UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549  FORM 10-K (Mark One) [x]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934  For the fiscal year ended
      December 31, 2008  [ ]TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934  Commission File Number
      000-24480  Sanguine Corporation (Exact name of registrant as specified in
charter)  Nevada
                                       95-4347608 State or other jurisdiction of
                (I.R.S.
Employer I.D. No. incorporation or
organization  101 East Green Street, #6 Pasadena,
California  91105 (Address of principal executive offices)
                      (Zip
Code)  Issuer's telephone number, including area
code: (626) 405-0079  Securities registered pursuant to section
12(b) of the Act:  Title of each class
                Name
of each exchange on which registered None
                                            N/A  Securities registered pursuant to section
12(g) of the Act:  Common Stock, $0.001 par value (Title of class)  Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act Yes [
 ] No   [X]  Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or 15(d) of the Act Yes [X] No   [   ]  Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
                       Yes
[X]  No [   ]  Indicate by check mark if disclosure of
delinquent filers in response to Item 405 of Regulation S-B is not contained
herein, and not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.    [ ]   1     Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.  See definitions of large
accelerated filer, accelerated filer, and smaller reporting company in Rule
12b-2 of the Exchange Act.  Large
Accelerated filer  ̈ Accelerated filer  ̈ Non-accelerated
filer   ̈ (Do not check if a
smaller reporting company) Smaller reporting company x  Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act). Yes [
  ]   No [ X]  State the aggregate market value of the
voting stock held by nonaffiliates computed by reference to the price at which
the stock was sold, or the average bid and asked prices of such stock, as of a
specified date within the past 60 days:   The average between the bid
and the ask price as of June 30, 2007, the end of the Registrant's second fiscal
quarter was $1.40 giving the shares held by non-affiliates a market value of
approximately $3,482,685.  There are approximately 2,487,632
shares of common voting stock of the Issuer beneficially owned by
non-affiliates.  As of April 13, 2009, the Registrant had
5,164,572 shares of common stock issued and outstanding.  DOCUMENTS INCORPORATED BY REFERENCE  List hereunder the following documents if
incorporated by reference and the part of the Form 10-K (e.g., part I, part II,
etc.) into which the document is incorporated:  (1) Any annual report to
security holders; (2) Any proxy or other information statement; and (3) Any
prospectus filed pursuant to rule 424(b) or (c) under the Securities Act of
1933: NONE   2    PART I  ITEM 1. BUSINESS  SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS  This periodic report contains certain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 with respect to the financial condition, results
of operations, business strategies, operating efficiencies or synergies,
competitive positions, growth opportunities for existing products, plans and
objectives of management. Statements in this periodic report that are not
historical facts are hereby identified as Aforward-looking
statements.@  Business Development.  Developmental Information for the
Year Ended December 31, 2006.  On February 16, 2006, we entered into an
Agreement for Department of Energy Funded Technology Assistance with the
Battelle Memorial Institute, Pacific Northwest National Laboratory, Office of
Small Business Programs, pursuant to which Pacific Northwest Laboratories will
assess the affinity of our proprietary product, PHER-O2, as an industrially
useful carrier of hydrogen and carbon dioxide.  On October 18, 2006, our Board of Directors
resolved to offer for sale in a private placement 353,333 shares of our common
stock that are restricted securities to accredited investors at $1.20 per
share for aggregate gross proceeds of $400,000.  This offering was closed
on February 12, 2007, with 37,333 shares having been sold for gross proceeds of
approximately $44,800.  Developmental Information for the
Year Ended December 31, 2007  Effective January, 2007 we extended the
expiration dates of 97,156 outstanding warrants to purchase shares of our common
stock at $1.60 per share to March, 2008, or a year from the date on which they
were scheduled to expire.  On November 21, 2007, we executed a
Consulting and Confidentiality Agreement for a 12 month term with KKS Venture
Management, Inc. (KKS) and Alfonso C. Knoll (Knoll), its principal, whereby
KKS was engaged to provide consulting services.   KKS has agreed to
exercise its best efforts to provide us with help in gaining market awareness
and exploring the possibilities of a European listing; recommending a
capitalization restructure to facilitate an offering of $5,000,000; and, in
approaching a large underwriter to structure a secondary offering for the
advertising of our brand and to increase our budget.  KKS has also agreed
to provide such managerial help and consultation to foster our growth and
performance. The KKS Agreement automatically renews with the same terms on the
last day of the 12th month, unless either party gives written notice of intent
not to renew.  KKS and Knoll will be compensated as
follows:  · Upon approval of the KKS Agreement, we
issued to KKS, one hundred fifty thousand (150,000) shares of our common stock
that are restricted securities under Rule 144 of the Securities and Exchange
Commission (the SEC), with piggy-back registration rights; and · 33,750 shares of our common stock through
a grant from our Stock Option Plan to Knoll, personally, under a separate Letter
Agreement of even date; and · After successful completion of a minimum
of an initial $500,000 financing has been realized by us, we will pay KKS Twenty
Thousand Dollars ($20,000) per month so long as we can afford to pay that sum
while the KKS Agreement or any extension thereof is in effect.  On November 21, 2007, we executed a
Management Consulting Agreement for a 24 month term with LKB Partners, LLC
(LKB), whereby LKB was engaged to provide additional management consulting
services to us.  LKB had previously executed a Consulting Agreement with us
on April 4, 2007.  LKB and its principal, Frank Marra, has
agreed to make themselves available to act in the full capacity as General
Manager (Marra, individually) and President (Marra, individually) for us, which
includes running all day to day business operations, entering into or
negotiating contracts, hiring and firing of personnel, paying expenses,
devising, revising and implementing business, financing, marketing strategies
and all other necessary tasks relevant to the position.   3    Furthermore, KKS
will be responsible for providing contacts for us to raise the requisite equity
capital to pay our current obligations and work to provide capital for our
future endeavors. LKB will be paid $8,000 for each month of the 24 month term
for these services.  We also agreed to pay LKB for these
services 150,000 shares of our common stock that are restricted securities, of
which 25,000 shares went to Marra personally under a separate Letter Agreement.
 We also agreed to grant to LKB the option to purchase up to 9.5 percent of
the issued and outstanding shares of our common stock at a price of $1.20 per
share for a period of two years; provided, however, these options, to the extent
not exercised prior thereto, shall be void on March 31, 2008, unless we shall
have raised not less than the sum of $500,000 through the efforts of LKB or its
associates or affiliates or by persons introduced by it or its associates or
affiliates by March 31, 2008, with no proration of options in the event all
$500,000 is not raised.  Effective during the quarter ended
September 30, 2007, but approved by the Board of Directors on November 21, 2007,
we executed a Stock Purchase Agreement with Terra Silex Holdings LLC, a
Pennsylvania LLC (Terra Silex), wherebyTerra Silex purchased one hundred
thousand (100,000) shares of our common stock for a purchase price of One
Hundred Thousand Dollars ($100,000). This $100,000 amount counts against the
$500,000 required to be raised as a condition of the LKB option referenced in
the preceding paragraph.  Pursuant to a consulting agreement dated
April 4, 2007, between us and LKB, LKB received 200,000 shares of our common
stock that are restricted securities, and was granted an option to purchase an
additional 250,000 shares of our common stock that are restricted securities
at a price of $1.20 per share for a period of two years ending April 3, 2009.
 On April 4, 2007, the Company also issued 50,000 shares to Frank
Marra.  On November 20, 2007, Dr. Thomas C. Drees,
our current President, executed an Option Agreement with LKB pursuant to which
he granted LKB an option to purchase 500,000 shares of our common stock that are
owned by him at a purchase price of $0.70 per share for a term of five (5)
years, provided, however, these options, to the extent not exercised prior
thereto, shall be void on March 31, 2008, unless we shall have raised not less
than the sum of $500,000 through the efforts of LKB or its associates or
affiliates or by persons introduced by LKB or its associates or affiliates by
March 31, 2008.  The $100,000 invested by Terra Silex that is outlined
above is considered to be a part of this $500,000 funding condition.  Also, on November 20, 2007, Dr. Drees
executed an additional Option Agreement with Terra Silex pursuant to which he
granted Terra Silex an option to purchase 500,000 shares of our common stock
that are owned by him at a purchase price of $0.70 per share for a term of five
(5) years, provided, however, these options, to the extent not exercised prior
thereto, shall be void on March 31, 2008, unless we shall have raised not less
than the sum of $500,000 by March 31, 2008, as outlined above.  The
$100,000 invested by Terra Silex that is outlined above is also considered to be
a part of this $500,000 funding condition.  On November 21, 2007, we executed a
Management Consulting Agreement for a term in perpetuity with Thomas C. Drees,
PhD., our current President, whereby Dr. Drees was engaged to provide management
consulting services.  Dr. Drees has agreed to be retained to act in the
full capacity as Chief Executive Officer for us, which includes, but not be
limited to, working with management to help promote our overall growth,
evaluating business opportunities, offering input on critical business issues
that may arise from time to time, participate in planning for our business
future and other like duties.  Dr. Drees will be paid $4,000 for each
month, in perpetuity for these services, as long as we are in business or until
Dr. Drees death.  In the event that Dr. Drees is relieved of the
obligations of the Drees Agreement and no longer serves as CEO, the fee will
remain intact until one of the aforementioned conditions occurs. Notwithstanding
that the term shall not have been completed, we may terminate the Drees
Agreement (i) upon the death of Dr. Drees, and (ii) if Dr. Drees should be
incapacitated by illness or any other matter from performing his duties
hereunder for a continuous period of sixty days.  Developments Information for
2008  In the first quarter of 2008, we raised
$280,000 from two investors.  These funds will be used to further the
development of our product and hire additional consultants to assist in our
business development.  The Company also retained an investor relation firm
which will be paid $20,000 and up to 25,000 shares of our common stock.
 The term of the agreement is for one year.   4    Business.  We are engaged in the development of a
synthetic red blood cell or an origination product called "PHER-O2."  The
development of this product presently comprises our sole business operations.
 PHER-O2 is composed of perfluoro-decalin molecules, or synthetic red blood
cells, purified water and a proprietary, synthetic, fluorinated surfactant, or
wetting agent, to hold the emulsion together. Perfluoro-decalin has great
oxygen-carrying capacity, yet it can be as much as 25 times smaller than a red
blood cell.  We believe that PHER-O2 can carry three to four times the
oxygen of human blood per unit volume. This increased oxygen-carrying capacity
would make PHER-O2 useful in the treatment of heart attacks, strokes, cancer and
other diseases for which increased oxygenation is beneficial.  We also
believe that perfluoro-decalin is effective as an imaging agent in X-ray
imaging, nuclear magnetic resonance imaging and CAT scans, without side effects.
 Our management estimates that PHER-O2 has several other advantages over
human blood: that it can be sterilized to be free of disease; that it has the
quality of a universal match for all blood types; that it can be mass-produced;
and that it can be stored at room temperature for up to three and one half
years, much longer than human blood, which can only be stored at room
temperature for about 42 days.  We have completed the compounding of
PHER-O2, and we have completed initial gross animal tests that do not require
regulatory approval prior to commencement.  However, regulatory agencies
may review the data gathered from any of these tests.  We have manufactured
the experimental doses of PHER-O2 required to conduct these tests. Our current
second phase of development of PHER-02 involves:  *
   the completion of a Master Drug File, pending final
funding;  *
   the completion of a method of use to support labeling of the
product;  *
   the completion of a 510 (k) submission to the FDA to request
support for PHER-O2 as a device;  *
   the completion formulation adjustments as deemed necessary for
PHER-O2s use as a transport medium;  In parallel with our second phase of
operations, we intend to continue working with outside agencies and/or
universities to support the writing and completion of peer reviewed medical
papers.  These papers will be announced as agreements with the agencies
and/or universities are completed.  The Company has been contacted related
to many uses of PHER-O2.  Notwithstanding internal Company identified
programs, Sanguine is desirous of moving toward licensing opportunities.
 To complete licensing opportunities, it will be necessary for third
parties to complete necessary testing and peer reviewed studies.  Should
the testing and studies prove successful, the Company intends to move toward
revenue generation.  All revenue considerations will comply with all
necessary FDA requirements.  In our third phase of operations, we intend
to continue developing the perfluorocarbon compounds in PHER-O2 in order to
optimize its quality for intravenous use; and begin animal safety and efficacy
trials in accordance with FDA guidelines and comparable foreign regulatory
requirements, with the aid and assistance of a regulatory specialist. We will
need additional funding for these purposes.  In our final phase, we intend to:  *
   complete United States testing of PHER-O2;  *
   seek all necessary FDA approvals and begin American and
Canadian sales; and  *
   complete overseas testing and begin overseas sales in foreign
countries.  In our final phase, we also intend to
continue trials to test PHER-O2 for other applications, transplant organ
preservation and treatment of carbon monoxide poisoning, sickle cell anemia,
heart attack and stroke and numerous other confidential areas.  We will
have to conduct similar rigorous testing and clinical trials of PHER-O2 for each
desired application, although we expect much of all sales will be off-label, as
was the case with the first generation sales of Fluosol, a first generation
product of PHER-O2.  PHER-O2 has not submitted any application
to any federal, state or foreign agency to seek authority for animal or human
testing.  The development process will be time consuming and expensive.
 It will also be subject to extreme governmental regulation.  We will
have to prove that our product is safe and efficacious for human use.
 Until then, we will have no potential for revenues from operations except
for licensing.  We cannot assure you that we will be able to raise the
money   5    necessary to
develop PHER-O2 or that, if we raise sufficient funds, that we will ever receive
the necessary federal, state or foreign agency approval to manufacture or market
the product.  Principal Products or Services and their
Markets.  We have one lead product, PHER-O2, and 15
extensions of that product. Our success hinges largely on the success of this
product.  We cannot assure you that it will ever be successful.
 PHER-O2 is made up of perfluoro-decalin, which is a type of
perfluorocarbon that is harmless to humans and the atmosphere and was used in
the FDA approved first generation product, Fluosol, purified water and a
proprietary surfactant to hold the emulsion together. Perfluoro-decalin gives
our product its oxygen carrying ability.  The surfactant is non-toxic and
was FDA approved in Fluosol and, being fluorinated, helps increase PHER-O2's
oxygen carrying capacity and emulsion stability.  We believe that the
unique chemical nature of PHER-O2 will make it ideal for many medical
applications, although each application will be subject to the same types of
rigorous testing, clinical trials and governmental regulatory approval
process.  We believe that PHER-O2 has the following
advantages over human blood:  *
   may carry three to four times the oxygen of human blood per
unit volume;  *
   free of HIV, hepatitis B & C, Mad Cow and other
