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: December 31, 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 December 31, 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
      ..........................................................................................................................
              12Part II. Other InformationItem
      1.  Legal Proceedings
      .....................................................................................................................................
              12Item
      2.  Unregistered Sales of Equity Securities and Use of Proceeds
      ...........................................................
              12Item
      3.  Defaults Upon Senior
      Securities .............................................................................................................
              12Item
      4.  Submission of Matters to a Vote of Security Holders
      .........................................................................
              12Item
      5.  Other
      Information ......................................................................................................................................
              12Item
      6.  Exhibits ........................................................................................................................................................
              13Signatures.............................................................................................................................................................................
              13


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 December 31, 2006 and our unaudited
consolidated statements of operations for the three month periods ended December
31, 2006 and 2005, and the unaudited consolidated statements of cash flows for
the three month periods ended December 31, 2006 and 2005, are attached hereto
and incorporated herein by this reference.
























1







SANGUI BIOTECH INTERNATIONAL, INC.Consolidated
      Balance SheetsASSETSDecember
      31,
              
              
              June
      30,2006
              
              
              2006CURRENT
      ASSETS
              (Unaudited)Cash
              
              $
              81,890
              
              
              $
              24,548Accounts
      receivable
              
              
              4,631
              
              
              
              16,601Inventory
              
              
              139,548
              
              
              
              14,720Prepaid
      expenses and other assets
              
              
              12,309
              
              
              
              15,060Total
      Current Assets
              
              
              238,378
              
              
              
              70,929FIXED
      ASSETS, NetProperty and
      equipment
              
              
              10,606
              
              
              
              11,708Total
      Fixed Assets
              
              
              10,606
              
              
              
              11,708OTHER
      ASSETSPatents
      and licenses, net
              
              
              7,828
              
              
              
              23,460Other
      miscellaneous assets
              
              
              110,328
              
              
              
              17,809Total
      Other Assets
              
              
              118,156
              
              
              
              41,269TOTAL
      ASSETS
              
              $
              367,140
              
              
              $
              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)December
      31,
              
              
              June
      30,2006
              
              
              2006(Unaudited)CURRENT
      LIABILITIESAccounts
      payable and accrued expenses
              
              $
              561,760
              
              
              $
              335,488Notes
      payable
              
              
              113,134
              
              
              
              172,122Total
      Current Liabilities
              
              
              674,894
              
              
              
              507,610TOTAL
      LIABILITIES
              
              
              674,894
              
              
              
              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, respectively
              
              
              18,969,358
              
              
              
              18,969,358Additional
      paid-in capital
              
              
              1,958,376
              
              
              
              1,958,376Accumulated
      other comprehensive income
              
              
              875,722
              
              
              
              453,434Accumulated
      deficit
              
              
              (22,111,210
              )
              
              
              (21,764,872
              )Total
      Stockholders' Equity (Deficit)
              
              
              (307,754
              )
              
              
              (383,704
              )TOTAL
      LIABILITIES AND STOCKHOLDERS'EQUITY
      (DEFICIT)
              
              $
              367,140
              
              
              $
              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 Three
                  
                  
                  For
      the SixMonths
      Ended
                  
                  
                  Months
      EndedDecember
      31,
                  
                  
                  December
      31,2006
                  
                  
                  2005
                  
                  
                  2006
                  
                  
                  2005REVENUES
                  
                  $
                  16,842
                  
                  
                  $
                  53,990
                  
                  
                  $
                  136,317
                  
                  
                  $
                  53,990COST
      OF SALES
                  
                  
                  42,713
                  
                  
                  
                  15,740
                  
                  
                  
                  119,869
                  
                  
                  
                  15,740GROSS
      PROFIT
                  
                  
                  (25,871
                  )
                  
                  
                  38,250
                  
                  
                  
                  16,448
                  
                  
                  
                  38,250OPERATING
      EXPENSESResearch
      and development
                  
                  
                  29,756
                  
                  
                  
                  38,353
                  
                  
                  
                  52,145
                  
                  
                  
                  49,910Depreciation
      and amortization
                  
                  
                  6,820
                  
                  
                  
                  8,545
                  
                  
                  
                  14,007
                  
                  
                  
                  21,869General
      and administrative
                  
                  
                  158,833
                  
                  
                  
                  122,455
                  
                  
                  
                  315,488
                  
                  
                  
                  246,304Total
      Operating Expenses
                  
                  
                  195,409
                  
                  
                  
                  169,353
                  
                  
                  
                  381,640
                  
                  
                  
                  318,083OPERATING
      LOSS
                  
                  
                  (221,280
                  )
                  
                  
                  (131,103
                  )
                  
                  
                  (365,192
                  )
                  
