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

                           FORM 10-KSB

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

     For the fiscal year ended December 31, 2004

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

     For the transition period from _____________ to ____________

                   Commission File No. 000-24480

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

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

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

            Issuer's Telephone Number:  (626) 405-0079
            --------------------------

                               N/A
                               ---
  (Former Name or Former Address, if changed since last Report)

Securities Registered under Section 12(b) of the Exchange Act: None
Name of Each Exchange on Which Registered:                     None
Securities Registered under Section 12(g) of the Exchange Act:

                    $0.001 par value common stock

     Check whether the Registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act 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.

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

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB.  [ ]

     State the Registrant's revenues for its most recent fiscal year: December
31, 2004 - $15,424.

     State the aggregate market value of the voting stock of the Registrant
held by non-affiliates 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.

     March 29, 2005 - $11,340,570.93.  There are approximately 39,105,417
shares of common voting stock of the Registrant beneficially owned by
non-affiliates.  This valuation is based upon the bid price of our common as
quoted on the OTCBB of the National Association of Securities Dealers, Inc. on
that date ($0.29).

                (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                        DURING THE PAST FIVE YEARS)

                                   N/A
                                   ---

                   (APPLICABLE ONLY TO CORPORATE ISSUERS)

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

                         March 29, 2005 - 80,012,884
                         ---------------------------

                    DOCUMENTS INCORPORATED BY REFERENCE

                            Part III, Item I
                            ----------------

Transitional Small Business Issuer Format:   Yes  X   No
------------------------------------------       --- ----

<PAGE>
                              PART I

Item 1.  Description of Business.
         ------------------------

Business Development.
---------------------

     Developmental Information Prior to December 31, 2001.
     -----------------------------------------------------

     We were organized under the laws of the State of Utah on January 24,
1974.  For additional information about our historical development, see our
10-KSB Annual Report for the year ended December 31, 2001, that was filed with
the Securities and Exchange Commission on April 10, 2002, and is incorporated
herein by reference.  See Part III, Item 1.

     Developmental Information for the Year Ended December 31, 2002.
     ---------------------------------------------------------------

     On February 15, 2002, we entered into an Exclusive License Agreement (the
"Exclusive License Agreement") with Ascendiant-Asia, LLC, a Nevada limited
liability corporation ("Ascendiant-Asia"), whereby we granted to
Ascendiant-Asia an exclusive license to PHER-02, our developmental synthetic
red blood cell product, the licensed process and all proprietary, formula,
developmental, technological, intellectual property and patent rights, and all
other applications of the above in certain countries in Asia, including the
People's Republic of China, Thailand, Laos, Cambodia, Vietnam, Singapore,
Malaysia, Indonesia, North Korea, Burma, Mongolia and Taiwan.

     On April 1, 2002, we also entered into an Exclusive License Agreement
(the "Exclusive License Agreement") with Ascendiant-South America, LLC, a
Nevada limited liability corporation ("Ascendiant-South America"), whereby we
granted to Ascendiant-South America a like exclusive license to PHER-02.
These licenses were terminated in 2004.

     See the heading "Developmental Information for the Year Ended December
31, 2004," below.

     Developmental Information for the Year Ended December 31, 2003.
     ---------------------------------------------------------------

     We provided our product, PHER-02, for cost, confidential treatment of our
formuale and the test results for use in our own planned United States Food
and Drug Administration ("FDA")application process discussed below under the
heading "Business" to three universities that are currently in the final
phases of federal and state animal toxicity trials that focus on our product's
effectiveness in perfusion for pancreas preservation for transplantation.
These perfusion studies are aimed at enhancement of islets used in transplants
as an amelioration for diabetes, which is one of the fastest growing diseases
in the United States and throughout the world.  Islet transplantation is done
to improve insulin production in Type 2 or juvenile onset diabetes.

     PHER-02 is also being provided to one university that is conducting
trials for the United States Navy on submarine crew and deep sea diver
oxygenation and the treatment of bends.

     We also began a project with the United States Army Medical Corps to
develop a "golden hour" medical kit using PHER-02.  The kit would allow self-
transfusion on the battlefield, thus helping to prevent bleeding to death
injuries, which are a major cause of fatalities in combat, despite current
improvements in front line battle care.

     Developmental Information for the Year Ended December 31, 2004.
     ---------------------------------------------------------------

     On September 29, 2004, we terminated Ascendiant-Asia's Exclusive License
Agreement for failure to meet minimum production or to pay royalties due
pursuant to the terms of that Exclusive License Agreement.  Also, on September
29, 2004, we terminated Ascendiant-South America's Exclusive License Agreement
for failure to meet minimum production or to pay royalties due pursuant to the
terms of that Exclusive License Agreement.

     We completed the restructuring of our financial statements, including a
satisfaction of debt for common stock issuance, issuance of common stock for
certain convertible debt and the contribution to capital of other debt,
including accrued salaries of management and others.  See our 8-K Current
Report dated September 29, 2004, filed with the Securities and Exchange
Commission on October 7, 2004, and which is incorporated herein by reference.
See Part III, Item 1.

     The testing of our red blood cell substitute, PHER-02, in various phases
of animal toxicity trials has begun.  The universities of Chicago, Maryland
and the University of Alberta (Canada) medical schools are currently focusing
on its effectiveness in perfusion for pancreas preservation for
transplantation (October, 2004).

     PHER-02 is being used to develop for the U.S. Navy on submarine crew and
deep sea diving oxygenation treatment of the bends (November, 2004).

     We are conferring with the U.S. Army Medical Corps to develop a "golden
hour" medical kit using PHER-02 to allow self blood transfusion on the
battlefield (November, 2004).

     We successfully completed animal toxicity and efficacy trials at the
University of Alberta (Canada) respecting transporting of pancreas islet cells
(November, 2004).  See our 8-K Current Report dated November 17, 2004, filed
with the Securities and Exchange Commission on November 18, 2004, and which is
incorporated herein by reference.  See Part III, Item 1.

     Our budgets are now in place to plan FDA testing and to select a
manufacturer of PHER-02 when our Medical Advisory and Applications Board
convenes in early 2005 (December, 2004).

     We selected a new Medical Advisory and Applications Board member, Dr.
Robert Kwun, a retina surgeon, to evaluate the use of PHER-02 in ophthalmic
surgery.  Dr. Kwun is a graduate of Harvard University and received his
medical degree from Columbia University, in New York (December, 2004).

     Developmental Information Subsequent to the Year Ended December 31, 2004.
     -------------------------------------------------------------------------

     We have convened our Medical Advisory and Applications Board in
California on April 2, 2005, to discuss our final selection of a contract
research organization to initiate and conduct our animal testing for the FDA
approval process and to select a PHER-02 manufacturer.  Beckloff Associates,
Inc., a Cardinal Health company of Overland Park, Kansas ("Beckloff"), has
been selected by us to analyze our IND (indication of what approvals are being
sought) submissions, NDA (new drug) applications, ANDA (appended new drug)
applications, IDE(investigational device evaluation) submissions, PMA (pre-
market approval) applications and 510(k) (form for medical devices)
applications, among other requirements, and to comment on the organization and
accuracy of our scientific data that is presented, along with advising us on
the attitudes, approaches and requirements of the FDA.

Business.
---------

     We are engaged in the development of a synthetic red blood cell 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 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 are performing
initial gross animal tests, which 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:

     *    performing animal testing at certain universities as outlined under
the subheadings "Developmental Information for the Year Ended December 31,
2003" and "Developmental Information for the Year Ended December 31,
2004" of the heading "Business Development," above;

     *    beginning a project with the United States Army Medical Corps to
develop a "golden hour" medical kit using PHER-02.  The kit would allow self-
transfusion on the battlefield, thus helping to prevent bleeding to death
injuries, which are a major cause of fatalities in combat, despite current
improvements in front line battle care;

     *    developing a deep sea diving oxygenation treatment of the bends for
use by the U.S. Navy on submarine crew; and

     *    completing the animal toxicity and efficacy trials respecting
transporting of pancreas islet cells.

     In our third phase of operations, intended to commence during our second
quarter of 2005, we intend to continue developing the perfluorocarbon
compounds in PHER-O2 in order to optimize its quality; and begin animal safety
and efficacy trials in accordance with FDA guidelines and comparable foreign
regulatory requirements, with the aid and assistance of Beckloff, a Cardinal
Health company.

     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, including retinal surgery, transplant organ preservation
and treatment of carbon monoxide poisoning, sickle cell anemia, heart attack
and stroke.  We will have to conduct similar rigorous testing and clinical
trials of PHER-O2 for each desired application, although we expect half of all
sales will be off-label, as were 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 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 can not 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-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.