blood-borne disease;  *
   universal match for all blood types;  *
   may be mass-produced;  *
   may have a three and one half year shelf life;  *
   may be stored at room temperature;  *
   has controllable circulatory half-life; and  *
   may be 1/25th the size of a red blood cell.  PHER-O2 is a
second generation improved drug from Fluosol-DA, the only synthetic red blood
cell approved by the FDA.  This approval was completed under the management
of our President and CEO, Thomas C. Drees, Ph.D.  We believe
that its unique qualities may make PHER-O2 ideal for blood transfusions and
numerous other medical applications, including:  *
    transportation of pancreas islets for treatment of
diabetes;  *
    ophthalmic retinal surgery;  *
    angioplasty;  *
    external oxygenation of infection, ischemic tissue and
diabetic ulcers;  *
    Alzheimer's;  *
    oxygenation of cancerous tumors;  *
    nuclear magnetic resonance imaging;  *
    CAT scans;  *
    cardioplegia, or the priming of heart-lung machines in
open heart surgery; and  *
    treatment of heart attacks, strokes, head and neck
tumors and hemorrhagic shock.  Preliminary testing has indicated that the
transportation of pancreas islet cells in a bath of PHER-02 in the treatment   6    of diabetes has
significantly increased the number of islet cells available for
transplantation.  For Ophthalmic retinal surgery, we are
evaluating a new version of PHER-02 for surgical use.  This product is
believed to have characteristics that can be used for retinal surgery because of
its specific weight properties.  The new product will be transparent.  Blood transfusion represents a vast market
for synthetic red blood cells.  The limited supply of safe donated blood is
the largest constraint on the number of transfusions given annually.  If a
safe blood substitute were widely available, more transfusions could be given to
those who desperately need them.  The present market for transfusions
worldwide is 100,000,000 units per year, but that is only one-third of the
annual demand. We hope to fulfill this need with PHER-O2. The key ingredients in
PHER-O2 are readily available in the United States from many manufacturers. When
combined, using our proprietary emulsion process, we know that the result will
be a plentiful alternative to donated human blood.  Another disadvantage to the use of human
blood in transfusions is the waiting period while the donor's blood is being
matched to the recipient's.  Because we know that PHER-O2 does not need to
be matched to the recipient's blood type, the use of PHER-O2 would eliminate
this potentially fatal wait, and increase its use in ambulances, emergency rooms
and battle fields.  As HIV, hepatitis B & C and other
diseases have infected the world's blood supply, the need for an absolutely
sterile blood product has become increasingly apparent.  There is currently
no 100% effective method for detecting blood-borne diseases and sterilization of
donated blood is not possible.  In light of these facts, PHER-O2's
potential sterility makes it especially attractive in comparison to donated
blood with its risk of AIDS, hepatitis and mad cow disease.  PHER-O2's anticipated ability to carry up
to four times the oxygen of human blood makes it promising for many medical
applications in which  increased oxygenation is vital.  PHER-O2
molecules are up to 25 times smaller than human red blood cells.
 Management believes that this fact will make PHER-O2 particularly useful
for oxygenating organs through blocked arteries, which are the primary cause of
heart attack and stroke.  One of our former competitors had obtained
in 1989 FDA approval under Dr. Drees' management for the use of a similar
product in angioplasty, the treatment of blocked arteries with small inflated
balloons.  This application involves the injection of the blood substitute
into the artery past the inflated balloon.  As a result, the heart receives
more oxygen, the treating physician can keep the balloon inflated longer and the
angioplasty is more effective than it would otherwise be.  This competitor
announced in 1993 that it would no longer manufacture its product, leaving us
well positioned in this market segment.  Fluosol was non-stable, so it had
to be frozen, which made it difficult to handle.  Management also believes that PHER-O2 will
be ideal for use in open-heart surgery.  Cardiac surgeons need an
oxygen-carrying fluid that can be used to prime the heart-lung bypass machines
that are used mechanically to pump and oxygenate heart patients' blood.
 This procedure is known as "cardioplegia."  Surgeons currently use
saline, dextrose or hydroxyethyl starch solutions for this purpose, but these
fluids can dilute the red blood cells in the body, and thus decrease the ability
of the blood to carry oxygen.   Moreover, the risk of infection from
whole blood or its derivatives makes them undesirable for use as priming fluids.
 PHER-O2's significant oxygen-carrying ability and its sterility address
both of these concerns.  The treatment of head and neck tumors is
another promising application for PHER-O2.  Increased oxygenation of these
tumors makes them more susceptible to the effects of radiation and
chemotherapeutic drugs, and makes PHER-O2 a diagnostic for these types of
tumors.  Another potential benefit of PHER-O2,
though little understood, is the ability of oxygen-rich blood to cause a tumor
to produce hydrogen peroxide, which in turn tends to shrink the tumor.  The perfluoro-decalin molecule in PHER-O2
also works as a radiopaque agent in X-ray imaging and as a contrast agent in
nuclear magnetic resonance imaging and CAT scans.  However, unlike many
currently-available imaging agents, PHER-O2 has no known side effects.  Distribution Methods of the Products or
Services.  None; our products are still in the
research and development stage.    7    Status of any
Publicly Announced New Product or Service.  None; not applicable.  Competitive Business Conditions and the
Small Business Issuer's Competitive Position in the Industry and Methods of
Competition.  10
years ago, there were 15 possible competitors.  We believe there are still
three companies working to develop alternatives to human blood.  They
include:  *
    Biopure Corporation of Cambridge, Massachusetts;  *
    Northfield Laboratories, Inc. of Evanston, Illinois
(Northfield is currently engaged in FDA testing of its synthetic blood product,
PolyHeme, that it believes is compatible with all human blood types and can be
used in the treatment of all trauma victims [Associated Press, March 6, 2006]);
and  *
    Synthetic Blood International, San Diego, California,
(PFC).  Each of these competitors files reports
with the Securities and Exchange Commission, and these reports are available for
review in the Securities and Exchange Commission's EDGAR Archives.  These
competitors are involved in the development of a wide variety of human blood
substitutes, including synthetic compounds, recycled outdated human blood and
bovine hemoglobin.  Neither the list of competitors nor the list of human
blood substitutes is exhaustive. Furthermore, some of our existing or potential
competitors have significantly greater technical and financial resources than we
do and may be better able to develop, test, produce and market products.
 These competitors may develop products that are competitive with or better
than our product and that may render our product obsolete.  We can provide
no assurance that we will be able to compete successfully.  Sources and Availability of Raw
Materials and Names of Principal Suppliers.  We plan to purchase highly purified
medical-grade perfluorocarbons and surfactants from reliable vendors and to
emulsify these ingredients in our own or other facilities, depending upon
funding.  FluoroMed, LP, F2 Chemicals, Ltd. and KC America are qualified
medical grade perfluorocarbon vendors. Surfactants are available through several
U. S. vendors.  Because sterile intravenous solutions manufacturing plants
are very expensive and FDA approval of these plants is a lengthy process, we
intend to hire a third party to package the product in sterile plastic bags with
intravenous sets attached. Abbott Laboratories, Baxter, B. Braun Medical Inc.,
Fresenius Kabi, and Alliance Medical Products, Inc. are a few of the U. S.
companies with the qualifications and capacity to perform this function.
However, we cannot assure you that any of these ingredients or services will be
available or that they will be available at prices that are low enough to make
our operations profitable.  Dependence on One or a Few Major
Customers.  None; not applicable.  Patents, Trademarks, Licenses,
Franchises, Concessions, Royalty Agreements or Labor Contracts, including
Duration.  We filed United States Application Patent
Nos. 07/952/403 and 08/230/672, covering PHER-O2, with the United States Patent
Office on September 28, 1992 and April 21, 1994, respectively.  No patent
has been issued, and we may have to amend our patent application before any
patent is issued, if ever.  We filed European Application Patent No.
(UK)EPO261802, covering PHER-O2, with the European Patent Office on August 25,
1997.  No patent has been issued and, and we may have to amend our patent
application before any patent is issued, if ever.  We have the following Patents pending for
"compositions and method for emulsifying a perfluorocarbon with an
oxygen-carrying surfactant."  Docket
No.                          
Serial
No.                               
Status (All Pending) 2127.21US                         
11/190.433                           
Office Action Reponse due 7/2/09 2127.21BR                         
PI
0615985-0                        
Request for Examination due 6/27/09 2127.2.1CA                        
2.616.986                              Maintenance
Fee due 6/27/09 and Request for Examination due 6/27/11 2127.21CN                          20060030461.7                    
Pending - Waiting on China Patent Office 2127.21JP                            2008-524194                       
Request for Examination due 6/27/09 2127.21MX                        
MX/a/2008/001350            
Pending - Waiting on Mexico Patent Office  There are no assurances that any patents
will be issued off of the pending applications. We have formulated certain proprietary GRAS
surfactants during the course of our research and development activities.
 The surfactant is mixed with the basic chemical of our product,
perfluoro-decalin, to maintain the small particle size in the emulsion of
PHER-O2 because the particle size of decalin alone in the blood stream may
quickly increase in size and block arteries and veins.  We have a Consulting Agreement with
Beckloff, a Cardinal Health company, that was effective for one year   8    commencing on
March 25, 2005, whereby Beckloff agreed to assist us in implementing, conducting
and completing our FDA testing and approval process.  Subject to available
funding, we expect these services to continue through 2008 for the same
purposes.  Need for any Governmental Approval of
Principal Products or Services.  The FDA and comparable foreign agencies
require laboratory testing, animal and human clinical testing and other costly
and time-consuming procedures before biomedical products such as PHER-O2 can be
marketed.  To date, we have not begun any of these procedures.  Our
plan for obtaining FDA and overseas approval of PHER-O2 is set forth under the
heading "Plan of Operation" of the caption "Management's Discussion and Analysis
or Plan of Operation" in Part I, Item 6.  We cannot assure you that these testing
procedures will be successfully completed, that if completed, they will show
PHER-O2 to be safe and efficacious, or that we will obtain any required
governmental approvals.  Nor can we assure you that we will ever be
permitted to market PHER-O2 in the United States or most foreign countries.
 The same holds true for any other related products or proprietary rights
that we may develop.  Effect of Existing or Probable
Governmental Regulations on the Business.  Regulation by governmental authorities in
the United States and foreign countries will significantly affect our ability to
manufacture and market our product and to conduct our ongoing research and
product development activities. Our lead product, PHER-O2, will require
regulatory approval by appropriate governmental agencies before it can be
commercialized.  Human therapeutic products are subject to rigorous
pre-clinical and clinical testing and other approval procedures by the FDA and
similar health authorities in foreign countries.  Various federal, state
and foreign statutes also govern or influence the manufacturing, safety,
labeling, storage, record-keeping and marketing of such products.  The
process of obtaining these approvals is costly and time consuming.  In
addition, ongoing compliance with these requirements can require the expenditure
of substantial resources.  If we or our collaborators or licensees fail to
obtain or experience delay in obtaining required regulatory approvals the
marketing of our product and our ability to derive product or royalty revenue
would be severely limited.  Pre-clinical testing is generally conducted
in animal or in vitro models to evaluate the potential efficacy and safety of a
compound before it is administered to humans.  The results of these studies
are submitted to the FDA as part of an Investigational New Drug application
("New Drug Application"), which must be approved before human clinical testing
can begin.  Successful stability tests and some animal tests have been run
on PHER-O2.  Clinical trials involve the administration
of the investigational new drug to healthy volunteers or to patients, under the
supervision of a qualified principal investigator.  Clinical trials are
conducted in accordance with certain standards under protocols that detail the
objectives of the study, the parameters to be used to monitor safety and the
efficacy criteria to be evaluated.  Each protocol must be submitted to the
FDA as part of the New Drug Application. Further, each clinical study must be
conducted under the auspices of an independent investigational review board at
the institution where the study will be conducted.  Consideration will be
given to ethical factors, the safety of human subjects and the possible
liability of the institution, among other things.  Clinical trials are typically conducted in
three sequential phases, but the phases may overlap.  In the first phase,
the product is usually infused into a limited number of human subjects and will
be tested for safety or adverse effects, dosage tolerance and pharmacokinetics,
or clinical pharmacology.  The second phase involves studies in a somewhat
larger patient population to identify possible adverse effects and safety risks
and to begin gathering preliminary efficacy data.  The third phase of
trials is designed to further evaluate clinical efficacy and to further test for
safety within an expanded patient population at geographically dispersed
clinical study sites. Although we believe that our product is substantially
different from other synthetic blood products, we may encounter problems in
clinical trials which will cause us to delay or suspend them.  In the case of biologic products such as
PHER-O2, the results of pharmaceutical development and the pre-clinical and
clinical testing are submitted to the FDA in the form of a Product License
Application.  This application must be approved before commercial sales may
begin.  We must also file an Establishment License Application, which
describes the manufacturing process for the product and the facility at which
the product will be produced.  The FDA may respond to the filings by
granting a license for the manufacture of the product from a designated facility
and the commercial sale of the product.  It may also deny the applications
if it finds that the applications do not meet the criteria for regulatory
approval, require additional testing or information or require post-marketing
testing and surveillance to monitor the safety   9    of the product
if it does not believe that the applications contains adequate evidence of the
safety and efficacy of the drug.  Despite the submission of this data, the
FDA may ultimately decide that the application does not satisfy its regulatory
criteria for approval.  The testing and approval process is likely to
require substantial time and effort.  We cannot guarantee that approval
will be granted for our product or our proposed facilities on a timely basis, if
at all.  In addition to regulations enforced by the
FDA, we may also be subject to regulation under the Occupational Safety and
Health Act; the Environmental Protection Act; the Toxic Substances Control Act;
the Resource Conservation and Recovery Act; the Comprehensive Environmental
Response, Compensation and Liability Act; the National Environmental Policy Act;
the Clean Air Act; the Medical Waste Tracking Act; the federal Water Pollution
Control Act; and other present and potential federal, state, local and foreign
regulations.  Research and Development Costs During
the Last Two Fiscal Years.  Since inception, we have expended a total
of approximately $1,973,158 on research and development.  During years
ended December 31, 2008, and 2007, research and development expense was
approximately $0 and $73,510, respectively.  None of these costs were borne
by customers or others.  Cost and Effects of Compliance with
Environmental Laws.  Management believes that all of the
substances making up PHER-O2 are inert and non-toxic and that no toxic or
hazardous materials will be byproducts of the manufacturing process of PHER-O2.
