONTINGENCIES




Litigation




The
Company may, from time to time, be involved in various legal disputes resulting
from the ordinary course of operating its business.  Management is
currently not able to predict the outcome of any such cases.  However,
management believes that the amount of ultimate liability, if any, with respect
to such actions will not have a material effect on the Company's financial
position or results of operations.




Indemnities
and Guarantees




During
the normal course of business, the Company has made certain indemnities and
guarantees under which it may be required to make payments in relation to
certain transactions.  These indemnities include certain agreements with
the Company's officers, under which the Company may be required to indemnify
such person for liabilities arising out of their employment relationship.
 The duration of these indemnities and guarantees varies and, in certain
cases, is indefinite.  The majority of these indemnities and guarantees do
not provide for any limitation of the maximum potential future payments the
Company could be obligated to make.  Historically, the Company has not been
obligated to make significant payments for these obligations and no liabilities
have been recorded for these indemnities and guarantees in the accompanying
consolidated balance sheet.





8







ITEM
2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
  Forward-looking
Statements
  The
following discussion of our financial condition and results of operations should
be read in conjunction with the consolidated financial statements and the
related notes thereto included elsewhere in this quarterly report.  Some of
the information in this quarterly report contains forward-looking statements,
including statements related to anticipated operating results, margins, growth,
financial resources, capital requirements, adequacy of the Company's financial
resources, trends in spending on research and development, the development of
new markets, the development, regulatory approval, manufacture, distribution,
and commercial acceptance of new products, and future product development
efforts.  Investors are cautioned that forward-looking statements involve
risks and uncertainties, which may affect our business and prospects, including
but not limited to, the Company's expected need for additional funding and the
uncertainty of receiving the additional funding, changes in economic and market
conditions, acceptance of our products by the health care and reimbursement
communities, new development of competitive products and treatments,
administrative and regulatory approval and related considerations, health care
legislation and regulation, and other factors discussed in our filings with the
Securities and Exchange Commission.
 GENERAL
  The
Company's mission is the development of novel and proprietary pharmaceutical,
medical and cosmetic products.  The Company develops its products
through its wholly owned German subsidiary Sangui GmbH.  The Company
is seeking to market and sell some or all of their products through partnerships
with industry partners.
  The
focus of Sangui GmbH has been the development of oxygen carriers capable of
providing oxygen transport in humans in the event of acute and/or chronic lack
of oxygen due to arterial occlusion, anaemia or blood loss whether due to
surgery, trauma, or other causes.  Sangui GmbH has thus far focused
its development and commercialization efforts of such artificial oxygen carriers
by reproducing and synthesizing polymers out of native hemoglobin of defined
molecular sizes.  Sangui GmbH, has in addition developed external
applications of oxygen transporters in the medical and cosmetic fields in the
form of gels and emulsions for the regeneration of the skin
  Sangui
GmbH holds the exclusive distribution rights for Chitoskin wound pads in the
European Union and various other countries.  Sangui GmbH has filed a
patent cooperation treatment applications (“PCT”) for the production and use of
improved Chitoskin wound pads using gelatine instead of collagen as the carrier
substance.
   Artificial
Oxygen Carriers
 
 Sangui
GmbH develops several products based on polymers of purified natural porcine
hemoglobin with oxygen carrying abilities that are similar to native
hemoglobin.  These are (1) oxygen carrying blood additives and (2)
oxygen carrying blood volume substitutes.
  In
December 1997, Sangui GmbH decided that porcine hemoglobin should be used as the
basic material for its artificial oxygen carriers.  In March 1999,
Sangui GmbH decided which hemoglobin hyperpolymer would go into preclinical
investigation and that glutaraldehyde would be utilized as a cross linker, and
further that the polymer hemoglobin be chemically masked to prevent protein
interaction in blood plasma.  The fine adjustment of the molecular
formula of the artificial oxygen carriers - optimized for laboratory scale
production - was finalized in the summer of 2000.
  The
experiments completed in Sangui GmbH’s laboratories demonstrated that it is
possible to polymerize hemoglobins isolated from porcine blood resulting in huge
soluble molecules, so-called hyperpolymers.  In August 2000, Sangui
GmbH finalized its work on the pharmaceutical formulation of the oxygen carrier
for laboratory scale.  In February 2001 a pilot production in a
laboratory scale was carried out in SGBI's clean room.  The resulting
product was applied in single volunteers in pilot
self-experiments.
  The
blood additives and blood substitute projects were halted in 2003 due to the
lack of financing for the pre-clinical test phase of the blood
additives.  In October 2006, subsequent to the period covered by this
report, a contract was entered into between Sangui GmbH and ERC Nano Med S.A. de
C.V. of Monterrey, Mexico (“ERC”), which provides that ERC will establish a
production facility in Mexico to produce sufficient quantities of the blood
additive.  In cooperation with the medical faculty of Monterrey
University and the Mexican National Health Organizations, ERC will initiate all
necessary steps to begin the pre-clinical test phase for the products as soon as
possible.  It is anticipated that this will lead to the FDA
authorization process in due course.
  According
to regulatory requirements, all drugs must complete preclinical and clinical
trials before approval (e.g. Federal Drug Administration approval) and market
launch.  The Company’s management believes that the European and FDA
approval process will take at a minimum several years to
complete.
 Nano
Formulations for the Regeneration of the Skin
  Healthy
skin is supplied with oxygen both from the inside as well as through diffusion
from the outside.  A lack of oxygen will cause degenerative
alterations, ranging from premature aging, to surface damage, and even as
extensive as causing open wounds.  The cause for the lack of oxygen
may be a part of the normal aging process, but it may also be caused by burns,
radiation, trauma, or a medical condition.  Impairment of the blood
flow, for example caused by diabetes mellitus or by chronic venous
insufficiency, can also lead to insufficient oxygen supply and the resulting
skin damage.
  9
 