     We intend to fully exploit the immense worldwide market for these
applications.

     Preliminary testing has indicated that the transportation of pancreas
islet cells in a bath of PHER-02 in the treatment 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.

Competition.
------------

      10 years ago there were 15 possible competitors.  Four companies are
still working to develop alternatives to human blood.  They include:

     *     Biopure Corporation of Cambridge, Massachusetts, (cows blood);


     *     Hemasol, Inc. of Etobicoke, Ontario, Canada (outdated human
blood);

     *     Northfield Laboratories, Inc. of Evanston, Illinois, (outdated
human blood); 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.  These four competitors have repeatedly failed FDA
tests.

Sources and Availability of Raw Materials.
------------------------------------------

     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 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 can not
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.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or
Labor Contracts.
----------------

     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 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,
effective for one year commencing on March 25, 2005, whereby Beckloff will
assist us in implementing, conducting and completing our FDA testing and
approval process.

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."

     We can not 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.

Effects of Existing or Probable Governmental Regulations.
---------------------------------------------------------

     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 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 can not 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.

Cost and Effect 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.

Research and Development Expenses.
----------------------------------

     Since inception we have expended a total of approximately $350,000 on
research and development.  During years ended December 31, 2004 and 2003,
research and development expense was approximately $10,000 and $63,000,
respectively.  None of these costs were borne by customers or others.

Number of 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.

Item 2.  Description of Property.
         ------------------------

     We lease approximately 970 square feet of office space located at 101
East Green Street, Suite 11, Pasadena California, 91105, at a base rent of
$1,841 per month.  The lease runs through April 30, 2004, and is expected to
be extended 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 Security Holders.
         ----------------------------------------------------

     None; not applicable.

                                  PART II


Item 5.  Market for Common Equity and Related Stockholder Matters and Small
Business Purchases of Equity Securities.
----------------------------------------

Market Information.
-------------------

     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."

     The range of high and low bid quotations for our common stock during
each quarter of the year ended December 31, 2002, each quarter of the calendar
year ended December 31, 2002, each quarter of the calendar year ended December
31, 2003, and each quarter of the calendar year ended December 31, 2004, is
shown below.  Prices are inter-dealer quotations as reported by the NASD (or
the NQB) and do not necessarily reflect transactions, retail markups, mark
downs or commissions.

                             STOCK QUOTATIONS*

                                                  BID

Quarter ended:                          High                Low
--------------                          ----                ---
March 31, 2002                          $0.18               $0.11

June 30, 2002                           $0.15               $0.105

September 30, 2002                      $0.11               $0.05

December 31, 2002                       $0.065              $0.03

March 31, 2003                          $0.048              $0.025

June 30, 2003                           $0.03               $0.015

September 30, 2003                      $0.13               $0.021

December 31, 2003                       $0.09               $0.045

March 31, 2004                          $.085               $.055

June 30, 2004                           $.095               $.065

September 30, 2004                      $.08                $.05

December 31, 2004                       $.49                $.055

          *    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.

Recent Sales of Restricted Securities; Use of Proceeds of Registered
Securities.
-----------

     Restricted Securities.
     ----------------------

     The following "restricted securities" of our Company were sold during the
past three calendar years:

                         Number of
Name                   Shares or Units         Date            Consideration
----                   ---------------         ----            -------------
Five members of        530,000 (1)              11/2000-1/2002  Services
the Advisory Board

NB, Inc.               250,000 (2)              05/2001         Services

Laidlaw Global         327,194 (3)              05/2001         Warrant Ex
Securities, Inc.

Five subscribers       840,195 (3)              11/2001         Sub-Merger
from California
Corporation

Additional shares       70,030 (3)              11/2001         Sub-Merger
issued for acquisition
of subsidiary

Five members of         50,000 (1)              01/2002         Services
the Advisory Board

Five members of         50,000 (1)              04/2002         Services
the Advisory Board

Leonard W. Burningham  500,000                  05/2002-09/2002 Services
Esq. (4)

Marketview Financial   310,000                  06/2002         Services
Group, Inc. (2)

Medical Advisory Board  37,500                  08/2002         Services
(1)

Ascendiant Capital   2,000,000                  11/2002         Services
(2)

M E Dancy & Associates 500,000                  12/2002         Services
(2)

David E. Nelson        100,000                  12/2002         Services
(5)

SCS, Inc.              540,000                  12/2002         Services

Medical Advisory Board  37,500                  12/2002         Services
(1)

Leonard W. Burningham  525,000                  01/2003-03/2003 Services
Esq. (4)

Jason Carter           100,000                  01/2003         Services
(6)

National Financial   1,063,369                  2/2003          Services
Communications Corp
(2)

Medical Advisory Board  37,500                  3/2003          Services
(1)

SCS, Inc.            1,000,000                  6/2003          Debt Ret.

Medical Advisory Board  37,500                  6/2003          Services
(1)

SCS, Inc.            1,000,000                  6/2003          Debt Ret.

Medical Advisory Board  37,500                  9/2003          Services
(1)

Leonard W. Burningham, 500,000                 10/2003          Services
Esq. (4)

Medical Advisory Board  37,500                 12/2003          Services
(1)

Leonard W. Burningham, 500,000                  9/2004          Services
Esq. (7)

Seven (7) persons
and/or entities (8)   2,800,000                 9/2004          Services

Nine (9) persons
and/or entities (9)     773,902                 9/2004      Conversion of
                                                            Convertible Notes

Ascendiant Capital
Group LLC (10)          228,666                 9/2004      Conversion of Debt


Thomas C. Drees,
Ph.D. (11)           31,604,000                9/2004      Conversion of Debt


Anthony & Audrey
Hargreaves Trust (12)   924,600                9/2004      Conversion of Debt


          (1) See the caption "Executive Compensation" of the Registration
Statement.

          (2) Miscellaneous public relations services.

          (3) Issued in connection with the acquisition of the remaining 6%
interest in our 94%-owned subsidiary, Sanguine California.

          (4) Legal Services.

          (5) Services as our Secretary/Treasurer and CFO.

          (6) Stock transfer services.

          (7) These shares were valued at $40,000.

          (8) These shares were valued at $242,034.11.

          (9) 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 97,102 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 to 676,800 shares of common stock of our Company.

         (10) 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 30,000 shares of common stock of our
Company that are "restricted securities" under Rule 144 of the Securities and
Exchange Commission.

          (11) 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 31,604,000 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.

          (12) 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
924,600 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.

          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, 2004, totaled $329,240.48.  Approximately $30,000 of these
proceeds were utilized to pay a contractor that assisted us in the development
of our PHER-02 surfactant; an additional $8,815.93 was utilized for accounting
costs; $15,753.03 was paid in attorney's fees; and another $1,213.27 went to
pay for the subscriptions, Business Wire fees and bank charges.

     The remaining funds have been deposited into our savings and checking
accounts, and will be utilized for day to day expenses and our planned FDA
application process regarding PHER-02 through Beckloff.

Holders.
--------

     The number of record holders of our common stock as of March 29, 2005,
was approximately 568.

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, 2004.

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.

Compensation Pursuant to Plans.
-------------------------------

                    Equity Compensation Plan Information
                    ------------------------------------
<TABLE>
<CAPTION>

            Number of                                  Number of securities
            securities                                 remaining available
            to be issued                               for future issuance
            upon exercise       Weighted-average       under equity
            of outstanding      exercise price of      compensation plans
Plan        options, warrants   outstanding options,   excluding securities
category    and rights          warrants and rights    reflected in column (a)
--------    ----------          -------------------    -----------------------
<S>         <C>                 <C>                    <C>

               (a)                      (b)                      (c)

Equity
compen-
sation
plans          -0-                      -0-                      -0-
approved
by
security
holders

Equity
compen-
sation
plans not      3,125,000                .037                  4,375,000
approved
by
security
holders

Total          3,125,000                                      4,375,000

</TABLE>

Item 6.  Management's Discussion and Analysis or Plan of Operation.
         ----------------------------------------------------------

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

General.
--------

     We have not commenced planned principal operations, but have made good
progress since the end of fiscal 2001,in formulation and stability testing.

     In January, 2001, we were successful in developing improved
formulations of our surfactants for PHER-02.

     Our proposed plan of operation is composed of three "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:

          Stage A (approximately one year): In the first six months, we
          have completed the development of perfluoro-decalin and
          the synthetic surfactants that make up PHER-O2, manufactured
          experimental doses and have performed preliminary animal tests in
          accordance with FDA and overseas regulations.  In the second six
          months, we will produce optimal quantities and conduct animal
          safety and efficacy trials 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 employees.  Estimated cost is not to exceed $500,000,
          divided as follows: Completed surfactant formulation (done) and the
          manufacture of sufficient product for initial testing, (done);
          animal safety and efficacy trials through a sub-contractor, (done);
          and administrative, patent and proprietary right protection and
          marketing costs, $400,000 (in process).