 PHER-O2 is totally inert. Accordingly, we do not believe that we will have
any material expenditures for compliance with environmental laws, rules or
regulations.  Number of Total Employees and Number of
Full Time Employees.  We presently have two employees, our
Chairman, President and CEO, Thomas C. Drees, Ph.D.; and our Chief Financial
Officer, David E. Nelson.  Dr. Drees is employed full time.  If we are
able to commence initial FDA approved animal testing and manufacturing of this
product for these tests, we will need additional employees.  We are
presently unable to estimate the exact number of employees that we may need for
these services.  Reports to Security Holders.  You may read and copy any materials that we
file with the Securities and Exchange Commission at the Securities and Exchange
Commission's public Reference Room at 100 F Street, N.E., Washington, D.C.
20549.  You may also find all of the reports that we have filed
electronically with the Securities and Exchange Commission at their Internet
site www.sec.gov.  ITEM 2. PROPERTIES  We lease approximately 600 square feet of office space
located at 101 East Green Street, Suite 6, Pasadena California, 91105, at a base
rent of $820 per month.  The lease is on a month to month basis.  ITEM 3. LEGAL PROCEEDINGS  We are not a party to any pending legal
proceeding.  To the knowledge of our management, no federal, state or local
governmental agency is presently contemplating any proceeding against us.
 No director, executive officer or other person who may be deemed to be our
"affiliate" or who is the owner of record or beneficially of more than five
percent of our common stock is a party adverse to us or has a material interest
adverse to us in any proceeding.  ITEM 4. SUBMISSION OF MATTERS TO A
VOTE OF SECURITIES HOLDERS  No matter was submitted to a vote of our Company's
stockholders during the fourth quarter of the period covered by this Annual
Report or during the previous two fiscal years.    10    PART
II  ITEM 5. MARKET FOR COMMON EQUITY,
RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES  Our common stock commenced to trade on the "OTC Bulletin
Board" of the National Association of Securities Dealers, Inc. ("NASD") in the
second quarter of 1994 under the symbol SGNC, and after September 10, 2008
under the symbol SGUI.  The range of high and low bid quotations for our common
stock during each quarter of the years ended December 31, 2006, 2007 and
2008, is presented below.  Prices are inter-dealer quotations as reported
do not necessarily reflect transactions, retail markups, mark downs or
commissions.  The prices prior to September 10, 2008, do not reflect the 1
for 20 reverse stock split.  STOCK
QUOTATIONS*  Quarter
ended: High Low March 31,
2006 $.16 $.12  June 30,
2006 $.22 $.105  September
30, 2006 $.24 $.11  December 31,
2006 $.125 $.075  March 31,
2007 $.15 $.085  June 30,
2007 $.175 $.096  September
30, 2007 $.12 $.081  December 31,
2007 $.12 $.055  March 31,
2008 $.11 $.07  June 30,
2008 $.10 $.07  September
30, 2008** $1.15 $.04  December 31,
2008** $.75 $.17  *
   The future sale of presently outstanding restricted
securities (common stock) by present members of our management
and others may have an adverse effect on any market in the shares of our common
stock.  See the heading Recent Sales of
Unregistered Securities, directly below.  ** In 2008, we completed a 1 for 20
reverse stock split.  Prices for September 30, 2008 and December 31,
2008, reflect the 1 for
20 reverse stock split.  All references to shares of common stock have been
retroactively restated.  Holders.  The number of record holders of our common stock as of
April 8, 2009, was approximately 562.  Dividends.  We have not declared any cash dividends on
our common stock, and we do not intend to declare dividends in the foreseeable
future.  Management intends to use all available funds for the development
of our product, PHER-02 and related business opportunities.  There are no
material restrictions limiting, or that are likely to limit, our ability to pay
dividends on our common stock.    11    Securities Authorized for
Issuance under Equity Compensation Plans.  Plan Category
Number of Securities to be issued upon exercise of
outstanding options, warrants and rights
Weighted-average exercise price of outstanding
options, warrants and rights
Number of securities remaining available for future
issuance under equity compensation plans excluding securities reflected
in column (a)(a)
(b)
(c)Equity compensation plans approved by security
holders
0
0
0Equity compensation plans not approved by security
holders
0
0
0Total
0
0
0  Recent Sales of Unregistered Securities.  Restricted Securities.  The following "restricted securities" of our Company were
sold during the past three calendar years: Name
Number of Shares or
Units
Date
ConsiderationLeonard W. Burningham, Esq. (2)
25,000
9/2004
ServicesSeven (7) persons
and/or entities (3)
140,000
9/2004
ServicesNine (9) persons
and/or entities (4)
38,695
9/2004
Conversion of
Convertible NotesAscendiant Capital
Group LLC (5)
11,433
9/2004
Conversion of DebtThomas C. Drees,
Ph.D. (6)
1,580,200
9/2004
Conversion of DebtAnthony & Audrey
Hargreaves Trust (7)
46,230
9/2004
Conversion of DebtRichard H. Walker (5)
15,000
12/2004
Warrant ExerciseJossef Kahlon (5)
35,000
12/2004
Warrant ExerciseMedical Advisory Board (1)
7,500
12/2004
ServicesKelly Trimble (8)
8,184
12/2004
Warrant ExerciseMark Sansom   (8)
8,184
12/2004
Warrant ExerciseJason Douglas (8)
5,000
12/2004
Warrant ExerciseMax Sabour (8)
5,000
12/2004
Warrant ExerciseTodd Kinney (8)
5,000
12/2004
Warrant ExerciseRobert Kwun (1)
5,000
12/2004
Warrant ExerciseLeonard W. Burningham,
Esq. (8)
25,687
12/2004
Warrant ExerciseBranden Burningham,
Esq. (8)
17,500
12/2004
Warrant ExerciseBrad Burningham, Esq. (8)
17,500
12/2004
Warrant ExerciseLeonard W. Burningham,
Esq. C/F (8)
15,000
12/2004
Warrant ExerciseRichard P. Stanton (5)
4,181
12/2004
Warrant ExerciseLeonard W. Burningham, Esq.(8)
10,000
2005
Warrant Exercise   12     Joseph Trabacoone(8)
5,000
2005
Warrant ExerciseTodd Kinney(8)
5,000
2005
Warrant ExerciseWilliam P. Archer(8)
5,000
2005
Warrant ExerciseRobert S. Howell(8)
2,331
2005
Warrant ExerciseSCS, Inc.(9)
8,000
2005
Warrant ExerciseSusan Johnston(8)
5,000
2005
Warrant ExerciseJames R. Dunn(8)
5,000
2005
Warrant ExerciseJoseph Trabaccone(8)
4,500
2/2005
Warrant ExerciseRobert Kwun(1)
3,665
2/2005
ServicesMedical Advisory Board (1)
1,875
4/2005
ServicesRobert Kwun(1)
2,500
4/2005
ServicesJoseph Trabaccone(8)
4,166
4/2005
Warrant ExerciseThomas C. Drees(1)
1,250
4/2005
ServicesDavid E. Nelson(1)
1,250
4/2005
ServicesEdward L. Kunkel(1)
1,250
4/2005
ServicesLeonard W. Burningham, Esq. (8)
10,000
5/2005
Warrant ExerciseThomas C. Drees(1)
1,250
10/2005
ServicesDavid E. Nelson(1)
1,250
10/2005
ServicesEdward L. Kunkel(1)
1,250
10/2005
ServicesMedical Advisory Board (1)
3,750
10/2005
ServicesRobert Kwun(1)
5,000
10/2005
ServicesThomas C. Drees(1)
1,250
5/2006
ServicesDavid E. Nelson(1)
1,250
5/2006
ServicesEdward L. Kunkel(1)
1,250
5/2006
ServicesMedical Advisory Board (1)
3,750
5/2006
ServicesRobert Kwun(1)
1,250
5/2006
ServicesJonathan Lakey(1)
5,000
5/2006
ServicesJames Shapiro(1)
2,500
5/2006
ServicesLeonard W. Burningham(8)
12,500
5/2006
Warrant ExerciseM. E. Dancy Consulting
Services, Inc. (10)
20,000
7/2006
ServicesThomas C. Drees(1)
1,875
1/2007
ServicesDavid E. Nelson(1)
1,875
1/2007
ServicesEdward L. Kunkel(1)
1,875
1/2007
ServicesMedical Advisory Board(1)
5,625
1/2007
ServicesRobert Kwun(1)
1,875
1/2007
ServicesJames Shapiro(1)
7,500
1/2007
ServicesPrivate Placement
37,333
3/8/07
$1.20 per shareLKB Partners, LLC
200,000
4/4/2007
ServicesKKS Venture Management, Inc.
150,000
11/21/2007
ServicesLKB Partners, LLC
12,500
11/21/2007
ServicesTerra Silex Holdings, LLC
100,000
11/21/2007
$100,000Thomas C. Drees
1,875
4/2008
ServicesDavid E. Nelson
1,875
4/2008
ServicesEdward L. Kunkel
1,875
4/2008
ServicesMedical Advisory Board
5,625
4/2008
Services ___________________________________ (1)  Issued for
service as a member of the Board of Directors or the Medical Advisory Board.    13    (2) These shares were valued at $40,000.  (3) These shares were
valued at $242,034.  (4) The
Convertible Note executed in favor of Barbara R. Mittman on March 19, 2002, in
the amount of $3,750.00, together with accrued interest, was converted to 4,855
shares of common stock of our Company.  The
Convertible Note executed in favor of First York Partners, Inc. on March 15,
2002, in the amount of $25,000, together with accrued interest, was converted by
the holders thereof to 33,840 shares of common stock of our Company.  (5) The Letter Agreement
executed in favor of Ascendiant Capital Group, LLC ("Ascendiant"), pursuant to
which Ascendiant loaned $12,000 to the Company, together with accrued interest,
was converted to 228,666 shares of common stock of our Company; and for
previously extending the term of the Letter Agreement, an additional Common
Stock Purchase Warrant was granted to Ascendiant for the option to purchase
1,500 shares of common stock of our Company that are "restricted securities"
under Rule 144 of the Securities and Exchange Commission.  (6) Thomas C.
Drees, Ph.D., MBA, our President, CEO and a Director agreed to exchange
$1,264,160 of debt owed to him by us for 1,580,200 shares of our common stock
that are restricted securities under Rule 144 of the Securities and Exchange
Commission; and Dr. Drees also agreed to contribute to capital his accrued
salary of $497,500 and interest on the debt owed to him by our Company in the
amount of $453,630, together with any interest on any of these amounts since
June 30, 2004.  (7) The Anthony
and Audrey Hargreaves Trust (the "Trust") agreed to exchange $36,984 of debt
owed by us to Mr. Hargreaves prior to his death for 46,230 shares of our common
stock that are "restricted securities" under Rule 144 of the Securities and
Exchange Commission; and the Trust also agreed to contribute to capital Mr.
Hargreaves' accrued salary of $276,500, together with any interest on any of
these amounts since June 30, 2004.  (8) Issued at
$1.60 per share on the exercise of outstanding warrants.  (9) Issued at
$1.20 per share for the payment of expenses on our behalf.  (10) Issued for
services related to public relations.  In addition to the securities issued during
the prior three years, in the first quarter of 2008, we issued 2,500 each to our
directors which represents the 625 shares per quarter the directors receive.
 We also issued 5,625 shares to our medical advisory board members.
 Additionally, we issued 233,333 shares of our common stock at a price of
$1.20 per share for aggregate proceeds of $280,000 to two investors.  The
funds are being used for general working capital purposes.  We issued all of these securities to
persons who were either "accredited investors," or "sophisticated investors"
who, by reason of education, business acumen, experience or other factors, were
fully capable of evaluating the risks and merits of an investment in our
company; and each had prior access to all material information about us.
 We believe that the offer and sale of these securities were exempt from
the registration requirements of the Securities Act, pursuant to Sections 4(2)
and 4(6) thereof, and Rule 506 of Regulation D of the Securities and Exchange
Commission and from various similar state exemptions.  Use of Proceeds of Registered Securities.  Proceeds from the sale of registered
securities received during the year ended December 31, 2006, totaled $95,410,
from warrant exercises. These funds were primarily used for professional
services and administrative expenses. There were no sales of registered
securities during 2007 or 2008.  Purchases of Equity Securities by Us and Affiliated
Purchasers.  There were no purchases of our equity
securities by us or any affiliated purchasers during the calendar year ended
December 31, 2008.    14    ITEM 6.
SELECTED FINANCIAL DATA  Summary of Financial
Information  We had no
revenues in 2008 and only $10,000 in 2007.  We had a net loss of $1,135,444
for the year ended December 31, 2008.  At December 31, 2008, we had cash of
$1,159.  We had a negative working capital of $262,097.  The following
table shows selected summarized financial data for the Company at the dates and
for the periods indicated. The data should be read in conjunction with the
financial statements and notes included herein beginning on page F-1.  STATEMENT OF OPERATIONS
DATA:   For the Year Ended
December 31, 2008
For the Year Ended
December 31, 2007Revenues
$
                        -
$
              10,000Selling, General and
Administrative Expenses
82,408
100,637Net Loss
1,135,444
934,148Basic Income (Loss)
per Share
(0.22)
(0.21)Diluted Income (Loss)
per Share
(0.22)
(0.21)Weighted Average
Number of Shares Outstanding
5,089,200
4,412,337Weighted Average
Number of Fully Diluted Shares Outstanding
5,089,200
5,088,654BALANCE SHEET
DATA:December 31, 2008
December 31, 2007Total Current
Assets
$
           112,534
$
       785,820Total Assets
113,728
897,865Total Current
Liabilities
374,631
372,657Working
Capital
(262,097)
413,163Stockholders Equity
(Deficit)
(260,903)
525,208  ITEM
7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.  Plan of
Operation.  General.  We have not
commenced planned principal operations, but have made progress, in formulation
and stability testing.  In January,
2005, we were successful in developing improved formulations of our surfactants
for PHER-02.  In December,
2006, we completed a pre-IND meeting with the FDA, where Company management
presented data to determine an appropriate regulatory path related to
PHER-O2.  Pending
additional funding our plan of operation for the next 12 months is to complete
the preparation and submission of the U.S. FDA New Device Application to support
PHER-02 as a synthetic oxygen carrying product.  Our proposed
plan of operation is composed of "stages," each of which coincides with a
specific milestone in the process of developing PHER-O2. Each stage, and the
projected cost of each, is as follows:   15       Stage A
(approximately three-six months): Complete the development of perfluoro-decalin
and the synthetic surfactants that make up PHER-O2, manufactured experimental
doses in accordance with FDA and overseas regulations and submit data to support
a Master Drug Filing.  Estimated cost is not to exceed $500,000, divided as
follows: Completed surfactant formulation (done) and the manufacture of
sufficient product for testing, (on going); animal safety and efficacy trials
through a sub-contractor, (done); and administrative, patent and proprietary
right protection and marketing costs,(in process) Optimize stabilized product to
support the Master Drug Filing (in process).  Stage B
(approximately three-six months): In the second period, we will produce optimal
quantities and conduct testing in accordance with FDA and overseas requirements.
 During the course of Stage A, we estimate that our increased technical,
administrative, sales/marketing and manufacturing requirements will require us
to the hire a few additional contractors and/or employees.  Stage C
(approximately three-six months): In the third period, we intend to prepare new
510(k) device application with the FDA.  Estimated cost is $1,000,000, to
be used as follows: set-up pilot facility, or subcontractor, to manufacture
small quantities of PHER-O2 for use in testing and in connection with the New
Drug Applications [done], prepare and submit data for use of PHER-O2 as a whole
organ transportation medium in support of FDA labeling, and administrative,
patent and proprietary right protection and marketing costs, (in process).  These cost
estimates are based upon the prior experience of Thomas C. Drees, Ph.D., our
President and CEO.  Dr. Drees has more than 33 years' experience in the
blood industry with Abbott Scientific, Alpha Therapeutics and Sanguine
Corporation.  Critical Accounting
Policies and Estimates  The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in the unaudited Financial Statements and accompanying notes. 
Management bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances.
Actual results could differ from these estimates under different
assumptions or conditions.  The Company believes there have
been no significant changes during the years ended December 31, 2008 and
2007, to the items disclosed as significant accounting policies in
management's Notes to the Financial Statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2007.  Management's Discussion and Analysis of Financial Condition and
Results of Operations.  Revenues for
the calendar years ending December 31, 2008, and 2007, were $0 and $10,000,
respectively.  We had no material operations, except the research and
development activities related to our subcontracted research and development of
our product, PHER-O2.  We realized a
net loss of $1,135,444 for the year ended December 31, 2008, and a net loss of
$934,148 for the year ended December 31, 2007.  Most of our expense related
to the value of equity securities issued by us for services rendered.  Our research
and development expenses were $0 in 2008, compared to $73,510 in 2007.  Liquidity.  As of
December 31, 2008, we had $1,159 in cash, with $374,631 in current
liabilities.  During the
calendar year ended December 31, 2008, we had operating expenses of $1,145,825,
and no revenues.  We received $10,000 in revenues, and had total operating
expenses of $924,068 during the calendar year ended December 31, 2007.
 Most of these expenses related to the value of equity securities issued by
us for services rendered.  Cash
resources at December 31, 2008, and 2007, were $1,159 and $15,436, respectively.
  At this time without additional capital infusions, it will be