 The
nano-emulsion-based preparations now being sold by Sangui GmbH have been
designed to supporting the regeneration of the skin by improving its oxygen
supply.  The products Sangui GmbH are currently focussing on are an
anti-aging formulation and treatment and an anti-cellulite formulation for the
cosmetics market.  The products were thoroughly tested by an
independent research institute and received top marks for skin moisturization,
and enhanced skin elasticity, respectively.
  Sangui’s
cosmetic business model is reliant upon cooperation with its manufacturing and
distribution partners.  Sangui has its various formulations produced
by a contract manufacturer and sells quantities of the products either in bulk
or in customized private label packaging, as requested.  In addition,
Sangui started to sell its cosmetic products under its own brand “Pure
MO2isture” via an internet shop as of mid September 2006 which generates
consistant sales, albeit at a low level.
 
 Sales
of the anti-cellulite products started in August 2005 via two German TV shop
programs.  Sales of the anti-cellulite products via two German TV shop
programs have been
flat thus far this fiscal year.  Additionally, distribution partners
in Argentina and Mexico have purchased launch quantities in November 2005, and
July 2006, respectively.
  Chitoskin
Wound Pads
  In
March 2005, SanguiBioTech GmbH was awarded the CE mark for their Chitoskin Wound
Pad product.  The CE mark authorizes the company to distribute
and sell this medical product in the member countries of the European
Union.  At the same time Sangui GmbH successfully passed the ISO
9001:2000 (General Quality Management System) and ISO 13485:2003 (Quality
Management System Medical Products) audits, and obtained the respective
certifications.  The “Chitoskin” trademark was granted to the company
for the European countries effective November 1, 2004.
  Karl
Beese GmbH, a leading German vendor and distributor of hospital supplies began
marketing and distributing the wound pad product in August 2005, and has placed
several subsequent orders with the company.  In addition, Karl Beese
delivered large quantities of the wound pad product to a Czech distribution
partner through summer 2006.
  FINANCIAL
POSITION




The
Company's current assets increased $12,243, or 17%, from June 30, 2006 to
$83,172 at September 30, 2006.  The increase is primarily attributable to a
$24,186 increase in accounts receivable, partially offset by small decreases in
cash and prepaid expenses during the period.




The
Company's net property and equipment increased $4,330, or 37% from June 30, 2006
to $16,038 at September 30, 2006.  The increase is primarily attributable
to minor purchases of fixed assets, partially offset by current period
depreciation.




The
Company funded its operations primarily through its existing cash reserves and
cash received from the sale of common stock.  During the three months ended
September 30, 2006, the Company's stockholders' deficit decreased $98,495.
 The primary decrease is caused by the Company's current period net loss of
$148,667.