                  
                  (279,833
                  )OTHER
      INCOME (EXPENSE)Interest
      income
                  
                  
                  90
                  
                  
                  
                  -
                  
                  
                  
                  90
                  
                  
                  
                  -Interest
      expense
                  
                  
                  (5,367
                  )
                  
                  
                  (3,507
                  )
                  
                  
                  (10,141
                  )
                  
                  
                  (5,323
                  )Other
      income (loss)
                  
                  
                  28,886
                  
                  
                  
                  7,961
                  
                  
                  
                  28,905
                  
                  
                  
                  8,515Total
      Other Income (Expense)
                  
                  
                  23,609
                  
                  
                  
                  4,454
                  
                  
                  
                  18,854
                  
                  
                  
                  3,192NET
      LOSS
                  
                  
                  (197,671
                  )
                  
                  
                  (126,649
                  )
                  
                  
                  (346,338
                  )
                  
                  
                  (276,641
                  )OTHER
      COMPREHENSIVE INCOMEForeign
      currency translation adjustments
                  
                  
                  175,126
                  
                  
                  
                  98,426
                  
                  
                  
                  422,288
                  
                  
                  
                  12,887Unrealized
      gain on marketable securities
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -Total
      Other Comprehensive Income
                  
                  
                  175,126
                  
                  
                  
                  98,426
                  
                  
                  
                  422,288
                  
                  
                  
                  12,887COMPREHENSIVE
      INCOME (LOSS)
                  
                  $
                  (22,545
                  )
                  
                  $
                  (28,223
                  )
                  
                  $
                  75,950
                  
                  
                  $
                  (263,754
                  )BASIC
      AND DILUTED LOSSPER
      SHARE
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.00
                  )
                  
                  $
                  (0.01
                  )
                  
                  $
                  (0.01
                  )WEIGHTED
      AVERAGE NUMBEROF
      SHARES OUTSTANDING
                  
                  
                  50,000,000
                  
                  
                  
                  48,503,749
                  
                  
                  
                  50,000,000
                  
                  
                  
                  48,248,314
 The
accompanying condensed notes are an integral part of these interim consolidated
financial statements.
  4
  
  SANGUI BIOTECH INTERNATIONAL, INC.Statements
      of Cash Flows(Unaudited)For
      the SixMonths
      EndedDecember
      31,2006
                  
                  
                  2005CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                  
                  $
                  (346,338
                  )
                  
                  $
                  (276,641
                  )Adjustments
      to reconcile net loss to net cashused
      by operating activities:Depreciation,
      depletion and amortization
                  
                  
                  14,007
                  
                  
                  
                  21,869Common
      stock issued for services
                  
                  
                  -
                  
                  
                  
                  10,837Changes
      in operating assets and liabilitiesDecrease
      (Increase) in accounts receivable
                  
                  
                  11,970
                  
                  
                  
                  522Decrease
      (Increase) in inventories
                  
                  
                  (124,828
                  )
                  
                  
                  (130
                  )Decrease
      (Increase) in prepaid expenses and other assets
                  
                  
                  (74,136
                  )
                  
                  
                  59,876Increase
      (Decrease) in accounts payable and accrued expenses
                  
                  
                  226,272
                  
                  
                  
                  24,503Net
      Cash Used by Operating Activities
                  
                  
                  (293,053
                  )
                  
                  
                  (159,164
                  )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of fixed assets
                  
                  
                  (12,905
                  )
                  
                  
                  -Net
      Cash Used by Investing Activities
                  
                  
                  (12,905
                  )
                  
                  
                  -CASH
      FLOWS FROM FINANCING ACTIVITIESPayments
      on notes payable
                  
                  
                  (58,988
                  )
                  
                  
                  -Sale
      of common stock for cash
                  
                  
                  -
                  
                  
                  
                  152,448Net
      Cash Provided by Financing Activities
                  
                  
                  (58,988
                  )
                  
                  
                  152,448EFFECT
      OF EXCHANGE RATE CHANGES
                  
                  
                  422,288
                  
                  
                  
                  12,887NET
      INCREASE (DECREASE) IN CASH
                  
                  
                  57,342
                  
                  
                  
                  6,171CASH
      AT BEGINNING OF PERIOD
                  
                  
                  24,548
                  
                  
                  