difficult for the Company to remain in business.  Our auditors have issued
a going concern qualification as to our ability to stay in business.  We
currently do not have the resources to engage in any further development of our
products and cannot cover ongoing expenses.  We are actively searching for
industry partners to help offset further development costs.  However, even
with industry partners, we must raise additional capital if we are to   16      remain viable.  Off
Balance Sheet Arrangements.  We had no off
balance sheet arrangements during the year ended December 31, 2008.  Forward
Looking Statements.  Statements
made in this Form 10-K which are not purely historical are forward-looking
statements with respect to the goals, plan objectives, intentions, expectations,
financial condition, results of operations, and future performance of our
business, including, without limitation, (i) our ability to gain a larger share
of the synthetic blood industry, our ability to continue to develop products
acceptable to the industry, our ability to retain relationships with suppliers
and distributors, our ability to raise capital, and the growth of the synthetic
blood industry, and (ii) statements preceded by, followed by or that include the
words "may", "would", "could", "should", "expects", "projects", "anticipates",
"believes", "estimates", "plans", "intends", "targets" or similar
expressions.  Forward-looking statements involve inherent risks and
uncertainties, and important factors (many of which are beyond our control) that
could cause actual results to differ materially from those set forth in the
forward-looking statements, including the following, in addition to those
contained in our reports on file with the Securities and Exchange Commission;
general economic or industry conditions, nationally and/or in the communities in
which we conduct business, changes in the interest rate environment, legislation
or regulatory requirements, conditions of the securities markets, changes in the
synthetic blood industry, the development of products and that may be superior
to the products and services offered by us, demand for synthetic blood products,
competition, changes in the quality or composition of our products and services,
our ability to develop new products and services, our ability to raise capital,
changes in accounting principles, policies or guidelines, financial or political
instability, acts of war or terrorism, other economic, competitive,
governmental, regulatory and technical factors affecting our operations,
products, services and prices.  Accordingly,
results actually achieved may differ materially from expected results in these
statements.  Forward-looking statements speak only as of the date they are
made.  We do not undertake, and specifically disclaim, any obligation to
update any forward-looking statements to reflect events or circumstances
occurring after the date of such statements.  ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA  The financial
statements of the Company are set forth immediately following the signature page
to this Form 10-K.  ITEM
9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE  The Company has had no
disagreements with its certified public accountants with respect to accounting
practices or procedures or financial disclosure.  ITEM
9A(T).  CONTROLS AND PROCEDURES  Evaluation of Disclosure Controls and
Procedures  Our management, with the participation of our
President and CFO, evaluated the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this report. Based on that
evaluation, our President and CFO concluded that our disclosure controls and
procedures as of the end of the period covered by this report were effective
such that the information required to be disclosed by us in reports filed under
the Exchange Act is (i) recorded, processed, summarized and reported within
the time periods specified in the SECs rules and forms and
(ii) accumulated and communicated to our management, including our
President and CFO, as appropriate to allow timely decisions regarding
disclosure. A controls system cannot provide absolute assurance, however, that
the objectives of the controls system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected.     17      Managements Annual
Report on Internal Control over Financial Reporting  Our management is responsible for establishing
and maintaining adequate internal control over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act). Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes of accounting principles generally accepted in the United
States.   Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only
reasonable assurance of achieving their control objectives.   Our management, with the participation of the
President and CFO, evaluated the effectiveness of our internal control over
financial reporting as of December 31, 2008.  In making this
assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control - Integrated Framework.  Based on this evaluation, our
management, with the participation of the President and CFO, concluded that, as
of December 31, 2008, our internal control over financial reporting was
effective.  This annual report does not include an
attestation report of the Companys registered public accounting firm regarding
internal control over financial reporting.  Managements report was not
subject to attestation by the Companys registered public accounting firm
pursuant to temporary rules of the Security and Exchange Commission that permit
the Company to provide only managements report in this annual
report.  Changes in
internal control over financial reporting  There have been no changes
in internal control over financial reporting.  ITEM
9B.  OTHER INFORMATION  None  PART
III  ITEM
10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Identification of
Directors and Executive Officers.  The following table sets
forth the names of all of our current directors and executive officers.
 These persons will serve until the next annual meeting of the stockholders
or until their successors are elected or appointed and qualified, or their prior
resignations or terminations.  Directors and Executive
Officers.   Name
Positions Held or
Designation
Date
of Election or Resignation
Date
of TerminationThomas C. Drees,
PhD., MBA
CEO,
President,
Director
Chairman
6/93
1/98
6/93
11/95
*
*
*
*David E. Nelson,
CPA
Director
Chief
Financial Officer
Secretary/Treasurer
3/96
3/96
6/03
*
*
*Edward L. Kunkel,
Esq.
Director
4/94
*  *
   These persons presently serve in the capacities indicated.  Term of Office.  The terms of
office of the current directors shall continue until the annual meeting of
stockholders, which has been   18      scheduled by the Board of Directors to be held in June of each
year. The annual meeting of the Board of Directors immediately follows the
annual meeting of stockholders, at which executive officers for the coming year
are elected.  Medical Advisory and
Applications Board of Directors.   Name
Positions Held
Date
of Election or Designation
Date
of Termination or ResignationCraig Morrison,
M.D.
Member
10/00
*Leon Cass Terry,
M.D., Ph.D.
Member
10/00
*Herbert J. Meiselman,
Sc.D.
Member
10/00
*Robert Kwun, M.D.
Member
12/04
*  *  These persons
presently serve in the capacities indicated.  Business
Experience.  Thomas C.
Drees, Ph.D., MBA, Chairman, President, CEO and a Director. Dr. Drees, age 79,
is the founder of Sanguine California.  Dr. Drees was Vice President and
General Manager of Abbott Scientific Products Division, collector of blood
plasma derivatives and manufacturer of human blood derivatives from 1973 to
1978.  From 1978 to 1984, he was the President and CEO of Alpha
Therapeutics Corporation, a subsidiary of Green Cross Corporation of Japan and
the developer of Fluosol DA 20, the only FDA-approved synthetic blood product.
 For 33 years, Dr. Drees has been involved at top management levels with
the collection, manufacture and marketing of human blood plasma derivatives.
 He has written many publications on the subject, including the
widely-acclaimed book "Blood Plasma: The Promise and the Politics," Ashley
Books, New York, 1983.  David E.
Nelson, CPA, Chief Financial Officer and Director.  Mr. Nelson, age 64,
received a B.S. degree in accounting from the University of Utah in 1966.
 He has over 20 years' experience in operations, finance and regulatory
compliance of stock brokerage firms.  He is the past President of Covey
& Company, Inc., a broker/dealer formerly registered with the Securities and
Exchange Commission.  Mr. Nelson has been a member of the NASD's Board of
Arbitrators, the American Institute of Certified Public Accountants and the Utah
Association of Certified Public Accountants.  Edward L.
Kunkel, Esq., Director.  Mr. Kunkel is 60 years of age. He graduated with a
Juris Doctor degree from the University of Southern California in 1973.
 From 1973 to 1978, he practiced law with the firm of Karns & Karabian
in Los Angeles, California.  From 1978 to the present, he has practiced
educational law, real estate law and general business law in his own firm.
 Mr. Kunkel is a member of the State Bar of California, the Los Angeles
County Bar Association and the National School Board Attorneys' Association. He
has also been a licensed real estate broker since 1979.  Craig
Morrison, M.D., Advisory Board Member, is 65 years of age, and practices at the
Brigham Young Student Health Center.  He has been an attending and
consulting staff general surgeon since 1978 at the following hospitals: Utah
Valley Regional Medical Center, Orem Community Hospital, Colombia Mountain View
Hospital and Central Valley Hospital.  Dr. Morrison received his Doctor of
Medicine Degree from the University of Oregon Medical School in 1970, followed
by a pediatric internship and surgical residency at the University of Southern
California-Los Angeles County Hospital and the Huntington Memorial Hospital in
1975.  Leon Cass
Terry, M.D., Ph.D., Advisory Board Member, is 66 years of age, and joined the
Medical College of Wisconsin as a Professor of Neurology and Professor of
Physiology in 1989, until his retirement.  Focusing on his professorial
duties, Dr. Terry recently stepped down from his position as the Chairman of
Neurology, which he held from June of 1989 to May, 2000.  During his
tenure, Dr. Terry was the Associate Dean for Ambulatory Care from January, 1997
to March, 1998, and was the Chief of Staff from January, 1997 to January, 1999.
 He also held previous teaching and professional positions as a Research
Scientist for the University of Michigan, Institute of Gerontology; Professor of
Neurology and Associate Professor of Physiology and Neurology at the University
of Michigan; and Associate Professor of Neurology at the University of Tennessee
Center for Health Sciences.  Dr. Terry earned his Doctorate of Pharmacology
from the University of Michigan, his Doctor of Medicine from Marquette
University Medical School, his Ph.D. in Experimental Medicine from McGill
University Medical School and his Master of Business Administration from the
University of South Florida.  Dr. Terry has authored over 100 peer-reviewed
articles, abstracts and book chapters in well known and respected publications.
 He was also principal or co-investigator on over 30 grants from the
National   19      Institute of Health, various pharmaceutical companies,
philanthropic donations and others.  He has also conducted clinical trials
in various neurological disorders.  Herbert J.
Meiselman, Sc.D., Advisory Board Member, is 67 years of age. He is an active
Professor and Vice Chairman of the University of Southern California School of
Medicine, Department of Physiology and Biophysics. Professor Meiselman graduated
from Michigan Technical University with a BS degree in 1962.  He received a
Sc.D. degree from the Massachusetts Institute of Technology in 1965.  As a
Research Fellow at the California Institute of Technology, he studied in-vivo
microcirculatory blood flow from 1966 to 1968. In 1968, he expanded his research
studies to include in-vivo blood rheology, a program jointly administered by the
California Institute of Technology and the University of Southern California
Medical School.  Since 1972, Dr. Meiselman's research at the University of
Southern California has been concentrated in the areas of blood rheology and the
physical behavior of red blood cells and white blood cells.  He has
authored or co-authored over 300 papers on numerous blood-related topics.  Robert Kwun,
M.D., Advisory Board Member, is 42 years of age.  He graduated from Harvard
University, and then received his medical degree from Columbia University, in
New York.  His clinical training includes Columbia University's Manhattan
Eye Ear and Throat Hospital, Los Angles Children's-USC Medical Center, the
Doheny Eye Institute and New York's St. Vincent's Hospital.  Significant
Employees.  There are no significant
employees.  LKB Partners,
LLC  The Company
and LKB Partners, LLC entered into an agreement in November 2007 whereby LKB was
engaged to provide management consulting services to the Company.  These
services included handling the duties of general manager and president of the
Company.  As part of this agreement, Frank Marra of LKB Partners, LLC
agreed to handle the duties of president of the Company.  LKB Partners, LLC
was founded in 2006 and engages in financial and business consulting.  Mr. Marra,
age 45, is currently the managing member of LKB Partners, LLC which engages in
financial consulting and acts as a private investment firm for small companies.
 Prior to founding LKB in November 2006, Mr. Marra ran Stonebridge Ross
which he founded in 1992 and sold in 2003.  Mr. Marra also worked as a
registered representative for Drexel Burnham after attending college at the
University of West Virginia.  Mr. Marra has focused on work with public and
private emerging growth companies.  As part of Mr. Marras consulting work,
he has acted as interim CEO for three public companies Sun Cut Floral
Distributors from 1999 to 2001, a consolidator of national floral distributors,
Interactive Medical Technologies from 1993 to 1995, a biomedical technology
company and Rheologics, Inc. from 2005 to 2007 which developed a whole blood
viscometer.  As part of
the consulting agreement with LKB Partners, LLC and Frank Marra, the Company
will pay LKB $8,000 for each month of the 24 month term for these services.
 We also agreed to pay LKB for these services 150,000 shares of our common
stock that are restricted securities, of which 25,000 shares went to Marra
personally under a separate Letter Agreement.  We also agreed to grant to
LKB the option to purchase up to 9.5 percent of the issued and outstanding
shares of our common stock at a price of $1.20 per share for a period of two
years; provided, however, these options, to the extent not exercised prior
thereto, shall be void on March 31, 2008, unless we shall have raised not less
than the sum of $500,000 through the efforts of LKB or its associates or
affiliates or by persons introduced by it or its associates or affiliates by
March 31, 2008, with no proration of options in the event all $500,000 is not
raised.  We have not had the resources to meet all of our payment
obligations under our consulting agreements.  Pursuant to a
consulting agreement dated April 4, 2007, between us and LKB, LKB received
200,000 shares of our common stock that are restricted securities, and was
granted an option to purchase an additional 250,000 shares of our common stock
that are restricted securities at a price of $1.20 per share for a period of
two years ending April 3, 2009.  On April 4, 2007, the Company also issued
50,000 shares to Frank Marra.  Family
Relationships.  There are no family
relationships between any of our directors or executive officers.    20      Involvement
in Certain Legal Proceedings.  During the
past five years, none of our present or former directors, executive officers or
persons nominated to become directors or executive officers:  (1)
 Filed a petition under the federal bankruptcy laws or any state insolvency
law, nor had a receiver, fiscal agent or similar officer appointed by a court
for the business or property of such person, or any partnership in which he was
a general partner at or within two years before the time of such filing, or any
corporation or business association of which he was an executive officer at or
within two years before the time of such filing;  (2)
 Was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses);  (3)
 Was the subject of any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him or her from or otherwise limiting his
involvement in any type of business, securities or banking activities;  (4)
 Was found by a court of competent jurisdiction in a civil action, by the
Securities and Exchange Commission  or the Commodity Futures Trading
Commission to have violated any federal or state securities law, and the
judgment in such civil action or finding by the Securities and Exchange
Commission has not been subsequently reversed, suspended, or vacated.  Compliance with Section
16(a) of the Exchange Act.  To our
knowledge, during our past fiscal year and since then, all filings required to
be made by members of management or others pursuant to Section 16(a) of the
Exchange Act, have been duly filed.  However, the following filings were
filed later than their due dates by our directors, executive officers or 5%
stockholders:   Filer
Transaction
Date Report
Due
Date Report
FiledDavid E. Nelson,
CPA
Director, CFO,
Secretary/Treasurer
Disposal of 5,500
Shares
Acquisition of 1,250
Shares
Disposal of 12,331
Warrants
Acquisition of
1,250
Shares
Acquisition of
1,250
Shares
Acquisition of
1,875
Shares
10/27/04