          Stage B (approximately one year [in process): In the second year, we
          intend to prepare New Drug Applications for FDA and selected foreign
          governmental approvals.  During the course of Stage B, we estimate
          that we will need to hire a few additional employees.  Estimated
          cost is $5,000,000, divided as follows: Prepare and file United
          States, European, Chinese and South American New Drug Applications,
          $600,000; conduct human safety and efficacy trials through a
          subcontractor in the United States and overseas, $3,200,000; set-up
          pilot facility, or subcontract, to manufacture small quantities of
          PHER-O2 for use in testing and in connection with the New Drug
          Applications, $500,000; submit license applications for use of
          PHER-O2 in transfusions overseas, $200,000; and administrative,
          patent and proprietary right protection and marketing costs,
          $500,000.

          Stage C (approximately one year): In the third year, we plan to
          complete overseas testing of PHER-O2, begin sales in Europe, China,
          and South America and other overseas areas that may have approved
          PHER-O2 by this time and may begin construction of facility for
          manufacturing, storing, inspecting and shipping PHER-O2. During the
          course of Stage C, we estimate that we will need to hire additional
          employees.  During the third year, we plan to complete testing of
          PHER-O2 in the United States and receive all necessary FDA approvals
          and begin American, South American, Chinese and Canadian sales for
          cancer treatment and angioplasty.  During this period, we also plan
          to subcontract this process, and continue trials of other PHER-O2
          applications, including transplant organ preservation and treatment
          of carbon monoxide poisoning, sickle cell anemia, stroke and heart
          attack.  The estimated cost for Stage C is $25,000,000, divided as
          follows:  Complete human safety and efficacy clinical trials and
          obtain United States and overseas agency approval of PHER-O2,
          $13,000,000; subcontract with major emulsifying firm, $5,000,000;
          recruit and train sales force of the United States and foreign
          markets, $5,000,000; and administrative, patent and proprietary
          right protection and marketing costs, $2,000,000.

     These cost estimates are based upon the prior experience of Thomas C.
Drees, Ph.D., our President and CEO.  Dr. Drees has more than 30 years'
experience in the blood industry.

     Our plan of operation for the next 12 months is to complete the
preparation and submission of the U.S. FDA Investigational New Drug
Application (IND) to support PHER-02 as a synthetic oxygen carrying product or
blood substitute; which will include:

     *    A Gap Analysis for the U.S. IND, meaning a Non-clinical Assessment,
a Clinical Assessment and a Chemistry, Manufacturing and Controls Assessment
(CMC), preparation for an attendance at a Pre-IND meeting with the FDA, and
preparation of a pre-IND briefing document to determine our progress towards
the U.S. IND, with the aid and assistance of Beckloff; and

     *    A Clinical Program and Study Design(s), meaning clinical experts
will be utilized for assessment as well as attendance in the Pre-IND meeting,
(if requested, with the aid and assistance of Beckloff.

     Our ability to carry out our plan depends entirely upon our ability to
obtain additional substantial equity, debt financing or royalties.  We can not
assure you that we will receive this financing, and except for the possibility
of receiving funds from the exercise of our outstanding warrants, we do not
have any arrangements that would ensure us any funding.  If we do not receive
it, we will not be able to proceed with our business plans.

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

     Revenues for the calendar years ending December 31, 2004 and 2003 were
$15,424 and $9,756, respectively.  We had no material operations, except the
research and development activities related to our subcontracted research and
development of our product.

     We realized a net gain of $907,725, with a gain of $0.01 per share
during the calendar year ended December 31, 2004, and a net loss of
$(324,531), with a loss of $(.01) per share for the year ending
December 31, 2003.  Most of our expense related to the value of equity
securities issued by us for services rendered.

     Our research and development expenses were $14,823 in 2004, compared to
$63,000 in 2003.  The decrease in 2004 was principally the result of our
limited capital resources.

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

     As of December 31, 2004, we had $304,103 in cash, with $46,198 in
current liabilities.

     During the calendar year ended December 31, 2004, we had net expenses of
$454,004, while receiving $15,424 in revenues.  We received $9,756 in
revenues, and had total expenses of $267,286 during the calendar year ended
December 31, 2003.  Most of these expenses related to the value of equity
securities issued by us for services rendered.

     Cash resources at December 31, 2004 and 2003 were $304,103 and $1,973,
respectively.  Liquidity during 2004 was provided by warrant exercises that
resulted in the issuance of 3,241,131 shares for an aggregate gross proceeds
of $329,290.48; subsequent to December 31, 2004, additional warrant exercises
resulted in the issuance of 993,254 shares for an aggregate gross proceeds of
$79,410.32.

Forward Looking Statements.
---------------------------

     Statements made in this Form 10-KSB 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 7.  Financial Statements.
         ---------------------

<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A DEVELOPMENT STAGE COMPANY)

                CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2004
<PAGE>







                         C O N T E N T S


Independent Auditors' Report . . . . . . . . . . . . . . .  F - 3

Consolidated Balance Sheet . . . . . . . . . . . . . . . .  F - 4

Consolidated Statements of Operations. . . . . . . . . . .  F - 5

Consolidated Statements of Stockholders' Equity  . . . . . .F - 6

Consolidated Statements of Cash Flows. . . . . . . . . . . F - 12

Notes to the Consolidated Financial Statements . . . . . . F - 14

<PAGE>






                   INDEPENDENT AUDITORS' REPORT

Board of Directors
Sanguine Corporation and Subsidiary
Pasadena, California

We have audited the accompanying balance sheet of Sanguine Corporation and
Subsidiary (a development stage company) as of December 31, 2004 and the
related statements of operations, stockholders' deficit and cash flows for the
years ended December 31, 2004 and 2003 and from inception of the development
stage on January 18, 1990 through December 31, 2004. These consolidated
financial statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with 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
consolidated financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall consolidated 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, 2004, and the results of their
operations and their cash flows for the years ended December 31, 2004 and 2003
and for the period from inception of the development stage January 18, 1990
through December 31, 2004, in conformity with United States generally accepted
accounting principles.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern.  As discussed in Note 7 to the
consolidated financial statements, the Company has incurred significant losses
which have resulted in an accumulated deficit which raises substantial doubt
about their ability to continue as a going concern.  Management's plans in
regard to these matters are also described in Note 7.  The consolidated
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 15, 2005
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
                   Consolidated Balance Sheets

                              ASSETS

                                                             December 31,
                                                                2004

CURRENT ASSETS

 Cash                                                        $    304,103
                                                             ------------
  Total Current Assets                                            304,103

PROPERTY AND EQUIPMENT, NET (Note 1)                                    -
                                                             ------------
  TOTAL ASSETS                                               $    304,103
                                                             ============

              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

 Related party payables (Note 3)                              $     4,000
 Accounts payable                                                  32,073
 Accrued compensation (Note 4)                                     10,125
                                                              -----------
  Total Current Liabilities                                        46,198
                                                              -----------
COMMITMENTS AND CONTINGENCIES (Note 4)

STOCKHOLDERS' EQUITY

 Common stock: 100,000,000 shares authorized of
  $0.001 par value, 78,942,904 shares issued and
  outstanding                                                      78,943
 Additional paid-in capital                                     5,517,066
 Deficit accumulated during the development stage              (5,338,104)
                                                              -----------
  Total Stockholders' Equity                                      257,905
                                                              -----------
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $   304,103
                                                              ===========

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-4
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
              Consolidated Statements of Operations

                                                             From Inception of
                                                              the Development
                                                                    Stage
                                                               on January 18,
                                       For the Years Ended      1990 Through
                                         December 31,           December 31,
                                     2004           2003            2004

REVENUE                            $   15,424    $   9,756      $    175,180

OPERATING EXPENSES

 Professional fees                    357,578       97,543         2,665,223
 Research and development              14,823       63,000         1,356,970
 Selling, general and administrative   81,603      106,743         2,338,585
                                   ----------    ---------      ------------
  Total Operating Expenses            454,004      267,286         6,360,778
                                   ----------    ---------      ------------
LOSS FROM OPERATIONS                 (438,580)    (257,530)       (6,185,598)
                                   ----------    ---------      ------------
OTHER INCOME (EXPENSE)

 Interest income                          616            -            28,073
 Interest expense                    (103,814)    (138,142)         (667,466)
 Loss on cash deposit                       -            -           (10,020)
 Gain (Loss) on settlement of debt  1,449,503       71,141         1,496,907
                                   ----------    ---------      ------------
  Total Other Income (Expense)      1,346,305      (67,001)          847,494
                                   ----------    ---------      ------------