RESULTS
OF OPERATIONS
  Three
months ended September 30, 2006 and 2005:
  RESEARCH
AND DEVELOPMENT.  Research and development expenses increased significantly
to $22,389 in 2006 from $11,557 in 2005.  The increase is mainly attributed
to the Company’s attempting to develop new products for its expanding market
base.  The Company is seeking additional sources to provide financing
for additional research and development.
  GENERAL
AND ADMINISTRATIVE.  General and administrative expenses increased 33% to
$156,655 in 2006 from $118,021 in 2005.  This increase is mainly attributed
to the ongoing refocusing program and an attempt to solidify the Company’s
standing in new markets.
  DEPRECIATION
AND AMORTIZATION.  Depreciation decreased 46% to $7,187 in 2006 from
$13,324 in 2005.  This decrease is mainly attributed to the ongoing
restructuring of Sangui GmbH.
  NET
LOSS.  As a result of the above and other factors, the Company's
consolidated net loss was $148,667, or $0.00 per common share, for the three
months ended September 30, 2006, compared to $144,164, or $0.01 per common
share, during the comparable period in 2005.
  LIQUIDITY
AND CAPITAL RESOURCES
  For
the three months ended September 30, 2006, net cash used in operating activities
increased to $184,475 from $52,333 in the corresponding period in 2005,
primarily related to a significant increase in prepaid expenses and other
assets, coupled with the Company's consolidated net loss as a result of the
ongoing refocusing program.
  The
Company had a working capital deficit of $404,281 at September 30, 2006, an
increase of $32,400 from June 30, 2006.  At September 30, 2006, the
Company had cash of $16,730.  The Company will need substantial additional
funding to fulfill its business plan and the Company intends to explore
financing sources for its future development activities.  No assurance can
be given that these efforts will be successful.
  10







ITEM
3-
CONTROLS AND PROCEDURES




(a)
Evaluation of disclosure controls and procedures.  Our principal executive
officer and principal financial officer have evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c)
under the Exchange Act), as of a date within 90 days of the filing date of this
Quarterly Report on Form 10-QSB.  Based on such evaluation, they have
concluded that as of such date, our disclosure controls and procedures were not
efficient enough to ensure that information required to be disclosed by us in
reports that we file or submit under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in applicable SEC
rules and forms.  Our principal executive officer and principal
financial officer are currently working to streamline our disclosure controls
and procedures, so as to adequately comply with such SEC rules and
forms.




(b)
Changes in internal controls.  There were no significant changes in our
internal controls or in other factors that could significantly affect these
controls subsequent to the date of evaluation by our principal executive officer
and principal financial officer.




PART
II-
OTHER INFORMATION




ITEM
1-
LEGAL PROCEEDINGS




The
Company is not aware of pending claims or assessments which may have a material
adverse impact on the Company’s financial position or results of
operations.


ITEM
2-
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS




None.





ITEM
3-
DEFAULTS UPON SENIOR SECURITIES




None.




ITEM
4-
SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS




None.




ITEM
5-
OTHER INFORMATION


Resignation
of Dr. Wolfgang Barnikol from positions of Chief Executive Officer and Chief
Financial Officer
  Subsequent
to the period covered by this report, on March 30, 2008, Dr. Wolfgang
Barnikol amicably resigned as the Company’s Chief Executive Officer and Chief
Financial Officer effective April 3, 2008.  Dr. Barnikol's resignation was
not due to any disagreement with the Company.  Dr. Barnikol remains a
Director.
  Appointment
of Thomas Striepe as Chief Executive Officer
  Subsequent
to the period covered by this report, on April 8, 2008, the Board of
Directors appointed Thomas Striepe to serve as Chief Executive Officer of the
Company.  He is a current a Director of the Company.  Mr.
Striepe is also the Vice President of Accounting and Controller at Feedback
AG, Hamburg, Germany, a financial services company.  Prior to joining the
Board in 2004, he held management positions in the accounting departments of
several German and international corporations.  He holds an MBA from
Hamburg University.Mr. Striepe does not
have an employment agreement with the Company, nor have the terms of a severance
agreement with the Company been finalized.
  Mr.
Striepe has no family relationships with any other director or executive officer
of the Company or any person nominated to become a director or executive officer
of the Company.  There are no arrangements or understandings between any of
the directors or executive officers, or any other person or person pursuant to
which they were selected as directors and/or
officers.
 Appointment
of Joachim Fleing as Chief Financial Officer
  Subsequent
to the period covered by this report, on April 8, 2008, the Board of
Directors appointed Joachim Fleing to serve as Chief Financial Officer of the
Company.  He is a current a Director of the Company.  Mr. Fleing
is a communications specialist.  His professional experience includes the
position of a communications officer and the position as an account director at
an international PR agency.  Mr. Fleing holds a PhD from Wuppertal
University.  Mr. Fleingdoes
not have an employment agreement with the Company, nor have the terms of any
severance agreement with the Company beenfinalized
and are thus not yet available.
  Mr.
Fleing has no family relationships with any other director or executive officer
of the Company or any person nominated to become a director or executive officer
of the Company.  There are no arrangements or understandings between any of
the directors or executive officers, or any other person or person pursuant to
which they were selected as directors and/or officers.
  Entry
into Letter of Intent with HemCon
  Subsequent
to the period covered by this report, on April 15, 2008 the Company signed
a letter of intent with HemCon Medical Techolologies, Inc. to develop technology
relating to Chitosan wound care products.  The Company will license
exclusive worldwide sales and marketing rights in exchange for HemCon managing
the submission of the Chitosan wound care products to the United States Food and
Drug Administration.
 11
  