4/13/05

1/05/05
10/7/05


5/4/06

1/17/07
4/18/05


4/18/05

4/18/05
3/28/08


3/28/08

3/28/08Edward L. Kunkel,
Esq.
Director
Acquisition of 1,250
shares
Acquisition of
1,875
Shares
Acquisition of
1,250
Shares
Acquisition of
1,250
Shares
Acquisition of
1,875
Shares
4/13/05


1/17/07
10/7/05


5/4/06

1/17/07
4/19/05


3/26/08
3/28/08


3/28/08

3/31/08   21        Thomas C. Drees,
Ph.D.
Director and
President
Acquisition of 1,250
Shares
Disposal of 10,250
Shares
Acquisition of
1,875
Shares
Acquisition of
1,250
Shares
Acquisition of
1,250
Shares
Acquisition of
1,875
Shares
4/13/05
12/22/04


1/17/07

10/7/05


5/4/06

1/17/07
4/19/05
4/19/05


3/26/08

3/28/08


3/28/08

3/31/08  In addition to the late
reports by the above officers, through a series of consulting agreements and
option contracts entered into in November 2007, several consulting firms
acquired the ability to purchase over 10% of our outstanding common stock.
 This firms and/or individuals have not made their filings.  Code of Ethics.  We have
adopted a Code of Ethics which was attached as Exhibit 14 to our Annual Report
on Form 10-K for the calendar year ended December 31, 2002. See Part III, Item
13.  Nominating
Committee.  We have not established a
Nominating Committee because we believe that our three member Board of Directors
is able to effectively manage the issues normally considered by a Nominating
Committee.  If we do establish a
Nominating Committee, we will disclose this change to our procedures by which
shareholders may recommend nominees to our board of directors.  Audit Committee.  We do not have an Audit
Committee separate from our Board of Directors because of our present limited
operations.    22      ITEM
11.  EXECUTIVE COMPENSATION  SUMMARY
COMPENSATION TABLE  The following tables set
forth certain summary information concerning the compensation paid or accrued
for each of the Company's last three completed fiscal years to the Company's or
its principal subsidiaries= chief executive officer and
each of its other executive officers that received compensation in excess of
$100,000 during such period (as determined at December 31, 2007, the end of the
Company's last completed fiscal year):   Name and Principal
Position
(a)
Year
(b)
Salary
($)
(c)
Bonus
($)
(d)
Stock
Awards
($)
(e)
Option
Awards
($)
(f)
Non-Equity Incentive
Plan Compensation
($)
(g)
Nonqualified
 Deferred Compensation
($)
(h)
All Other
Compensation
($)
(i)
Total
Earnings
($)
(j)Thomas C. Drees,
Ph.D., MBA, CEO, President, Chairman of the Board
12/31/08
12/31/07
12/31/06
*
*
*
0
0
0
*
*
*
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0David E. Nelson,
CPA
CFO and
Director
12/31/08
12/31/07
12/31/06
*
*
*
0
0
0
*
*
*
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0Edward L. Kunkel,
Esq.
Director
12/31/08
12/31/07
12/31/06
*
*
*
0
0
0
*
*
*
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0 *
  Commencing with the quarter ended December 31, 2004, members of our
Board of Directors will be paid 625 shares of common stock per quarter for all
services rendered to us in lieu of employment contracts.  See Part III,
Items 12 and 13, below.  On November
21, 2007, we executed a Management Consulting Agreement for a term in perpetuity
with Thomas C. Drees, PhD., our current President, whereby Dr. Drees was engaged
to provide management consulting services.  Dr. Drees has agreed to be
retained to act in the full capacity as Chief Executive Officer for us, which
includes, but not be limited to, working with management to help promote our
overall growth, evaluating business opportunities, offering input on critical
business issues that may arise from time to time, participate in planning for
our business future and other like duties.  Dr. Drees will be paid $4,000
for each month, in perpetuity for these services, as long as we are in business
or until Dr. Drees death.  In the event that Dr. Drees is relieved of the
obligations of the Drees Agreement and no longer serves as CEO, the fee will
remain intact until one of the aforementioned conditions occurs. Notwithstanding
that the term shall not have been completed, we may terminate the Drees
Agreement (i) upon the death of Dr. Drees, and (ii) if Dr. Drees should be
incapacitated by illness or any other matter from performing his duties
hereunder for a continuous period of sixty days.  We have not had the funds
to meet our ongoing obligations under this agreement.  Outstanding Equity Awards.  See the
heading "Compensation of Directors" below.  Also, see the heading
Securities Authorized for Issuance Under Equity Compensation Plans in Part II,
Item 5, above.    23      Compensation of Directors.  All
directors, executive officers and Medical Advisory Board Members will be paid
2,500 shares of our common stock per year, in quarterly issuances.  Changes in
Control.  To our
knowledge, there are no present arrangements or pledges of our securities that
may result in a change in control of our Company. However, based on the
agreements entered into in November 2007, between us and LKB, Terra Silex, and
Dr. Drees and LKB, and Dr. Drees and Terra Silex, Terra Silex and LKB have
accumulated the potential to acquire substantial numbers of our common stock.
 Accordingly, these agreements may be deemed to involve a change in
control of our Company, especially if all options are exercised.  Securities Authorized
for Issuance under Equity Compensation Plans.  Equity
Compensation Plan Information  Plan
Category
Number of Securities
to be issued upon exercise of outstanding options, warrants and
rights
Weighted-average
exercise price of outstanding options, warrants and rights
Number of securities
remaining available for future issuance under equity compensation plans
excluding securities reflected in column (a)(a)
(b)
(c)Equity compensation
plans approved by security holders
0
0
0Equity compensation
plans not approved by security holders
0
0
0Total
0
0
0  ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS  The following
tables set forth the share holdings of our directors and executive officers and
those persons who own more than five percent of our common stock as of April 8,
2009:  Security Ownership of
Certain Beneficial Owners.   Name and
Address
Number
of Shares Beneficially Owned

Percent
of Class (1)Thomas C. Drees,
Ph.D., MBA (2)
101 East Green
Street, #11
Pasadena, California
 91105
1,853,282

35.89%Leonard
Burningham
455 East 500 South,
Suite 205
Salt Lake City, Utah
84111-3323
271,866

5.27% Total of all five
percent Stockholders(2)
2,125,148

41.15% ______________________  (1) Based
upon 5,164,572 shares of outstanding common stock on April 13, 2009. (2)  Dr.
Drees owns approximately 1,571,325 shares in his own name and 276,457 shares in
the name of the Drees Family Trust which he is a co-trustee with his wife.  24   Security Ownership of
Management.   Name and
Address
Number
of Shares Beneficially Owned

Percent
of Class (1)Thomas C. Drees,
Ph.D., MBA
101 East Green
Street, #11
Pasadena, California
 91105
1,853,282

35.89%David E. Nelson,
CPA
528 14th Avenue
Salt Lake City, Utah
 84103
28,340

0.55%Edward L. Kunkel,
Esq.
16 N. Marengo Ave,
#517
Pasadena, California
 91103
8,125

0.16%All directors and
officers as a group
(three
persons)
1,889,747

36.59% _____________________________ (1)  Based upon
5,164,572 shares of outstanding common stock on April 13, 2009.  Indirect and
Direct ownership are referenced by an "I" or "D", respectively.  All shares
owned directly are owned beneficially and of record and such shareholder has
sole voting, investment, and dispositive power, unless otherwise  25       ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE  Transactions with
Related Persons.  Related party
payables, represents amounts owed to our officers for reimbursement of expenses
paid on behalf of the Company.  For 2007 and 2008, related party payables
were $0 and $38,461, respectively.  On November
21, 2007, we executed an agreement with Thomas C. Drees, PhD. for a term in
perpetuity with Dr. Drees, PhD., our current President, whereby Dr. Drees was
engaged to provide management consulting services.  Dr. Drees has agreed to
be retained to act in the full capacity as Chief Executive Officer for us, which
includes, but not be limited to, working with management to help promote our
overall growth, evaluating business opportunities, offering input on critical
business issues that may arise from time to time, participate in planning for
our business future and other like duties.  Dr. Drees will be paid $4,000
for each month, in perpetuity for these services, as long as we are in business
or until Dr. Drees death.  In the event that Dr. Drees is relieved of the
obligations of the Drees Agreement and no longer serves as CEO, the fee will
remain intact until one of the aforementioned conditions occurs. Notwithstanding
that the term shall not have been completed, we may terminate the Drees
Agreement (i) upon the death of Dr. Drees, and (ii) if Dr. Drees should be
incapacitated by illness or any other matter from performing his duties
hereunder for a continuous period of sixty days.  Except as
indicated above, there have been no material transactions, series of similar
transactions or currently proposed transactions, to which our Company was or is
to be a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to us to own
of record or beneficially more than five percent of our common stock, or any
member of the immediate family of any of the foregoing persons, or any promoter
or founder had a material interest.  As part of a series of contracts
entered into in November 2007, several consulting firms were issued shares of
our common stock.  For further information on the issuance of shares to the
consulting firms and individuals see Business Development under Item
1-Descritption of Business herein.  Parents of the
Issuer.  Except and to
the extent that Dr. Drees may be deemed to be a parent of ours by virtue of his
substantial stock ownership, we have no parents.  Transactions with
Promoters and Control Persons.  Except as
outlined above, there have been no material transactions, series of similar
transactions or currently proposed transactions, to which our Company was or is
to be a party, in which the amount involved exceeded $60,000 and in which any
director or executive officer, or any security holder who is known to us to own
of record or beneficially more than five percent of our common stock, or any
member of the immediate family of any of the foregoing persons, or any promoter
or founder had a material interest.  ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES  The following
is a summary of the fees billed to us by our principal accountants during the
calendar years ended December 31, 2008, and December 31, 2007:   Fee
Category
2008