NET INCOME (LOSS)                  $  907,725    $(324,531)     $ (5,338,104)
                                   ==========    =========      ============
BASIC INCOME (LOSS) PER SHARE      $     0.02    $   (0.01)
                                   ==========    =========
DILUTED INCOME PER SHARE           $     0.02    $    0.00
                                   ==========    =========
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING BASIC AND DILUTED      48,807,880   37,470,947
                                   ==========   ==========

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-5
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Equity

                                                                     Deficit
                                                        Expenses   Accumulated
                                            Additional Prepaid with During the
                              Common Stock     Paid In   Common    Development
                           Shares     Amount   Capital    Stock       Stage
Balance, January 18, 1990
Retroactive restated     1,428,364 $ 1,428 $2,423,214   $     -   ($2,464,642)

Net income from
January 1, 1990 through
January 1, 1991                  -       -          -         -        73,917
                         --------- ------- ----------   -------  ------------
Balance, December 31,
1991                     1,428,364   1,428  2,423,214         -    (2,390,725)

Common stock issued for
services provided at
$0.001 per share             2,720       2          -         -             -

Contributed capital by
officer                          -       -        750         -             -

Net loss for the year
ended December 31,
1992                             -       -          -         -       (77,011)
                         --------- ------- ----------   -------  ------------
Balance, December 31,
1992                     1,431,084   1,430  2,423,964         -    (2,467,736)

Common stock issued to
acquire 94% of outstanding
Stock of Sanguine
Corporation             14,589,775  14,590          -         -       (14,590)

Common stock for cash
at $0.22 per share         510,000     510    109,490         -             -

Net loss for the year
ended December 31,
1993                             -       -          -         -       (92,895)
                        ----------  ------  ---------   -------  ------------
Balance, December 31,
1993                    16,530,859 $16,530 $2,533,454   $     -  $ (2,575,221)
                        ----------  ------  ---------   -------  ------------
The accompanying notes are an integral part of these consolidated financial
statements.
                               F-6
<PAGE>
                       SANGUINE CORPORATION
                  (A Development Stage Company)
           Statements of Stockholders' Equity (Continued)
                                                                     Deficit
                                                        Expenses   Accumulated
                                            Additional Prepaid with During the
                              Common Stock     Paid In   Common    Development
                           Shares     Amount   Capital    Stock       Stage
Balance, December 31,
1993                    16,530,859 $16,530 $2,533,454         -  $ (2,575,221)

Quasi-reorganization             -       - (2,423,964)        -     2,423,964

Common stock for cash
at $0.39 per share         191,000     191     74,809         -             -

Net loss for the year
ended December 31, 1994          -       -          -         -      (230,779)
                        ----------  ------  ---------   -------  ------------
Balance, December 31,
1994                    16,721,859  16,721    184,299         -      (382,036)

Common stock issued for
debt and payables at
$0.11 per share          1,216,000   1,216    128,048         -             -

Common stock issued for
services at $0.13 per
share                    1,625,000   1,625    201,500         -             -

Net loss for the year
ended December 31, 1995          -       -          -         -      (366,843)
                        ----------  ------  ---------  --------  ------------
Balance, December 31,
1995                    19,562,859  19,562    513,847         -      (748,879)

Common stock issued for
Cash at $0.25 per share     10,000      10      2,490         -             -

Common stock issued for
debt and payables at
$0.25 per share            325,506     326     80,605         -             -

Common stock issued for
services at $0.001 per
share                      979,358     979          -           -           -

Net loss for the year
ended December 31, 1996          -       -          -           -    (210,017)
                        ----------  ------   --------     -------  ----------
Balance, December 31,
1996                    20,877,723  20,877    596,942           -    (958,896)

Common stock issued
for services at $0.09
per share                  100,000     100      9,234           -           -

Net loss for the year
ended December 31, 1997          -       -          -           -    (166,212)
                        ----------  ------  ---------     -------  ----------
Balance, December 31,
1997                    20,977,723 $20,977  $ 606,176     $     - $(1,125,108)
                        ---------- -------  ---------     ------- -----------

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-7
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
          Statements of Stockholders' Equity (Continued)
                                                                     Deficit
                                                        Expenses   Accumulated
                                            Additional Prepaid with During the
                              Common Stock     Paid In   Common    Development
                           Shares     Amount   Capital    Stock       Stage
Balance, December 31,
1997                    20,977,723 $20,977  $ 606,176     $     - $(1,125,108)

Common stock issued for
cash $0.10 per share     1,218,000   1,218    120,982           -           -

Common stock issued for
debt and payables $0.22
per share                  240,000     240     52,887           -           -

Common stock issued for
services at $0.12 per
share                      674,494     675     77,952           -           -

Shares canceled           (100,000)   (100)       100           -           -

Net loss for the year ended
December 31, 1998                -       -          -           -    (366,439)
                        ---------- -------  ---------     ------- -----------
Balance, December 31,
1998                    23,010,217  23,010    858,097           -  (1,491,547)

Common stock issued for
cash $0.18 per share        52,777      53      9,447           -           -
Common stock issued for
services $0.10 per share   100,000     100      9,900           -           -

Net loss for the year ended
December 31, 1999                -       -          -           -    (217,864)
                        ---------- -------  ---------     -------  ----------
Balance, December 31,
1999                    23,162,994  23,163    877,444           -  (1,709,411)

Common stock issued for
cash at $0.19 per share  3,318,269   3,318    632,002           -           -

Common stock issued for
services at $0.26 per
share                    1,629,925   1,630    427,370           -           -

Net loss for the year ended
December 31, 2000                -       -          -           -  (1,444,616)
                        ---------- ------- ----------     ------- -----------
Balance at December 31,
2000                    28,111,188  28,111  1,936,816           -  (3,154,027)

Common stock issued for
services at $0.25 per
share                      125,000     126     31,125           -           -

Common stock issued for
services at $0.23 per
share                       75,000      75     17,175           -           -
                        ---------- ------- ----------     ------- -----------
Balance Forward         28,311,188 $28,312 $1,985,116     $     - $(3,154,027)
                        ---------- ------- ----------     ------- -----------

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-8
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
         Statements of Stockholders' Equity (Continued)
                                                                     Deficit
                                                        Expenses   Accumulated
                                            Additional Prepaid with During the
                              Common Stock     Paid In   Common    Development
                           Shares     Amount   Capital    Stock       Stage
Balance Forward         28,311,188 $28,312 $1,985,116     $     - $(3,154,027)

Common stock issued for
services at $0.13 per
share                      825,000     825    103,125           -           -

Common stock issued for
services at $0.17 per
share                       50,000      50      8,500           -           -

Common stock issued for
prepaid services at $0.23
per share                  250,000     250     57,250     (57,500)          -

Common stock issued for
commission of private
placement of common
stock                      327,194     327       (327)          -           -

Common stock issued for
acquisition of subsidiary
stock held by minority
shareholders               840,195     840       (840)          -           -

Amortization of prepaid
expenses                         -       -          -      43,125           -

Net loss for the year
ended December 31, 2001          -       -          -           -  (1,037,570)
                        ---------- ------- ----------     ------- -----------
Balance, December 31,
2001                    30,603,577  30,604  2,152,824     (14,375) (4,191,597)

Additional common stock
issued for acquisition
of subsidiary stock held
by minority shareholders
in prior year               70,030      70        (70)          -           -

Common stock issued for
services at $0.06 and
$0.16 per share          1,615,000   1,615     57,122           -           -

Warrants issued for
services                         -       -    989,956           -           -

Common stock issued for
prepaid services at
$0.06 per share          1,700,000   1,700     94,810     (96,510)          -
                        ---------- ------- ----------    -------- -----------
Balance Forward         33,988,607 $33,989 $3,294,642   $(110,885)$(4,191,597)
                        ---------- ------- ----------    -------- -----------

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-9
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
         Statements of Stockholders' Equity (Continued)
                                                                     Deficit
                                                        Expenses   Accumulated
                                            Additional Prepaid with During the
                              Common Stock     Paid In   Common    Development
                           Shares     Amount   Capital    Stock       Stage
Balance Forward         33,988,607 $33,989 $3,294,642   $(110,885)$(4,191,597)

Common stock issued for
cash less warrants
exercised at $0.06-$0.13
per share                  500,000     500    103,125           -           -

Common stock issued for
exercise of warrants for
cash at $0.08 per share    310,000     310     24,490           -           -

Amortization of prepaid
expenses                         -       -          -      14,375           -

Net loss for the year
ended December 31, 2002          -       -          -           -  (1,729,701)
                        ---------- ------- ----------   --------- -----------
Balance, December 31,
2002                    34,798,607  34,799  3,422,257     (96,510) (5,921,298)