 Sale
of Capital Securities in Wholly Owned Subsidiary
  Subsequent
to the period covered by this report, on April 25, 2008 the Company entered into
letters of intent with various European investors to sell 10% of the capital
securities of its wholly owned subsidiary, Sangui BioTech GmbH, for
approximately 722,000 Euros.  Payments for the purchase were received in
their entirety by the Company by May 16, 2008.  The closing of this
transaction is subject to German Law and is anticipated to be complete
within eight weeks of filing with the German Register of Commercial
Companies scheduled for June 11, 1008 in Witten Germany.
  One
of the investors in this transaction is the current Managing Director of the
wholly owned subsidiary; he is receiving his ownership interest in
consideration of past services rendered for the Company in the amount
of 50,000 Euros.


ITEM
6-
EXHIBITS


2.1
                Exchange Agreement
      between MRC Legal Services LLC and SanguiBioTech International, Inc.,
      dated of March 31, 2000 (1)3.1
                Articles of
      Incorporation of the Company (1)3.2
                Bylaws of the
      Company (1)4.1
                Stock Option
      Agreement between Professor Wolfgang Barnikol and Sangui Biotech
      International, Inc. dated November 3, 1999 (2)10.1
                Office Lease between
      Brookhollow Office Park and Sangui Biotech International, Inc. dated
      September 4, 1996 and as amended 2000 (2)10.2
                Fee Agreement
      between GlukoMeditech AG and Dr. Sieglinde Borchert dated June 15,
      1998 (2)10.3
                Fee Agreement
      between SanguiBiotech AG and Dr. Sieglinde Borchert dated June 15,
      1998 (2)10.4
                Service Contract
      between GlukoMeditech AG and Dr. Wolfgang Barnikol dated June 30,
      1998 (2)10.5
                Service Contract
      between SanguiBiotech AG and Dr. Wolfgang Barnikol dated June 30,
      1998 (2)10.6
                Service Agreement
      between Axel Kleinkorres Promotionsagentur and Sangui Biotech
      International, Inc. dated April 26, 1999 (2)10.7
                Amendment to Service
      Agreement between Axel Kleinkorres Promotionsagentur and Sangui Biotech
      International, Inc. dated August 18, 2000 (2)10.8
                Appropriation Notice
      from North-Rhine-Westphalia to GlukoMediTech AG dated November 30,
      1998 (2)10.9
                Appropriation Notice
      from North-Rhine-Westphalia SanguiBiotech AG dated November 30,
      1998 (2)10.10
                Lease Contract for
      Business Rooms between Research and Development Centre, Witten, Germany
      and GlukoMeditech AG dated June 6, 2000 (2)10.11
                Additional Agreement
      to Lease Contract between Research and Development Centre, Witten, Germany
      and GlukoMeditech AG dated June 7, 2000 (2)10.12
                Additional Agreement
      to Lease Contract between Research and Development Centre, Witten, Germany
      and SanguiBiotech AG dated June 7, 2000 (2)10.13
                Assignment of
      Patents and
      Royalty Agreement with Dr. Wolfgang Barnikol
(3)10.14
                Prolongation Letter
      for SanguiBiotech AG Grants (4)16.1
                Auditor Letter from
      HJ & Associates, LLC (5)21.1
                Subsidiaries of the
      Company, filed herewith31.01
                Certification of CEO
      Pursuant to Rule 13a-14(a) and 15d-14(a), filed herewith31.02
                Certification of
      CFO Pursuant to Rule 13a-14(a) and 15d-14(a), filed
  herewith32.01
                Certification
      Pursuant to Section 1350 of Title 18 of the United States Code, filed
      herewith
 _____________________________________________________________________________________________________________________


(1)
Filed as an exhibit to the report on Form 8-K, filed on or about April 4,
2000


(2)
Filed as an exhibit to the report on Form 10-KSB for period ended June 30,
2000, filed on
October 13, 2000 (3)Filed as
an exhibit to the amended report on Form 10-KSB/A for the period ended June 30,
2000, filed on November 20, 2000
 (4)
Filed as an exhibit to the report on Form 10-KSB for the period ended June
30, 2001, filed on
September 28, 2001
 (5)
Filed as an exhibit to the report on Form 8-K/A filed on October 9,
2007








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.







SANGUI
BIOTECH INTERNATIONAL, INC.




Dated:
June 6, 2008   /s/
Thomas Striepe
 __________________________________________
 By:
Thomas Striepe
 Chief
Executive Officer
     Dated: June 6,
2008   /s/
Joachim Fleing
 __________________________________________
 By:
Joachim Fleing
 Chief
Financial Officer


12