2007Audit Fees
$
18,500

$
18,400Audit-related
Fees

0


0Tax Fees

2,039


1,019All Other Fees

0


0Total Fees
$
20,539

$
19,419  Audit fees.
 Consists of fees for professional services rendered by our principal
accountants for the audit of our annual financial statements and the review of
financial statements included in our Forms 10-QSB or services that are normally
provided by our principal accountants in connection with statutory and
regulatory filings or  engagements.   26       Audit-related
fees.  Consists of fees for assurance and related services by our principal
accountants that are reasonably related to the performance of the audit or
review of our financial statements and are not reported under "Audit fees."  Tax fees.
 Consists of fees for professional services rendered by our principal
accountants for tax compliance, tax advice and tax planning.  All other
fees.  Consists of fees for products and services provided by our principal
accountants, other than the services reported under "Audit fees," "Audit-related
fees" and "Tax fees" above.  Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of
Independent Auditors.  We do not
have an Audit Committee; therefore, there is no Audit Committee policy in this
regard.  However, we do require approval in advance of the performance of
professional services to be provided us by our principal accountant.
 Additionally, all services rendered by our principal accountant are
performed pursuant to a written engagement letter between us and the principal
accountant.  ITEM
15. EXHIBITS  Exhibit Number
              Description 3.1 Articles
of Amendment increasing the authorized shares-Definitive Information Statement
filed 12/23/2005**  3.2 Amendment
to the Articles of Incorporation reflecting 1 for 20 reverse stock split.**  3.3 Bylaws-8-K
Current Report dated 11/28/2005**  14 Code of
Ethics-Form 10KSB for the year ended December 31, 2002**  23 Consent
of HJ & Associates to use their financials in this Report.  31.1 302
Certification of Thomas C. Drees, Ph.D.  31.2 302
Certification of David E. Nelson  32 906
Certification  *
   Summaries of all exhibits contained within this Report are
modified in their entirety by reference to these Exhibits.  **
  These documents and related exhibits have been previously filed with
the Securities and Exchange Commission and are incorporated herein by
reference.    27      SIGNATURES  In
accordance with Section 13 or 15(d) of the Securities Exchange Act, the Company
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.  SANGUINE
CORPORATION     Date:
April 14, 2009 By
Thomas C. Drees Thomas
C. Drees, Ph.D., MBA CEO,
President and Chairman of the Board
of Directors  Date:
April 14, 2009 By
David E. Nelson David
E. Nelson, CPA CFO
and Director  Date:
April 14, 2009 By
Edward L. Kunkel Edward
L. Kunkel, Director   28                       SANGUINE CORPORATION AND SUBSIDIARY (A DEVELOPMENT STAGE COMPANY)  CONSOLIDATED FINANCIAL STATEMENTS  DECEMBER 31, 2008 and 2007   29             C O N T E N T S   Report
of Independent Registered Public Accounting Firm F
- 3  Consolidated
Balance Sheet F
- 4  Consolidated
Statements of Operations F
- 6  Consolidated
Statements of Stockholders Equity F
- 7  Consolidated
Statements of Cash Flows F
- 12  Notes
to the Consolidated Financial Statements F
- 14    30      Report of Independent Registered Public Accounting Firm     To the
Board of Directors Sanguine
Corporation and Subsidiary (A
Development Stage Company) Pasadena,
California  We have audited the accompanying consolidated balance sheets of
Sanguine Corporation and subsidiary as of December 31, 2008 and 2007, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the two years in the period ended December 31, 2008, and
for the period from inception of the development stage on January 18, 1990,
through December 31, 2008.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our audits.  We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States).  Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.  We believe
that our audits provide a reasonable basis for our opinion.  In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of
Sanguine Corporation and subsidiary as of December 31, 2008 and 2007, and the
results of their operations and their cash flows for each of the two years in
the period ended December 31, 2008, and for the period from inception of the
development stage on January 18, 1990, through December 31, 2008, in conformity
with U.S. generally accepted accounting principles.  We were not engaged to examine management's assessment of the
effectiveness of Sanguine Corporation's internal control over financial
reporting as of December 31, 2008, included in the accompanying Form 10-K and,
accordingly, we do not express an opinion thereon.  The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 7
to the financial statements, the Company has incurred significant recurring
losses which have resulted in an accumulated deficit.  This raises
substantial doubt about the Company's ability to continue as a going concern.
 Management's plans in regard to these matters are also described in Note
7.  The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.   /s/HJ
Associates & Consultants, LLP  HJ
Associates & Consultants, LLP Salt Lake
City, Utah April 14,
2009        31       SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Balance Sheet   ASSETS     December 31,
2008

December 31,
2007CURRENT
ASSETSCash
$
1,159
$
15,436Prepaid
expenses

111,375

770,384Total
Current Assets

112,534

785,820PROPERTY
AND EQUIPMENT, NET

1,194

670OTHER
ASSETSLong
term prepaid expenses

-

111,375TOTAL
ASSETS
$
113,728
$
897,865  The
accompanying notes are an integral part of these consolidated financial
statements. F-32


SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Balance Sheet    LIABILITIES AND STOCKHOLDERS EQUITY   December 31,
2008

December 31,
2007CURRENT
LIABILITIESAccounts
payable
$
319,851
$
332,719Related
party payable

38,461

-Accrued
compensation

16,319

39,938Total
Current Liabilities

374,631

372,657Total
Liabilities

374,631

372,657COMMITMENTS
AND CONTINGENCIESSHAREHOLDERS
EQUITY (DEFICIT)Common
stock, 10,000,000 shares authorized of
$0.001
par value, 5,164,572 and 4,888,739 shares
issued
and outstanding, respectively

5,165

4,889Additional
paid in capital

8,161,055

7,811,998Deficit
accumulated during the development stage

(8,427,123)

(7,291,679)Total
Shareholders Equity (Deficit)

(260,903)

525,208TOTAL
LIABILITIES AND SHAREHOLDERS
EQUITY
(DEFICIT)
$
113,728
$
897,865  The
accompanying notes are an integral part of these consolidated financial
statements. F-33    SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Operations  For the
Year Ended
December
31,

From
Inception of the Development Stage on January 18, 1990 through December
312008

2007

2008  REVENUES
$
-
$
10,000
$
191,762OPERATING
EXPENSESProfessional
fees

1,063,417

749,921

4,709,516Research
and development

-

73,510

1,973,158Selling,
general and administrative

82,408

100,637

2,784,677Total
Operating Expenses

1,145,825

924,068

9,467,351LOSS
FROM OPERATIONS

(1,145,825)

(914,068)

(9,275,589)OTHER
INCOME (EXPENSE)Interest
income

688

241

40,193Interest
expense

(644)

-

(668,630)Loss
on cash deposit

-

-

(10,020)Gain
(loss) on foreign currency exchange

4,611

(20,321)

(15,710)Gain
on settlement of debt

5,726

-

1,502,633Total
Other Income (Expense)

10,381

(20,080)

848,466NET
INCOME (LOSS)

(1,135,444)

(934,148)

(8,427,123)OTHER
COMPREHENSIVE INCOME (LOSS)Unrealized
loss on foreign currency exchange

-

2,570

-TOTAL
COMPREHENSIVE INCOME (LOSS)
$
(1,135,444)
$
(931,578)
$
(8,427,123)BASIC
INCOME (LOSS) PER SHARE
$
(0.22)
$
(0.21)DILUTED
INCOME PER SHARE
$
(0.22)
$
(0.21)WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING BASIC

5,089,200

4,412,337WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING-DILUTED

5,089,200

4,412,337   The
accompanying notes are an integral part of these consolidated financial
statements. F-34    SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Stockholders' Equity   Common Stock

Additional Paid-in Capital

Expenses Prepaid with Common Stock

Common Stock Subscribed

Deficit Accumulated During the Development Stage

Accumulated Other Compre-hensive IncomeShares

AmountBalance,
January 18, 1990 Retroactive restated
71,418
$
71
$
2,424,571
$
-
$
-
$
(2,464,642)
$
-Net
income from January 1, 1990 through January 1, 1991
-

-

-

-

-

73,917

-Balance,
December 31, 1991
71,418

71

2,424,571

-

-

(2,390,725)

-Common
stock issued for services provided at  $0.001 per share
136

1

1

-

-

-

-Contributed
capital by officer
-

-

750

-

-

-

-Net
loss for the year ended December 31, 1992
-

-

-

-

-

(77,011)

-Balance,
December 31, 1992
71,554

72

2,425,322

-

-

(2,467,736)

-Common
stock issued to acquire 94% of outstanding stock of Sanguine
Corporation
729,489

729

13,861

-

-

(14,590)

-Common
stock for cash at $4.31 per share
25,500

25

109,975

-

-

-

-Net
loss for the year ended December 31, 1993
-

-

-

-

-

(92,895)

-Balance,
December 31, 1993
826,543

826

2,549,158

-

-

(2,575,221)

-Quasi-reorganization
-

-

(2,423,964)

-

-

2,423,964

-Common
stock for cash at $7.85 per share
9,550

10

74,990

-

-

-

-Net
loss for the year ended December 31, 1994
-

-

-

-

-

(230,779)

-Balance,
December 31, 1994
836,093

836

200,184

-

-

(382,036)

-Common
stock issued for debt and payables at $2.13 per share
60,800

61

129,203

-

-

-

-Common
stock issued for services at $2.50 per share
81,250

81

203,044

-

-

-

-Balance
Forward
978,143
$
978
$
532,431
$
-
$
-
$
(382,036)
$
-    The
accompanying notes are an integral part of these consolidated financial
statements. F-35     SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Stockholders' Equity  Common Stock

Additional Paid-in Capital

Expenses Prepaid with Common Stock

Common Stock Subscribed

Deficit Accumulated During the Development Stage

Accumulated Other Compre-hensive IncomeShares

AmountBalance
Forward
978,143
$
978
$
532,431
$
-
$
-
$
(382,036)
$
-Net
loss for the year ended December 31, 1995
-

-

-

-

-

(366,843)

-Balance,
December 31, 1995
978,143

978

532,431

-

-

(748,879)

-Common
stock issued for cash at $5.00 per share
500

1

2,499

-

-

-

-Common
stock issued for debt and payables at $4.97 per share
16,275

16

80,915

-

-

-

-Common
stock issued for
services
at $0.02 per share
48,968

49

930

-

-

-

-Net
loss for the year ended December 31, 1996
-

-

-

-

-

(210,017)

-Balance,
December 31, 1996
1,043,886

1,044

616,775

-

-

(958,896)

-Common
stock issued for
services
at $1.87 per share
5,000

5

9,329

-

-

-

-Net
loss for the year ended December 31, 1997
-

-

-

-

-

(166,212)

-Balance, December 31,
1997
1,048,886

1,049

626,104

-

-

(1,125,108)

-Common
stock issued for
cash
at $2.00 per share
60,900

61

122,139

-

-

-

-Common
stock issued for
debt
and payables at $4.33 per share
12,000

12

53,115

-

-

-

-Common
stock issued for
services
at $2.33 per share
33,725

34

78,593

-

-

-

-Shares
canceled
(5,000)

(5)

5

-

-

-

-Net
loss for the year ended December 31, 1998
-

-

-

-

-

(366,439)

-Balance,
December 31, 1998
1,150,511
$
1,151
$
879,956
$
-
$
-
$
(1,491,547)
$
-    The
accompanying notes are an integral part of these consolidated financial
statements. F-36    SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Stockholders' Equity  Common Stock

Additional Paid-in Capital

Expenses Prepaid with Common Stock

Common Stock Subscribed

Deficit Accumulated During the Development Stage

Accumulated Other Compre-hensive IncomeShares

AmountBalance,
December 31, 1998
1,150,511
$
1,151
$
879,956
$
-
$
-
$
(1,491,547)
$
-Common
stock issued for cash at $3.60 per share
2,639

3

9,497

-

-

-

-Common
stock issued for
services
at $2.00 per share
5,000

5

9,995

-

-

-

-Net
loss for the year ended December 31, 1999
-

-

-

-

-

(217,864)

-Balance,
December 31, 1999
1,158,150

1,159

899,448

-

-

(1,709,411)

-Common
stock issued for
cash
at $3.83 per share
165,913

166

635,154

-

-

-

-Common stock issued for
services
at $5.26 per share
81,496

81

428,919

-

-

-

-Net
loss for the year ended December 31, 2000
-

-

-

-

-

(1,444,616)

-Balance,
December 31, 2000
1,405,559

1,406

1,963,521

-

-

(3,154,027)

-Common
stock issued for
services
at $5.00 per share
6,250

6

31,245

-

-

-

-Common stock issued for
services
at $4.60 per share
3,750

4

17,246

-

-

-

-Common stock issued for
services
at $2.52 per share
41,250

41

103,909

-

-

-

-Common stock issued for
services
at $3.42 per share
2,500

3

8,547

-

-

-

-Common stock issued for
prepaid services at $4.60
per
share
12,500

13

57,487

(57,500)

-

-

-Common stock issued for
commission of private
placement of common
stock
16,360

16

(16)

-

-

-

-Balance
Forward
1,488,169
$
1,489
$
2,181,939
$
(57,500)
$
-
$
(3,154,027)
$
-   The
accompanying notes are an integral part of these consolidated financial
statements. F-37    SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Stockholders' Equity  Common Stock

Additional Paid-in Capital

Expenses Prepaid with Common Stock

Common Stock Subscribed

Deficit Accumulated During the Development Stage

Accumulated Other Compre-hensive IncomeShares

AmountBalance
Forward
1,488,169
$
1,489
$
2,181,939
$
(57,500)
$
-
$
(3,154,027)
$
-Common stock issued for
acquisition of subsidiary
stock held by minority
shareholders
42,010

42

(42)

-

-

-

-Amortization of prepaid
expenses
-

-

-

43,125

-

-

-Net
loss for the year ended December 31, 2001
-

-

-

-

-

(1,037,570)

-Balance,
December 31, 2001
1,530,179

1,531

2,181,897

(14,375)

-

(4,191,597)

-Additional
common stock issued for acquisition of subsidiary stock held by minority
shareholders in prior year
3,502

3

(3)

-

-

-

-Common
stock issued for
services
at $1.20 and $3.20 per share
80,750

81

58,656

-

-

-

-Warrants
issued for services
-

-

989,956

-

-

-

-Common
stock issued for
prepaid
services at $1.14
per
share
85,000

85

96,425

(96,510)

-

-

-Common
stock issued for
Cash-less
warrant exercise at $1.20 - $2.60 per share
25,000

25

103,600

-

-

-

-Common stock issued for
exercise of warrants for
cash
at $1.60 per share
15,500

16

24,784

-

-

-

-Amortization of prepaid
expenses
-

-

-

14,375

-

-

-Net
loss for the year ended December 31, 2002
-

-

-

-

-

(1,729,701)

-Balance,
December 31, 2002
1,739,931
$
1,741
$
3,455,315
$
(96,510)
$
-
$
(5,921,298)
$
-   The
accompanying notes are an integral part of these consolidated financial
statements. F-38    SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Stockholders' Equity   Common Stock

Additional Paid-in Capital

Expenses Prepaid with Common Stock

Common Stock Subscribed

Deficit Accumulated During the Development Stage

Accumulated Other Compre-hensive IncomeShares

AmountBalance,
December 31,
2002
1,739,931
$
1,741
$
3,455,315
$
(96,510)
$
-
$
(5,921,298)
$
-Common
stock issued for
cash-less
option exercise
at
$0.60 and $0.80 per
share
for services and
prepaid
services
31,250

31

23,969

(19,231)

-

-

-Common stock issued for
services at $0.60 - $2.20
per
share
7,500

7

9,181

-

-

-

-Common stock issued for
debt at $0.60 and $0.40
per
share
103,168

103

54,924

-

-

-

-Common stock issued for
debt and prepaid
expenses
at $1.60 per
share
50,000

50

79,950

(62,943)

-

-

-Amortization of prepaid
Expenses
-

-

-

115,741

-

-

-Net
loss for the year
ended
December 31,
2003
-

-

-

-

-

(324,531)

-Balance,
December 31,
2003
1,931,849

1,932

3,623,339

(62,943)

-

(6,245,829)

-Common
stock issued for
cash-less
option exercise
at
$1.20 and $1.60
per
share for services
176,433