Common stock issued for
cash-less option
exercise at $0.03 and
$0.04 per share for
services and prepaid
services                   625,000     625     23,375     (19,231)          -

Common stock issued for
services at $0.03-$0.11
per share                  150,000     150      9,038           -           -

Common stock issued for
debt at $0.03 and $0.02
per share                2,063,369   2,063     52,964           -           -

Common stock issued for
debt and prepaid
expenses at $0.08 per
share                    1,000,000   1,000     79,000     (62,943)          -

Amortization of prepaid
expenses                         -       -          -     115,741           -

Net loss for the year
ended December 31, 2003          -       -          -           -    (324,531)
                        ---------- ------- ----------   --------- -----------
Balance, December 31,
2003                    38,636,976 $38,637 $3,586,634   $ (62,943)$(6,245,829)
                        ---------- ------- ----------   --------- -----------


The accompanying notes are an integral part of these consolidated financial
statements.
                               F-10
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
         Statements of Stockholders' Equity (Continued)
                                                                     Deficit
                                                        Expenses   Accumulated
                                            Additional Prepaid with During the
                              Common Stock     Paid In   Common    Development
                           Shares     Amount   Capital    Stock       Stage
Balance Forward         38,636,976 $38,637 $3,586,634   $ (62,943)$(6,245,829)

Common stock issued for
cash-less option
exercise at $0.06 and
$0.08 per share for
services                 3,528,666   3,529    246,192           -           -

Common stock issued for
services at $0.26
per share                  150,000     150     38,850           -           -

Common stock issued for
debt at $0.04 and $0.07
per share               33,302,502  33,302  1,319,425           -           -

Common stock issued for
Cash at $0.08-$0.15
per share                3,241,131   3,241    326,049           -           -

Common stock issued for
Cash-less warrant exercise
at  $0.28 per share         83,629      84        (84)          -           -

Net income for the year
ended December 31, 2004          -       -          -           -     907,725
                       ----------- ------- ----------  ----------  ----------
Balance,
December 31, 2004       78,942,904 $78,943 $5,517,066  $  (62,943)$(5,338,104)
                       =========== ======= ==========  ========== ===========


The accompanying notes are an integral part of these consolidated financial
statements.
                               F-11
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
              Consolidated Statements of Cash Flows


                                                             From Inception of
                                                              the Development
                                                                    Stage
                                                               on January 18,
                                       For the Years Ended      1990 Through
                                         December 31,           December 31,
                                     2004           2003            2004
CASH FLOWS FROM OPERATING ACTIVITIES:

 Net income (loss)                  $   907,725  $ (324,531)     $ (5,338,104)
 Adjustments to reconcile net loss
 to net cash used by operating
 activities:
  Depreciation and amortization               -           -             4,609
  Common stock issued for services      268,884      13,956         2,434,211
  Interest on beneficial conversion
  feature                                     -           -            25,000
  Legal expense related to beneficial
  conversion feature                          -           -             3,750
  Note payable issued for services            -           -           727,950
  (Gain) Loss on extinguishments of
  debt                                  (51,422)    (71,141)          (98,826)
  Gain on conversion of debt to
  equity                             (1,398,081)          -        (1,398,081)
  Recognition of prepaid expenses and
  expenses prepaid with common stock     62,943     115,741           456,184
 Changes in assets and liabilities:
  Increase in accounts payable and
  related party payables                  7,459       8,066           350,661
  Increase in accrued interest payable  103,814     139,289           547,279
  Increase in accrued liabilities         7,756           -            10,125
  Increase in customer deposits          45,000           -            45,000
  Increase in accrued salaries                -      96,000           844,000
                                       --------  ----------    --------------
   Net Cash Used by Operating
   Activities                           (45,922)    (22,620)       (1,386,242)

CASH FLOWS FROM INVESTING ACTIVITIES

 Cash paid for fixed assets                   -           -            (4,609)
                                       --------  ----------    --------------
   Net Cash Used by Investing
   Activities                                 -           -            (4,609)
                                       --------  ----------    --------------
CASH FLOWS FROM FINANCING ACTIVITIES

 Proceeds from warrant conversion       329,290           -           329,290
 Proceeds from notes payable and notes
 payable-related party                   18,762      24,000           212,139
 Payments on notes payable and notes
 payable related party                        -        (800)           (9,400)
 Proceeds from issuance of convertible
 debentures                                   -           -            40,000
 Contributed capital                          -           -               750
 Common stock issued for cash                 -           -         1,122,175
                                       --------  ----------    --------------
  Net Cash Provided by Financing
  Activities                            348,052      23,200         1,694,954
                                       --------  ----------    --------------
NET INCREASE (DECREASE) IN CASH         302,130         580           304,103

CASH AT BEGINNING OF YEAR                 1,973       1,393                 -
                                       --------  ----------    --------------
CASH AT END OF YEAR                    $304,103  $    1,973    $      304,103
                                       ========  ==========    ==============

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-12
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Cash Flows (Continued)


                                                             From Inception of
                                                              the Development
                                                                    Stage
                                                               on January 18,
                                       For the Years Ended      1990 Through
                                         December 31,           December 31,
                                     2004           2003            2004
SUPPLEMENTAL SCHEDULE OF CASH FLOW
ACTIVITIES

CASH PAID FOR:

  Interest                          $       -       $       -      $        -
  Income taxes                      $       -       $       -      $        -

NON-CASH FINANCING ACTIVITIES

  Common stock issued for services
  rendered                          $  268,884      $  13,956      $2,434,211
  Interest on beneficial conversion
  feature                           $        -      $       -      $   25,000
  Legal expense related to beneficial
  conversion feature                $        -      $       -      $    3,750
  Notes payable issued for services $        -      $       -      $  727,950
  Common stock issued for prepaid
  services                          $        -      $  82,174      $  236,284
  Common stock issued for debt      $2,822,067      $       -      $2,822,067

The accompanying notes are an integral part of these consolidated financial
statements.
                               F-13

<PAGE>
                       SANGUINE CORPORATION
                  (A Development Stage Company)
                Notes to the Financial Statements
                    December 31, 2004 and 2003

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 synthetic red blood cells to be
     used by the medical profession.  The Company is conducting research and
     development leading to F.D.A. clinical trials.

     On June 14, 1993, the Company entered into an Agreement and Plan of
     Reorganization, wherein it was agreed that Sanguine Corporation (a
     Nevada Corporation) would issue 14,589,775 shares of its common stock to
     acquire 94% of the issued and outstanding shares of stock of Sanguine
     Corporation (a California Corporation).  During the year ended December
     31, 2001, the Company acquired the remaining 6% of the California
     Corporation in exchange for the issuance of 840,195 shares of common
     stock.

     From 1974 to 1980, the Company engaged in several business ventures.
     These business activities resulted in the loss of all Company assets.
     Because of the search for a new business venture, the Company has
     entered into the "development stage company" status again.  The Company
     is a development stage company and these financial statements are
     presented as those of a development stage company effective January 18,
     1990, coinciding with the incorporation date of Sanguine Corporation.

     b.  Accounting Method

     The Company's financial statements are prepared using the
     accrual method of accounting.  The Company has elected a December 31
     year-end.

                               F-14
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     (Continued)

     c.  Basic and Diluted Income (Loss) Per Share

     The computation of basic inome (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,
                                        2004                  2003

     Loss/Income (numerator)       $      907,725          $      (324,531)
     Shares (denominator)              40,051,302               37,470,947
     Per share amount              $         0.02          $         (0.01)


     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 Year
                                       Ended
                                     December 31,
                                        2004

     Loss/Income (numerator)       $      907,725
     Shares (denominator)              48,807,880
     Per share amount              $         0.02

     The Company's outstanding stock options have been excluded from the
     basic net loss per share calculation for December 31, 2003 as they are
     anti-dilutive.

     d.  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-15
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     (Continued)

     e.  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.

     Net deferred tax assets consist of the following components as of
     December 31, 2004 and 2003:


                                          2004                2003

     Deferred tax assets:
          NOL Carryover            $      876,960      $    1,412,065
          Accrued Officer Salary                -              51,115
          Related Party Interest                -             329,160
                                   --------------      --------------
                                                -           1,792,340
          Deferred tax liabilities:
          Valuation allowance      $     (876,960)     $   (1,792,340)
                                   --------------      --------------
          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, 2004 and 2003 due to the following:

                               F-16
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                 Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     (Continued)

     e.  Income Taxes (Continued)

                                                    2004            2003
          Book Income                        $     370,703     $ (126,605)
          NOL carryforward                        (535,105)             -
          Accrued Interest                               -          1,355
          Accrued Salaries                               -         37,440
          Stock for Services/Options Expense       164,402         50,585
          Other                                          -            (40)
          Valuation Allowance                            -         37,265
                                              ------------     ----------
                                              $          -     $        -
                                              ============     ==========

     At December 31, 2004, the Company had net operating loss carryforwards
     of approximately $2,200,000 that may be offset against future taxable
     income from the year 2004 through 2024.  No tax benefit has been
     reported in the December 31, 2004 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.  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.

     g.  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.  As of December 31, 2004,
     all property and equipment was fully depreciated.