                  9,497CASH
      AT END OF PERIOD
                  
                  $
                  81,890
                  
                  
                  $
                  15,668SUPPLIMENTAL
      DISCLOSURES OFCASH
      FLOW INFORMATIONCASH
      PAID FOR:Interest
                  
                  $
                  -
                  
                  
                  $
                  5,322Income
      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 December 31, 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") wereengaged
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
$22,111,210  as of December 31, 2006 and has been significantly
reducing its working capital since June 30, 2004. The Company incurred a net
loss applicable to common stockholders of $346,338 during the six months ended
December 31, 2006 and used cash in operating activities of $293,053 for the six
months ended December 31, 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 December 31, 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 December 31, 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 dueto 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 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.
  9
  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.
  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 the 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 Pad
  In
March 2005, SanguiBioTech GmbH was awarded the CE mark
for their Chitoskin wound care 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 approximately $167,449, or 236%, from June
30, 2006 to approximately $238,378 at December 31, 2006. The increase is
primarily attributable to a $124,828 increase in inventory, and $54,342 in
cash.  This increase was partially offset by slight decreases in accounts
receivable and prepaid expenses during the period.
  The
Company's net property and equipment decreased approximately $1,102, or 9% from
June 30, 2006 to approximately $10,606 at December 31, 2006. The decrease is
primarily attributable to current period depreciation.
  The
Company funded its operations primarily through its existing cash reserves and
cash received from the sale of common stock. The Company's stockholders' deficit
decreased approximately $75,950. The decrease resulted primarily from the
Company's increase in cash, inventory, and other assets.
  RESULTS
OF OPERATIONS
  Three
months ended December 31, 2006 and 2005:
  RESEARCH
AND DEVELOPMENT. Research and development expenses decreased $8,597 to
approximately $29,756 in 2006 from approximately $38,353 in 2005. The decrease
is mainly attributed to the Company lacking the requisite funding and a
reduction in staff. The Company is seeking additional sources to provide
financing for additional research and development.
  GENERAL
AND ADMINISTRATIVE. General and administrative expenses increased 27% to
approximately $158,833 in 2006 from approximately $122,455 in 2005. This
increase is mainly attributed to the ongoing refocusing program, and expansion
of the Company’s product lines into new markets.
  DEPRECIATION
AND AMORTIZATION. Depreciation decreased $1,725 to approximately $6,820 in 2006
from approximately $8,545 in 2005. This decrease is mainly attributed to the
ongoing restructuring of Sangui GmbH.
  NET
LOSS. As a result of the above factors, the Company's consolidated net loss was
approximately $197,671, or approximately $0.00 per common share, for the three
months ended December 31, 2006, compared to approximately $126,649, or $0.00 per
common share, during the comparable period in 2005.
  10
 
 Six
months ended December 31, 2006 and 2005:
  RESEARCH
AND DEVELOPMENT. Research and development expenses increased $2,235 to
approximately $52,145 in 2005 from approximately $49,910 in 2005. The increase
is mainly attributed to the Company seeking to expand its product base into new
markets.  The Company is seeking additional sources to provide
financing for additional research and development.
  GENERAL
AND ADMINISTRATIVE. General and administrative expenses increased 28% to
approximately $315,488 in 2006 from approximately $246,304 in 2005. This
increase is mainly attributed to the ongoing refocusing program, and the
Company’s expansion into new sales markets.
  DEPRECIATION
AND AMORTIZATION. Depreciation and amortization decreased $7,862 to
approximately $14,007 in 2006 from approximately $21,869 in 2005. This decrease
is mainly attributed to the ongoing restructuring of Sangui
GmbH.
  NET
LOSS. As a result of the above factors, the Company's consolidated net loss was
approximately $346,338, or approximately $(0.01) per common share, for the six
months ended December 31, 2006, compared to approximately $276,641, or $0.01 per
common share, during the comparable period in 2005.
  LIQUIDITY
AND CAPITAL RESOURCES
  For
the six months ended December 31, 2006, net cash used in operating activities
increased to approximately $293,053, from approximately $159,164 in the
corresponding period in 2005, primarily related to a increase in the Company's
consolidated net loss and increased inventory holdings.
  The
Company had a working capital deficit of approximately $436,516 at December 31,
2006, an increase of approximately $172 from June 30, 2005 due primarily to the
Company's net loss for the three-month period.  At December 31, 2006,
the Company had cash of approximately $81,890. 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.
 11




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 Director of the Company.  Mr.
Striepe is the Vice President of Accounting and Controlling at Feedback AG,
Hamburg, Germany, a financial services company. Prior to joining 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 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.
 12
  
 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, 2008 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 (6)31.01
                  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
 (6)
Filed as an exhibit to the report on Form 10-QSB for the period ended September
30, 2006, filed on June 10, 2008


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 11, 2008   /s/
Thomas Striepe
 __________________________________________
 By:
Thomas Striepe
 Chief
Executive Officer
     Dated: June 11,
2008   /s/
Joachim Fleing
 __________________________________________
 By:
Joachim Fleing
 Chief
Financial Officer


13