176

249,545

-

-

-

-Common stock issued for
services
at $5.20 per
share
7,500

8

38,992

62,943

-

-

-Common stock issued for
debt at $0.80 and $1.40
per
share
1,665,125

1,665

1,351,062

-

-

-

-Common stock issued for
Cash at $1.60-$3.00
per
share
162,057

162

329,128

-

-

-

-Common
stock issued for
Cash-less
warrant
exercise
at $0.001 per
share
4,181

4

(4)

-

-

-

-Net
income for the year
ended
December 31,
2004
-

-

-

-

-

843,384

-Balance, December
31, 2004
3,947,145
$
3,947
$
5,592,062
$
-
$
-
$
(5,402,445)
$
-   The
accompanying notes are an integral part of these consolidated financial
statements. F-39    SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Stockholders' Equity   Common Stock

Additional Paid-in Capital

Expenses Prepaid with Common Stock

Common Stock Subscribed

Deficit Accumulated During the Development Stage

Accumulated Other Compre-hensive IncomeShares

AmountBalance, December
31, 2004
3,947,145
$
3,947
$
5,592,062
$
-
$
-
$
(5,402,445)
$
-Common
stock issued for
services
at $2.20-$6.00
per
share
20,625

21

81,105

-

-

-

-Common
stock issued for
Cash
at $1.74 per share
59,663

60

104,000

-

-

-

-Common
stock issued for
Debt
reduction at $1.20
per
share
8,000

8

9,592

-

-

-

-Net
loss for the year
ended
December 31,
2005
-

-

-

-

-

(337,751)

-Balance,
December 31,
2005
4,035,433

4,036

5,786,759

-

-

(5,741,196)

-Common
stock issued for
services
at $2.40-$5.00
per
share
36,250

36

143,776

-

-

-

-Common
stock issued for
Cash
at $1.60 per share
12,500

13

19,988

-

-

-

-Common
stock
Subscribed
-

-

-

-

27,800

-

-Contributed
capital for
Contributed
interest on
Notes
payable
-

-

520

-

-

-

-Loss
on Foreign
Currency
Exchange
-

-

-

-

-

-

(2,570)Net
loss for the year
ended
December 31,
2006
-

-

-

-

-

(617,335)

-Balance,
December
31,
2006
4,084,183

4,085

5,951,043

-

27,800

(6,357,531)

(2,570)Common
stock issued for
services
at $1.80-$4.60
per share
20,625

21

61,166

-

-

-

-Common
stock issued for
Cash at $1.20 per share
37,333

37

44,763

-

(27,800)

-

-Common
stock issued for
Cash at $1.60 per share
62,500

63

99,937

-

-

-

-Common
stock issued for services per consulting agreement at $2.40 per
share
250,000

250

599,750

-

-

-

-Common
stock issued for services per consulting agreement at $1.62 per
share
333,750

333

540,342

-

-

-

-Balance Forward
4,788,391
$
4,789
$
7,297,001
$
-
$
-
$
(6,357,531)
$
(2,570)   The
accompanying notes are an integral part of these consolidated financial
statements. F-40    SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Stockholders' Equity     Common Stock

Additional Paid-in Capital

Expenses Prepaid with Common Stock

Common Stock Subscribed

Deficit Accumulated During the Development Stage

Accumulated Other Compre-hensive IncomeShares

AmountBalance Forward
4,788,391
$
4,789
$
7,297,001
$
-
$
-
$
(6,357,531)
$
(2,570)Common
stock issued for
Cash
at $1.00 per share
100,000

100

99,900

-

-

-

-Contributed
capital for options granted
-

-

380,605

-

-

-

-Warrants
extension
-

-

34,493

-

-

-

-Adjustment
to Unrealized
Loss
on Foreign
Currency
Exchange
-

-

-

-

-

-

2,570Net
loss for the year
ended
December 31, 2007
-

-

-

-

-

(934,148)

-Balance,
December
31,
2007
4,888,391
$
4,889
$
7,811,999
$
-
$
-
$
(7,291,679)
$
-Common
stock issued for services per consulting agreement at $1.20-$2.50 per
share
17,500

17

33,671

-

-

-

-Common
stock issued for
services
at $1.40
per share
25,000

25

34,975

-

-

-

-Common
stock issued for
Cash
at $1.20 per share
233,681

234

279,766

-

-

-

-Contributed
interest on
Related
party payables
-

-

644

-

-

-

-Net
loss for the year
ended
December 31, 2008
-

-

-

-

-

(1,135,444)

-Balance,
December
31,
2008
5,164,572
$
5,165
$
8,161,055
$
-
$
-
$
(8,427,123)
$
-  The
accompanying notes are an integral part of these consolidated financial
statements. F-41     SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Cash Flows  For the Year Ended
December 31,

From Inception of the Development Stage on January 18, 1990
through December 31,2008

2007

2008CASH
FLOWS FROM OPERATING ACTIVITIESNet
loss
$
(1,135,444)
$
(934,148)
$
(8,427,123)Adjustments
to reconcile net loss to net cash used
by
operating activities:Depreciation

373

298

5,803Common
stock issued for services

35,000

671,297

3,365,446Contributed
capital

645

-

1,165Stock
warrants granted

-

-

8,650Interest
on beneficial conversion feature

-

-

25,000Legal
expense related to beneficial conversion feature

-

-

3,750Note
payable issued for services

-

-

727,950Gain
on extinguishments of debt

(5,726)

-

(104,552)Gain
on conversions of debt to equity

-

-

(1,398,081)Recognition
of prepaid expenses and

expenses
prepaid with common stock

-

-

456,184Warrant
extension

-

34,493

34,493Loss
on foreign currency exchange

(4,611)

20,321

15,710Changes
in assets and liabilities:(Increase)
decrease in prepaid expense

770,384

(31,776)

738,608Increase
(decrease) in accounts payable

(2,531)

(8,402)

638,055Increase
in accrued interest payable

-

-

547,279Increase
in accrued liabilities

-

-

10,125Increase
in customer deposits`

-

-

45,000Increase
(decrease) in warrant liability

-

(2,123)

-Increase
in accrued salaries

40,067

22,188

975,067Net
Cash Used by Operating Activities

(301,843)

(227,852)

(2,331,471)CASH
FLOWS FROM INVESTING ACTIVITIESCash
paid for fixed assets

(895)

-

(6,995)Net
Cash Used by Investing Activities

(895)

-

(6,995)CASH
FLOWS FROM FINANCING ACTIVITIESProceeds
from warrant conversion

-

100,000

524,700Proceeds
from notes payable and notes payable-

related
party

8,461

2,000

222,600Payments
on notes payable and notes payable 

related
party

-

(6,000)

(15,400)Proceeds
from issuance of convertible debentures

-

-

40,000Contributed
capital

-

-

750Common
stock issued for cash

280,000

117,000

1,566,975Net
Cash Provided by Financing Activities

288,461

213,000

2,339,625NET
INCREASE (DECREASE) IN CASH

(14,277)

(14,852)

1,159CASH
AT BEGINNING OF PERIOD

15,436

30,288

-CASH
AT END OF PERIOD
$
1,159
$
15,436
$
1,159   The
accompanying notes are an integral part of these consolidated financial
statements. F-42      SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Consolidated Statements of Cash Flows(Continued)   For the
Year Ended
December
31,

From
Inception of the Development Stage on January 18, 1990 through December
31,2008

2007

2008   SUPPLEMENTAL SCHEDULE
OF CASH FLOW ACTIVITIESCASH PAID FOR:Interest
$
-
$
-
$
-Income
taxes
$
-
$
-
$
-NON-CASH
ACTIVITIESCommon
stock issued for debt conversion
$
-
$
-
$
9,600Equity
instruments issued for services rendered
$
33,688
$
671,297
$
3,220,322Contributed
capital for interest contributed
$
645
$
-
$
1,165Interest
on beneficial conversion feature
$
-
$
-
$
25,000Legal
related to beneficial conversion feature
$
-
$
-
$
3,750Notes
payable issued for services
$
-
$
-
$
727,950Common
stock issued for prepaid services
$
-
$
-
$
236,284Common
stock issued for debt
$
-
$
-
$
2,822,067      F-43     SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007  NOTE
1 - ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  a.
 Organization  Sanguine Corporation, (the Company) was incorporated January 27,
1974, in the State of Utah, using the name Sight and Sound Systems, Inc.
 On July 8, 1974, the Company changed its name to International Health
Resorts, Inc., and on June 25, 1993, the Company filed a Certificate of
Amendment changing the name to Sanguine Corporation.  In May of 1992, the
Company changed its domicile to the State of Nevada.  The Company is engaged in developing oxygen carriers to be used by
the medical profession.  The Company is conducting research and development
leading to F.D.A. clinical trials.  On June 14, 1993, the Company entered into an Agreement and Plan
of Reorganization, wherein it was agreed that Sanguine Corporation (a Nevada
Corporation) would issue 729,489 shares of its common stock to acquire 94% of
the issued and outstanding shares of stock of Sanguine Corporation (a California
Corporation).  During the year ended December 31, 2001, the Company
acquired the remaining 6% of the California Corporation in exchange for the
issuance of 42,010 shares of common stock.  From 1974 to 1980, the Company engaged in several business
ventures.  These business activities resulted in the loss of all Company
assets.  Because of the search for a new business venture, the Company has
entered into the development stage company status again.  The Company is
a development stage company and these financial statements are presented as
those of a development stage company effective January 18, 1990, coinciding with
the incorporation date of Sanguine Corporation.  On March 7, 2008, the Company formed a wholly owned subsidiary
called Sanguine Lifescience Corporation.  As part of the formation of
Sanguine Lifescience Corporation, the Company transferred $15,000 to a bank
account for Sanguine Lifescience use.  At this time, Sanguine Lifescience
Corporation is not engaged in any business other than normal corporate
matters.  b.  Accounting Method  The Companys consolidated financial statements are prepared using
the accrual method of accounting.  The Company has elected a December 31
year-end.  c. Principles of Consolidation  The consolidated financial statements include the accounts of the
Company and its subsidiaries.  All material intercompany accounts and
transactions are eliminated in consolidation.  d. Basic and Diluted Earnings (Loss) Per Share  In
accordance with SFAS 128, Earnings per share, basic earnings (loss) per
share is computed by dividing net income (loss) attributable to common shares by
the weighted average number of common shares outstanding during the period.
 Diluted earnings (loss) per share is computed by dividing net income
(loss) attributable to common shares for the period by the weighted average
number of common and potential common shares outstanding during the period.
Potential common shares, composed of incremental common shares issuable upon the
exercise of stock options and warrants, are included in the calculation of
diluted net loss per share to the extent such shares are dilutive.      F-44     SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007  NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)  d.  Basic and Diluted Income
(Loss) Per Share (continued)  The following table sets forth the computation of basic and
diluted loss per share for the periods indicated:  For the Years Ended
December 31,2008

2007Loss
(numerator)
$
(1,135,444)
$
(934,148)Shares
(denominator)

5,088,654

4,412,337Net
loss per common share  basic and diluted
$
(.22)
$
(.21)  The computation of diluted income (loss) per share of common stock
is based on the weighted average number of shares outstanding during the
period.   For the Years Ended
December 31,2008

2007Loss
(numerator)
$
(1,135,444)
$
(934,148)Shares
(denominator)

5,088,654

4,412,337Net
loss per common share  basic and diluted
$
(.22)
$
(.21)  The Companys outstanding stock options have been excluded from
the 2008 basic net loss per share calculation as they are anti-dilutive.
 The Company has excluded common stock equivalents.  e.  Estimates  The preparation of financial statements in conformity with
generally accepted accounting principles in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period.  Actual results could
differ from those estimates.  f.  Income Taxes  Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are recognized
for taxable temporary differences.  Temporary differences are the
differences between the reported amounts of assets and liabilities and their tax
bases.  Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized.  Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.     F-45       SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007  NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)  f.  Income Taxes (Continued)  Net deferred tax liabilities asset consists of the following
components as of December 31, 2008 and 2007:   2008

2007Deferred tax
assets:Research
and Development
$
81,645

$
81,645NOL
Carryover

748,530


700,600Accrued
Salaries

6,400


15,600836,575


797,845Deferred tax
liabilities:Depreciation

(100)


(100)Valuation
allowance

(836,475)


(797,745)Net
deferred tax asset
$
-

$
- The income tax provision differs from the amount of income tax
determined by applying the U.S. federal and state income tax rates of 39% to
pretax income from continuing operations for the years ended December 31, 2008
and 2007 due to the following:  2008

2007Book Income
$
(442,200)

$
(364,438)Research and
Development

-


3,800Stock for
Services/Options Expense

378,463


283,080Currency
valuation

1,798


2,330Meals and Entertainment
Depreciation

2,105
32


71                                
-Accrued
compensation

(9,210)


(15,990)Change in valuation
allowance

69,012


91,147$
-

$
-   At December 31, 2008, the Company had net operating loss
carryforwards of approximately $2,900,000 that may be offset against future
taxable income from the year 2009 through 2029.  No tax benefit has been
reported in the December 31, 2008 consolidated financial statements since the
potential tax benefit is offset by a valuation allowance of the same amount.  Due to the change in ownership provisions of the Tax Reform Act of
1986, net operating loss carryforwards for Federal income tax reporting purposes
are subject to annual limitations.  Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future years.      F-46      SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007  NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)  f.  Income Taxes (Continued)  The Company files income tax returns in the U.S. federal
jurisdiction, andthe state of California.  With few exceptions, the
Company is no longer subject to U.S. federal, state and local, or non-U.S.
income tax examinations by tax authorities for years before 2003.  The company had an outstanding tax liability to the state of
California for the years ended 2003, 2004, 2005, and 2006.  The amount of
the liability was 9,864 and was paid during 2008.  The Company adopted the provisions of FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, on January 1, 2007.  As
a result of the implementation of Interpretation 48, the Company recognized no
increase in the liability for unrecognized tax benefits.  Included in the balance at December 31, 2008 and 2007, are notax positions for which the ultimate deductibility is highly certain but for
which there is uncertainty about the timing of such deductibility.  Because
of the impact of deferred tax accounting, other than interest and penalties, the
disallowance of the shorter deductibility period would not affect the annual
effective tax rate but would accelerate the payment of cash to the taxing
authority to an earlier period.  g.  Development Stage  The Company is considered a development stage Company as defined
in SFAS No. 7, Accounting For Development Stage Enterprises.  The Company
is devoting substantially all of its efforts to research and development and
obtaining financing.  Principal operations have not commenced and no
significant revenues have been derived from operations since inception.
 The Company has, at the present time, not paid any dividends and any
dividends that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.  h.  Property and Equipment  Property and equipment are stated at cost.  Expenditures for
small tools, ordinary maintenance and repairs are charged to operations as
incurred.  Major additions and improvements are capitalized. Depreciation
is computed using the straight-line method over estimated useful lives, which
range between 3 to 5 years.  Fixed assets and related accumulated
depreciation are as follows:  December 31
2008