                               F-17
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     (Continued)

     h. Revenue Recognition

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

     i.  Newly Adopted Accounting Pronouncements

     On December 16, 2004 the FASB issued SFAS No. 123(R), Share-Based
     Payment, which is an amendment to SFAS No. 123, Accounting for Stock-
     Based Compensation.  This new standard eliminates the ability to account
     for share-based compensation transactions using Accounting Principles
     Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees,
     and generally requires such transactions to be accounted for using a
     fair-value-based method and the resulting cost recognized in our
     financial statements.  This new standard is effective for awards that
     are granted, modified or settled in cash in interim and annual periods
     beginning after June 15, 2005.  In addition, this new standard will
     apply to unvested options granted prior to the effective date.  We will
     adopt this new standard effective for the fourth fiscal quarter of 2005,
     and have not yet determined what impact this standard will have on our
     financial position or results of operations.

     In November 2004, the FASB issued SFAS No. 151, Inventory Costs - an
     amendment of ARB No. 43, Chapter 4. This Statement amends the guidance
     in ARB No. 43, Chapter 4, "Inventory Pricing," to clarify the accounting
     for abnormal amounts of idle facility expense, freight, handling costs,
     and wasted material (spoilage). Paragraph 5 of ARB 43, Chapter 4,
     previously stated that ". . . under some circumstances, items such as
     idle facility expense, excessive spoilage, double freight, and
     rehandling costs may be so abnormal as to require treatment as current
     period charges. . . ." This Statement requires that those items be
     recognized as current-period charges regardless of whether they meet the
     criterion of "so abnormal." In addition, this Statement requires that
     allocation of fixed production overheads to the costs of conversion be
     based on the normal capacity of the production facilities. This
     statement is effective for inventory costs incurred during fiscal years
     beginning after June 15, 2005. Management does not believe the adoption
     of this Statement will have any immediate material impact on the
     Company.

                               F-18
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                 Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     (Continued)

     i.  Newly Adopted Accounting Pronouncements (Continued)

     In December 2004, the FASB issued SFAS No. 152, Accounting for Real
     Estate Time-sharing Transactions, which amends FASB statement No. 66,
     Accounting for Sales of Real Estate, to reference the financial
     accounting and reporting guidance for real estate time-sharing
     transactions that is provided in AICPA Statement of Position (SOP) 04-2,
     Accounting for Real Estate Time-Sharing Transactions. This statement
     also amends FASB Statement No. 67, Accounting for Costs and Initial
     Rental Operations of Real Estate Projects, to state that the guidance
     for (a) incidental operations and (b) costs incurred to sell real estate
     projects does not apply to real estate time-sharing transactions. The
     accounting for those operations and costs is subject to the guidance in
     SOP 04-2. This Statement is effective for financial statements for
     fiscal years beginning after June 15, 2005. Management believes the
     adoption of this Statement will have no impact on the financial
     statements of the Company.

     In December 2004, the FASB issued SFAS No.153, Exchange of Nonmonetary
     Assets. This Statement addresses the measurement of exchanges of
     nonmonetary assets. The guidance in APB Opinion No. 29, Accounting for
     Nonmonetary Transactions, is based on the principle that exchanges of
     nonmonetary assets should be measured based on the fair value of the
     assets exchanged. The guidance in that Opinion, however, included
     certain exceptions to that principle. This Statement amends Opinion 29
     to eliminate the exception for nonmonetary exchanges of similar
     productive assets and replaces it with a general exception for exchanges
     of nonmonetary assets that do not have commercial substance. A
     nonmonetrary exchange has commercial substance if the future cash flows
     of the entity are expected to change significantly as a result of the
     exchange. This Statement is effective for financial statements for
     fiscal years beginning after June 15, 2005. Earlier application is
     permitted for nonmonetary asset exchanges incurred during fiscal years
     beginning after the date of this statement is issued.  Management
     believes the adoption of this Statement will have no impact on the
     financial statements of the Company.

     The implementation of the provisions of these pronouncements are not
     expected to have a significant effect on the Company's consolidated
     financial statement presentation.

     j.  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.


                               F-19
<PAGE>
                     SANGUINE CORPORATION
                  (A Development Stage Company)
                 Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     (Continued)

     k.  Stock Options

     As permitted by FASB Statement 148 "Accounting for Stock Based
     Compensation - Transition and Disclosure" (SFAS No. 148), the Company
     elected to measure and record compensation cost relative to employee
     stock option costs in accordance with Accounting Principles Board
     ("APB") Opinion 25, "Accounting for Stock Issued to Employees," and
     related interpretations and make proforma disclosures of net income and
     earnings per share as if the fair value method of valuing stock options
     had been applied.  Under APB opinion 25, compensation cost is recognized
     for stock options granted to employees when the option price is less
     that the market price of the underlying common stock on the date of
     grant.

     l.   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.

     m.  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.

NOTE 2 - MINORITY INTEREST

     Sanguine Corporation (California) had a total of 6,586,800 shares of its
     common stock issued and outstanding at June 14, 1993.  Pursuant to an
     Agreement and Plan of Reorganization, Sanguine Corporation (Nevada)
     acquired 6,200,000 of the issued and outstanding shares.  The remaining
     386,800 shares of minority interest in California Corporation
     represented approximately six percent (6%) of the Company's outstanding
     stock.  No provisions for minority interest has been made on the
     financial statements because of the losses incurred in prior periods and
     the stockholders' deficit of California.
                               F-20
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                 Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 2 - MINORITY INTEREST (Continued)

     In November 2001 Sanguine Corporation (Nevada) acquired the remaining
     386,800 shares of Sanguine Corporation (California) through the issuance
     of 840,195 shares of common stock.  As of that date, Sanguine Corporation
     (California) was dissolved and is operating as a foreign entity in
     California.

NOTE 3 - RELATED PARTY TRANSACTIONS, DEBT CANCELLATION, CONTRIBUTION AND STOCK
     ISSUANCES

     Related party payables at December 31, 2004 represents amounts owed to
     officers of the Company for reimbursement of expenses paid of $4,000.

     During the year ended December 31, 2004, the Company authorized the
     issuance of an aggregate of 32,777,266 shares of the Company's common
     stock for: (i) the cancellation of certain debts in the amount of
     $1,313,144, and (ii) the contribution to capital of accrued salary and
     interest on debt by members of management in the amount of $1,327,630. An
     additional 3,280,000 shares of common stock were authorized to be issued
     for services rendered to the Company. The issuance of these shares is
     reflected in these financial statements.

     In addition, two convertible notes payable in the aggregate amount of
     $28,750.00, plus accrued interest, were converted into 773,902 shares of
     common stock of the Company. The issuance of these shares is reflected in
     these financial statements.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

     During February 1994, the Company entered into a lease for office space
     in Pasadena, California.  The lease has been extended three times
     through April 2004 with monthly rent payments of $1,744 with annual
     increases.

     Future minimum lease payments under this non-cancelable operating lease
     are $7,364 through April 2004.  Currently the lease is on a month-to-
     month basis.

     Rent expense was $24,556 and $22,127 for the years ended December 31,
     2004 and 2003, 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 ("restricted securities") such compensation is to be paid
     quarterly.

     As of December 31, 2004, a total of $10,125 in salaries has been
     accrued.

                               F-21
<PAGE>
                     SANGUINE CORPORATION
                  (A Development Stage Company)
                Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 4 -  COMMITMENTS AND CONTINGENCIES (Continued)

     License Agreements

     During February and April, 2002, the Company entered into two 25 year
     exclusive license agreements with two entities by granting the exclusive
     license rights to its PHER-02 product and associated processes and
     technologies. These entities had been granted these exclusive licenses
     for Asia, including the People's Republic of China, Thailand, Laos,
     Cambodia, Vietnam, Singapore, Malaysia, Indonesia, North Korea, Burma,
     Mongolia and Taiwan; and one for South America.

     On September 29, 2004, we terminated Ascendiant-Asia's Exclusive License
     Agreement for failure to meet minimum production or to pay royalties due
     pursuant to the terms of that Exclusive License Agreement.  Also, on
     September 29, 2004, we terminated Ascendiant-South America's Exclusive
     License Agreement for failure to meet minimum production or to pay
     royalties due pursuant to the terms of that Exclusive License Agreement.

NOTE 5 -  COMMON STOCK TRANSACTIONS

     During the year ended December 31, 2003, the Company issued 150,000
     shares of common stock for services valued at $9,188; 1,000,000 shares
     issued for payables of $17,057 and prepaid services valued at $62,943;
     625,000 shares issued for cash-less option exercises valued at $24,000;
     and 1,063,369 shares issued for payables of $34,028 and gain on
     settlement of $25,972.

     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 6 - STOCK OPTIONS AND WARRANTS

     During January and March 2003, the Company issued options to purchase
     1,625,000 shares of common stock to non-employees for services.  The
     options were exercisable at $0.04 per share and were immediately
     exercised upon issuance in payment of services.  As the options were
     exercised immediately, no expense was recognized upon grant.

                               F-22
<PAGE>
                       SANGUINE CORPORATION
                  (A Development Stage Company)
                 Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 6 - STOCK OPTIONS AND WARRANTS (Continued)


     During February 2002, the Company entered into a consulting agreement
     which provides for the issuance of 300,000 warrants.  The consultant
     received 100,000 warrants upon signing the contract while the remaining
     200,000 warrants are contingent upon receipt of funding generated by the
     consultant.  The warrants are exercisable at a price of $0.125 per share
     and expire February 6, 2007.  As of December 31, 2002, no funding has
     been generated by the consultant and 100,000 warrants are issued and
     exercisable.  The Company recognized $11,252 in expense associated with
     the issuance of these warrants.

     During February 2002, the Company issued three warrants to purchase an
     aggregate of 3,000,000 shares of the Company's common stock to
     individuals related to an entity that received the exclusive license
     rights of the Company's PHER-02 product in Asia (See Note 4).  The
     warrants are exercisable at a price of $0.15 per share and expire
     February 21, 2005.  The warrants also have a call provision, which the
     Company can exercise and require the holders of the warrants to exercise
     their warrants if at any time the Company's common stock trades for an
     amount equal to or greater than $1.00 per share for 10 consecutive
     trading days.  The Company recognized $237,455 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 $0.08 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.

     During March 2002, the Company issued a warrant to an individual to
     acquire up to 500,000 shares of the Company' s common stock for
     services.  The exercise price of the warrant is the lower of 50% of the
     average bid price of the Company's common stock for the five trading days
     prior to the exercise of the warrant or $0.08 per share.  The warrant
     expires March 11, 2005.  The Company recognized $58,784 in expense
     associated with the issuance of these warrants.

                               F-23
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 6 -  STOCK OPTIONS AND WARRANTS (Continued)

     A summary of the status of the Company's outstanding stock options as of
     December 31, 2004 and 2003 and changes during the years then ended is
     presented below:


                                         2004                    2003
                                               Weighted               Weighted
                                                Average                Average
                                               Exercise               Exercise
                                  Shares         Price     Shares       Price
   Outstanding, beginning of
   year                        10,997,709  $ 0.15    10,997,709   $ 0.30
   Granted                              -       -     1,625,000     0.04
   Expired/Cancelled                    -       -             -        -
   Exercised                   (2,241,131)   0.08    (1,625,000)    0.04
                               ----------  ------    ----------   ------
   Outstanding end of year      8,756,578  $ 0.15    10,997,709   $ 0.15
                               ==========  ======    ==========   ======
   Exercisable                  8,756,578  $ 0.15    10,997,709   $ 0.15
                               ==========  ======    ==========   ======

                              Outstanding                   Exercisable

                                Weighted
                     Number      Average   Weighted   Number    Weighted
                 Outstanding    Remaining  Average  Exercisable  Average
       Range of  at December Contractual  Exercise at December Exercise
 Exercise Prices  31, 2004        Life     Price     31, 2004    Price

     $     0.13    470,642        2.23     $  0.13     470,642     $  0.13
           0.35  1,799,567         .16        0.35   1,799,567        0.35
      0.07-0.15  6,486,369         .90        0.10   6,486,369        0.10
     ----------  ---------       -----     -------   ---------     -------
     $0.07-0.35  8,756,758         .69     $  0.15   8,756,578     $  0.15
                ==========       =====     =======  ==========     =======

                               F-24
<PAGE>
                     SANGUINE CORPORATION
                  (A Development Stage Company)
                Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 7 -  GOING CONCERN

     The Company's financial statements are prepared using United States
     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
     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 $300,000 -
     $500,000 that should enable the Company to complete the animal 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.

NOTE 8 - PREPAID EXPENSES AND EXPENSES PREPAID WITH COMMON STOCK

       During December 2003, the Company issued 1,000,000 shares of common
       stock for debt and prepaid services valued at $80,000.

       During the years ended at December 31, 2004 and 2003, the Company
       recognized $62,943 and $115,741 of consulting expense related to
       these agreements, respectively.

NOTE 9 - EXTINGUISHMENT OF LIABILITIES

       During 2003, the Company wrote-off $45,169 in payables dating back to
       2000 and earlier for which the Company believes it no longer has any
       liability and for which the statue for collection has passed.
       Additionally, the Company recognized a total of $25,973 gain from
       extinguishments of payables through the issuance of common stock.
       The gain was calculated as the difference between the fair market
       value of the stock on the date of issue and the value of the debt
       extinguished.  The Company recognized a total of $71,142 at December
       31, 2003 in other income related to these extinguishments.

                               F-25
<PAGE>
                      SANGUINE CORPORATION
                  (A Development Stage Company)
                 Notes to the Financial Statements
                    December 31, 2004 and 2003

NOTE 9 - EXTINGUISHMENT OF LIABILITIES (Continued)

       During 2004, the Company extinguished various notes, accounts payable
       and accrued expenses (see Note 3).

       The Company recognized a total of $1,449,503 at December 31, 2004 in
       other income related to these extinguishments.


                               F-26
<PAGE>
Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
---------------------

     We changed accountants, from Tanner + Company, Inc. on December 11, 2003.
The new accounting firm is HJ Associates & Consultants, LLP.  For additional
information about our change of accountants, see our 8-K Current Report dated
December 11, 2003, as amended, which is incorporated herein by reference.  See
Part III, Item 13.

Item 8(a).  Controls and Procedures.
------------------------------------

     As of the end of the period covered by this Annual Report, we carried out
an evaluation, under the supervision and with the participation of our
President and Chief Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures.  Based on this
evaluation, our President and Chief Financial Officer concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information required to be included in our periodic Securities and
Exchange Commission reports.  It should be noted that the design of any system
of controls is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions, regardless
of how remote.  In addition, we reviewed our internal controls, and there have
been no significant changes in our internal controls or in other factors that
could significantly affect those controls subsequent to the date of their last
evaluation.

Item 8(b).  Other Information.
------------------------------

     None; not applicable.

                                 PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
--------------------------------------------------

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.

<TABLE>
<CAPTION>

Directors and Executive Officers.
---------------------------------

                                               Date of            Date of
                            Positions         Election or       Termination
  Name                      Held              Designation      or Resignation
  ----                      ----              -----------      --------------
<S>                         <C>                   <C>               <C>
Thomas C. Drees,            CEO                    6/93              *
Ph.D., MBA                  President              1/98              *
                            Chairman              11/95              *
                            Director               6/93              *

Anthony G. Hargreaves       Vice Chairman          9/00         6/2003 (Death)
                            Vice President         6/93         6/2003 (Death)
                            Secretary/             6/93         6/2003 (Death)
                            Treasurer              6/93         6/2003 (Death)
                            Director               6/93         6/2003 (Death)
                            Chief Financial        6/94             3/96
                            Officer

David E. Nelson, CPA        Director               3/96              *
                            Chief Financial        3/96              *
                            Officer
                            Secretary/Treasurer    6/03              *

Edward L. Kunkel, Esq.      Director               4/94              *

          *    These persons presently serve in the capacities
               indicated.
</TABLE>

Term of Office.
---------------

          The terms of office of the current directors shall continue until
the annual meeting of stockholders, which has been 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.
<TABLE>

Medical Advisory and Applications Board of Directors.
-----------------------------------------------------

                                               Date of          Date of
                            Positions         Election or      Termination
  Name                      Held              Designation      or Resignation
  ----                      ----              -----------      --------------
<S>                          <C>                  <C>               <C>

Craig Morrison, M.D.        Member               10/00               *

Leon Cass Terry, M.D.,      Member               10/00               *
Ph.D.

Herbert J. Meiselman,       Member               10/00               *
Sc.D.