December 31
2007Furniture and fixtures
$
2,386
$
1,491Accumulated depreciation

(1,192)

(821)Total Fixed Assets
$
1,194

670  Depreciation expense for the years ended December 31, 2008 and
2007, amounted to $373 and $298, respectively.    F-47        SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007   NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)  i. Revenue Recognition  Revenue is recognized when the sales amount is determined,
shipment of goods to the customer has occurred and collection is reasonably
assured.  j. Newly Adopted Accounting Pronouncements  New accounting pronouncements that have a current or future
potential impact on our financial statements are as follows: In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounted Principlesthat becomes effective 60 days
following the SECs approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles, which identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements in accordance with generally accepted
accounting principles.  The adoption of this standard will not materially
impact the Companys financial statements. The Company has reviewed all other recently issued, but not yet
adopted, accounting standards in order to determine their effects, if any, on
its consolidated results of operation, financial position or cash flows. 
Based on that review, the Company believes that none of these pronouncements
will have a significant effect on its current or future earnings or
operations.  k.  Equity Securities  Equity securities issued for services rendered have been accounted
for at the fair market value of the securities on the date of issuance.  l.  Stock Options  As required by FASB Statement 123R Share Based Payment, the
Company elected to measure and record compensation cost relative to employee
stock option costs. SFAS 123R requires compensation cost relating to share-based
payment transactions to be recognized in financial statements.  That cost
will be measured based on the fair value of the equity or liability instruments
issued.  m. Valuation of Options and Warrants  The valuation of options and warrants granted to unrelated parties
for services are measured as of the earlier of (1) the date at which a
commitment for performance by the counterparty to earn the equity instrument is
reached, or (2) the date the counterpartys performance is complete.
 Pursuant to the requirements of EITF 96-18, the options and warrants will
continue to be revalued in situations where they are granted prior to the
completion of the performance.       F-48      SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007   NOTE
1 - ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  n.  Cash and Cash Equivalents  The Company considers all highly liquid investments with a
maturity of three months or less when purchased to be cash equivalents.
 From time to time the Company carries cash balances at a single financial
institution in excess of the federally insured maximum of $250,000  NOTE 2 - RELATED PARTY TRANSACTIONS  Related party payables at December 31, 2008 and 2007 represents
amounts owed to officers of the Company for consulting fees and reimbursement of
expenses paid of $38,461 and $0, respectively.  NOTE 3 - COMMITMENTS AND CONTINGENCIES  During February 1994, the Company entered into a lease for office
space in Pasadena, California.  The lease has been extended through October
2008 with monthly rent payments of $820 with annual increases.  Future minimum lease payments under this non-cancelable operating
lease are $8,200 through October 2009.  Currently the lease is on a
month-to-month basis.  Rent expense was $14,550 and $10,324 for the years ended December
31, 2008 and 2007, respectively.  Employment Agreements  Beginning the quarter ended September 30, 2004, the CEO, CFO and
Vice President are each entitled to receive 12,500 shares of common stock of the
company which are considered to be restricted securities.  Such
compensation is to be paid quarterly.  As of December 31, 2008 and 2007, a
total of $16,319 and $39,937 in salaries has been accrued, respectively.  NOTE 4 - COMMON STOCK TRANSACTIONS  During the year ended December 31, 2008 the Company completed a
one for twenty reverse split of its issued and outstanding shares of common
stock.  The Company also approved the addition of 10,000,000 shares of
preferred stock.  No shares of preferred stock have been issued.
  The financial statements as of December 31, 2007, have been restated
to give retroactive recognition of this reverse split.  Also during the year ended December 31, 2008, the Company issued
233,333 shares of common stock valued at $280,000.  The Company retained an
investor relation firm which was paid $20,000 and issued 25,000 shares of our
common stock valued at $35,000.  The term of the agreement is for one year.
 The Company also issued 17,500 shares in payment of previously accrued
compensation valued at $33,678.         F-49      SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007   NOTE 4 - COMMON STOCK TRANSACTIONS (continued)  During the year ended December 31, 2007, the Company issued
137,333 shares of common stock for cash and subscriptions of $144,800; 20,625
shares of common stock for services valued at a range of $1.80-$4.60 per share
for a total of $61,187; 62,500 shares issued for warrant exercises at $1.60 per
share for total proceeds of $100,000; 250,000 shares issued pursuant to a
consulting agreement valued at $2.40 per share for a total of $600,000 of which
$480,000 was initially recorded as a prepaid asset and is being amortized over
the 15 month term of the consulting agreement; 333,750 shares issued pursuant to
a consulting agreement dated November 21, 2007 valued at $1.62 per share for a
total of $540,675 which was initially recorded as a prepaid asset and is being
amortized over the terms of the consulting agreement.  Common stock issued for services, prepaid services and cash-less
option exercises have been accounted for at the fair market value of the
securities on the date of issue.  NOTE 5 - STOCK OPTIONS AND WARRANTS  During February 2002, the Company entered into a consulting
agreement which provides for the issuance of 15,000 warrants.  The
consultant received 5,000 warrants upon signing the contract while the remaining
10,000 warrants were contingent upon receipt of funding generated by the
consultant.  The warrants were exercisable at a price of $2.50 per share
and expired February 6, 2007.  The Company recognized $11,252 in expense
associated with the issuance of these warrants.  During March 2002, and in connection with the issuance of a
convertible debenture, the company issued warrants to purchase 5,937,500 shares
of common stock at an exercise price of the greater of $1.60 or 66 2/3 % of the
five-day trading average of the Companys common stock.  The Company
recognized $682,465 in expense associated with the issuance of these warrants.
 Through December 31, 2008, a total of 260,718 of these warrants have been
exercised and the remaining 36,157 have expired.  During the year ended December 31, 2007, the Company extended the
expiration date of above warrants by one year and valued the extension using
the Black-Scholes option-pricing model with the
following assumptions: dividend yield of zero percent; expected volatility of
79.2%; risk-free interest rate of 5.06%; and expected life of 1 year.  This
resulted in the recognition of an additional expense of $34,493 which increased
additional paid in capital.                   F-50        SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007  NOTE 5 - STOCK OPTIONS AND WARRANTS (continued)  A summary of the status of the Companys outstanding stock
warrants as of December 31, 2008 and 2007 and changes during the years then
ended is presented below:   2008

2007Shares

Weighted
Average Exercise Price

Shares

Weighted Average Exercise PriceOutstanding, beginning of year
36,157

$
1.60

106,157

$
1.60Granted
-


-

-


-Expired/Cancelled
(36,157)


1.60

(7,500)


2.50Exercised
-


-

(62,500)


1.60Outstanding end of year
-

$
-

36,157

$
1.60Exercisable
-

$
-

36,157

$
1.60   During
the year ended December 31, 2007, the Company granted 250,000 options to
purchase the Companys common stock for an exercise price of $1.20 per share for
a period of 24 months beginning in April 2007.  The options were granted as
part of a consulting agreement with LKB Partners, LLC entered into during the
quarter.  The Company valued the options using the Black-Scholes
option-pricing model with the following assumptions: dividend yield of zero
percent; expected volatility of 75.6%; risk-free interest rate of 4.73%; and
expected life of 2 years.  The value of the options was initially recorded
as a prepaid expense which is being amortized over the 15 month term of the
consulting agreement which expired on September 30, 2008.  A summary of the status of the Companys outstanding stock options
as of December 31, 2008 and December 31, 2007 and changes during the periods
then ended is presented below:  2008

2007Shares

Weighted
Average Exercise Price

Shares

Weighted Average Exercise PriceOutstanding, beginning of year
250,000

$
1.20

-

$
-Granted
-


-

250,000


1.20Expired/Cancelled
-


-

-


-Exercised
-


-

-


-Outstanding end of year
250,000

$
1.20

250,000

$
1.20Exercisable
250,000

$
1.20

250,000

$
1.20      F-51     SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007  NOTE 5 - STOCK OPTIONS AND WARRANTS (continued)  Outstanding

ExercisableRange of
Exercise Prices

Number
outstanding at December 31, 2008

Weighted
Average Remaining Contractual Life

Number
Exercisable at December 31, 2008$
1.20

250,000

.25

250,000250,000



250,000  NOTE 6 - MATERIAL DEFINITE AGREEMENT  Consulting Firm
Engagement  On November 21, 2007, the Company executed a Consulting and
Confidentiality Agreement (the KKS Agreement) for a 12 month term with KKS
Venture Management, Inc. (KKS) and Alfonso C. Knoll (Knoll), its principal,
whereby KKS was engaged to provide consulting services.  KKS has agreed to exercise its best efforts to provide the Company
with help in gaining market awareness and exploring the possibilities of a
European listing; recommending a capitalization restructure to facilitate an
offering of $5,000,000; and, in approaching a large underwriter to structure a
secondary offering for the advertising of our brand and to increase our budget.
 KKS has also agreed to provide such managerial help and consultation to
foster our growth and performance.  The KKS Agreement automatically renews
with the same terms on the last day of the 12th month, unless either party gives
written notice of intent not to renew.  KKS and Knoll will be compensated as follows:  · Upon approval of the KKS Agreement, the Company issued to
Consultant, one hundred fifty thousand (150,000) shares of our common stock that
are restricted securities under Rule 144 of the Securities and Exchange
Commission (the SEC), with piggy-back registration rights; and · 33,750 free trading shares of our common stock through a grant
from our Stock Option Plan to Knoll, personally, under a separate Letter
Agreement (the Knoll Letter Agreement); and · After successful completion of a minimum of an initial $500,000
financing has been realized by the Company, we will pay Consultant Twenty
Thousand Dollars ($20,000) per month so long as we can afford to pay that sum
while the KKS Agreement or any extension thereof is in effect.  As of
December 31, 2008 the $500,000 has not been raised.  Management Consulting Firm Engagement  On November 21, 2007, the Company executed a Management Consulting
Agreement (the November LKB Agreement) for a 24 month term with LKB Partners,
LLC (LKB), whereby LKB was engaged to provide additional management consulting
services to the Company.  LKB had previously executed a Consulting Agreement with the
Company on April 4, 2007 wherein , the Company issued 200,000 restricted
securities that are shares of common stock and the right to acquire 250,000
additional restricted securities that are shares of common stock at a price of
$1.20 per share     F-52     SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007  NOTE 6 - MATERIAL DEFINITE AGREEMENT (continued)  for a period of two years ending April 3, 2009.  LKB was
granted customary piggy-back registration rights on the 200,000 shares issued
and the shares underlying the option grant in any applicable registration
statement filed by us within 12 months. The Company in conjunction with this
Agreement, also issued 50,000 shares of common stock for future services to Mr.
Frank Marra valued at $45,000.  150,000 of the 200,000 shares are being
held in escrow pending completion of the services to be rendered, and the Option
Agreement to cover the 250,000 share options will be prepared on completion of
the services too.  LKB and its principal, Frank Marra, has agreed to make themselves
available to act in the full capacity as General Manager (Marra, individually)
and President (Marra, individually) for the Company, which includes running all
day to day business operations, entering into or negotiating contracts, hiring
and firing of personnel, paying expenses, devising, revising and implementing
business, financing, marketing strategies and all other necessary tasks relevant
to the position.  Furthermore, Consultant will be responsible for providing
contacts for the Company to raise the requisite equity capital to pay its
current obligations and work to provide capital for its future endeavors.  LKB will be paid $8,000 for each month of the 24 month term for
these services.  The Company also agreed to pay LKB for these services 150,000
shares of its common stock that are restricted securities, of which 25,000
shares shall be made free trading through a grant from our Stock Option Plan to
Marra personally under a separate Letter Agreement.  These shares have now
been issued. The Company also agreed to grant to LKB the option to purchase up
to 9.5 percent of the issued and outstanding shares of our common stock at a
price of $1.20 per share for a period of two years; provided, however, these
options, to the extent not exercised prior thereto, shall be void on March 31,
2008, unless we shall have raised not less than the sum of $500,000 through the
efforts of LKB or its associates or affiliates or by persons introduced by it or
its associates or affiliates by March 31, 2008, with no proration of options in
the event all $500,000 is not raised.  As of December 31, 2008, the
$500,000 has not been raised.  Stock Purchase Agreement  Effective during the year ended December 31, 2007, we executed a
Stock Purchase Agreement (the SPA) with Terra Silex Holdings LLC, a
Pennsylvania LLC (Terra Silex), whereby Terra Silex purchased one hundred
thousand (100,000) shares of our common stock for a purchase price of One
Hundred Thousand Dollars ($100,000) (the Purchase Price) pursuant to an
exemption from registration provided by Rule 506 of Regulation D promulgated
under the Securities Act of 1933, as amended (the Securities Act), as an
offering to an accredited investor.  This $100,000 amount counts against
the $500,000 required to be raised as a condition of the LKB option referenced
in the preceding paragraph.          F-53     SANGUINE CORPORATION AND SUBSIDIARY (A Development Stage Company) Notes to the Consolidated Financial Statements December 31, 2008 and 2007   NOTE 7 - GOING CONCERN  The Companys consolidated financial statements are prepared using
generally accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business.  The Company has historically incurred
significant losses, which have resulted in an accumulated deficit of $8,427,123
at December 31, 2008 which raises substantial doubt about the Companys ability
to continue as a going concern.  The accompanying financial statements do
not include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.  The Companys
management has taken certain steps to maintain its operating and financial
requirements in an effort to enable the Company to continue as a going concern
until such time that revenues are sufficient to cover expenses, including:  The Companys management has taken certain steps to maintain its
operating and financial requirements in an effort to continue as a going concern
until such time as revenues are sufficient to cover expenses. Future plans
include a debt or equity offering for between $1,000,000 - $1,500,000 that
should enable the Company to complete the testing stage for FDA approval of its
product.  However, management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans.  The ability of the Company to continue as a going concern is
dependent upon its ability to successfully accomplish the plan described above,
and eventually attain profitable operations.  The accompanying financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.      F-54