Joseph P. O'Malley, M.D.    Member                6/01               *

Robert Kwun, M.D.           Member               12/04               *
</TABLE>

Business Experience.
--------------------

     Thomas C. Drees, Ph.D., MBA, Chairman, President, CEO and a Director. Dr.
Drees, age 76, 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 29 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 61, 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 57 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 62 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 63 years of age,
and joined the Medical College of Wisconsin as a Professor of Neurology and
Professor of Physiology in 1989, and has recently retired.  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 Institute of Health, various pharmaceutical companies,
philanthropic donations and others.  He has also conducted clinical trials in
various neurologic disorders.

     Herbert J. Meiselman, Sc.D., Advisory Board Member, is 64 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.

     Joseph P. O'Malley, M.D., Advisory Board Member, is 73 years of age.  Mr.
O'Malley graduated from Harvard Medical School, cum laude, served 25 years
with the National Institute of Health and the Federal Drug Administration and
15 years with the American Red Cross as Regulatory Head of blood services.

     Robert Kwun, M.D., Advisory Board Member, is 39 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.

Family Relationships.
---------------------

     There are no family relationships between any of our directors or
executive officers.

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.

Audit Committee.
----------------

     We do not have an audit committee separate from our Board of Directors
because of our present limited operations.

Code of Ethics.
---------------

     We have adopted a Code of Ethics which was attached as Exhibit 14 to our
2002 Annual Report on Form 10-KSB.  See Part III, Item 13.

Item 10. Executive Compensation.
         -----------------------

Cash Compensation.
------------------

     The following table shows the aggregate compensation that we have paid to
our directors and executive officers for services rendered during the periods
indicated:

<TABLE>
<CAPTION>
                    SUMMARY COMPENSATION TABLE


                           Long Term Compensation

                    Annual Compensation   Awards  Payouts

(a)             (b)   (c)   (d)   (e)   (f)   (g)   (h)    (i)

                                              Secur-
                                              ities        All
Name and   Year or               Other  Rest- Under- LTIP  Other
Principal  Period   Salary Bonus Annual rictedlying  Pay- Comp-
Position   Ended      ($)   ($)  Compen-Stock Optionsouts ensat'n
-----------------------------------------------------------------
<S>         <C>       <C>   <C>   <C>   <C>    <C>   <C>  <C>
Thomas C.
Drees, Ph.D,12/31/04    *     0     0     0      *     0   0
MBA, CEO,   12/31/03    *     0     0     0      0     0   0
President   12/31/02    *     0     0     0      0     0   0
and Chairman
of the Board

David E.
Nelson, CPA 12/31/04    0     0     0      0     *     0   0
CFO and     12/31/03    0     0     0      0     0     0   0
Director    12/31/02    0     0     0      0     0     0   0

Edward L.
Kunkel, Esq.12/31/04    0     0     0     0      *     0   0
Director    12/31/03    0     0     0     0      0     0   0
            12/31/02    0     0     0     0      0     0   0

</TABLE>

                *   Commencing with the quarter ended December 31, 2004,
                    members of our Board of Directors will be paid 12,500
                    shares of common stock per quarter for all services
                    rendered to us in lieu of an employment contracts.  See
                    Part III, Items 12 and 13, below.

Bonuses and Deferred Compensation.
----------------------------------

    See the heading "Employment Contracts and Termination of Employment and
Change-in-Control Arrangements" below.

Compensation Pursuant to Plans.
-------------------------------

     See the heading "Compensation of Directors" below.  Also see the heading
"Compensation Pursuant to Plans" in Part II, Item 5, above.

Pension Table.
--------------

     None; not applicable.

Other Compensation.
-------------------

     Other than as discussed below under the heading "Compensation of
Directors," we have no other compensation arrangements with any of our
directors or executive officers or our Advisory Board and Applications
members.

Compensation of Directors.
--------------------------

     In 2001, the Board of Directors authorized 25,000 shares of our common
stock that are "restricted securities" under Rule 144 to be issued per each
quarter of service for members of our Medical Advisory and Applications Board,
with the exception of Robert Kwun, M.D., who is to be paid 50,000 shares per
quarter, commencing in 2005.

     Commencing with the fourth quarter ended September 30, 2004, the Board of
Directors authorized 25,000 shares of our common stock that are "restricted
securities" under Rule 144 per each quarter of service for members of our
Board of Directors.

Employment Contracts.
---------------------

    Except as stated above, there are no employment arrangements with our
directors or executive officers.

Termination of Employment and Change of Control Arrangements.
-------------------------------------------------------------

     We have no special arrangements involving any change of control of our
company or termination of any director, executive officer or Medical Advisory
and Applications Board member.

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:
<TABLE>
<CAPTION>

                                            Date Report        Date Report
Filer                 Transaction               Due               Filed
-----                 -----------               ---               -----

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

S. C. S., Inc.        Acquisition of            12/01/03         05/12/04
                      1,000,000 shares

Edward L. Kunkel      Acquisition of            09/29/04         10/19/04
Esq.                    250,000 shares
Director

Thomas C. Drees       Acquisition of            09/29/04         10/19/04
Ph.D.                31,604,000 shares
Director and President

David E. Nelson       Acquisition of            09/29/04         10/19/04
CPA                     564,294 shares
Director, CFO,
Secretary/Treasurer

</TABLE>

Item 11. Security Ownership of Certain Beneficial Owners and Management.
         ---------------------------------------------------------------

     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 the date of the Annual Report:

                     DIRECTORS AND EXECUTIVE OFFICERS
                     --------------------------------

<TABLE>
<CAPTION>

                                         Number of Shares        Percent
Name and Address                        Beneficially Owned       of Class*
----------------                        ------------------       --------
<S>                                          <C>                   <C>

Thomas C. Drees, Ph.D., MBA                   40,203,133            50.2%
101 East Green Street, #11
Pasadena, California  91105

David E. Nelson, CPA                             454.294              .0056%
528 14th Avenue
Salt Lake City, Utah  84103

Edward L. Kunkel, Esq.                           250,000              .003%
16 N. Marengo Ave, #517
Pasadena, California  91103
                                               ---------            -----
All directors and officers as a group         40,907,427            51.1%
(three persons)
</TABLE>

               * Based upon 80,012,844 shares of outstanding common stock.

                         FIVE PERCENT STOCKHOLDERS
                         -------------------------

<TABLE>
<CAPTION>

                                         Number of Shares         Percent
Name and Address                        Beneficially Owned       of Class *
----------------                        ------------------       --------
<S>                                           <C>                   <C>
Thomas C. Drees, Ph.D., MBA                   40,203,133            50.2%
101 East Green Street, #11
Pasadena, California  91105
                                              ----------            -----
Total of all five percent                     40,203,133            50.2%
stockholders
</TABLE>

               * Based upon 80,012,844 shares of outstanding common stock.

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.

Item 12. Certain Relationships and Related Transactions.
         -----------------------------------------------

Transactions with Management and Others.
----------------------------------------

     An unsecured note payable to an officer of our Company (our President)
due on demand, payable through the issuance of 1,600,000 shares of common
stock as repayment for personally held shares of that officer that were issued
as payment of a Company obligation.  The face value of the note of $699,200
was based on the market price per share on the date of transfer by the
officer.  Interest was computed at 12% per annum.

     An unsecured note payable to an officer of our Company (our President),
due on demand, payable through issuance of 1,000,000 shares of common stock as
repayment for personally-held shares of that officer that were issued as
payment of a Company obligation.  The face value of the note of $220,000 was
based on the market price per share on the date of transfer by the officer.
Interest was computed at 12% per annum.

     Unsecured notes payable to an officer of our Company (our President) in
the amount of $198,943, due on demand, with interest at 12% per annum.

     Accrued interest on related party notes totaled $        at September 30,
2004, while interest expense on the related party notes totaled $          and
$131,059 for the years ended December 31, 2004 and 2003, respectively.

     Related party payables at December 21, 2003 includes amounts owed to an
officer (our President) of the Company for reimbursement of expenses paid of
$150,821.

     The foregoing debts and obligations were resolved during the year ended
December 31, 2004, as discussed below.

     Thomas C. Drees, Ph.D., MBA, our Company's President, CEO and a Director
agreed to exchange $1,264,160 of debt owed to him by us for 31,604,000 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
us in the amount of $453,630, together with any interest on any of these
amounts since June 30, 2004, effective September 29, 2004.

     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
924,600 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,
effective September 29, 2004.

     Except for the 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.

Certain Business Relationships.
-------------------------------

     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.

Indebtedness of Management.
---------------------------

     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.

Parents of the Issuer.
----------------------

     Except and to the extent that Dr. Drees may be deemed to be a parent
of our by virtue of his substantial stock ownership, we have no parents.

Transactions with Promoters.
----------------------------

     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 13. Exhibits and Reports on Form 8-K.
         ---------------------------------

Reports on Form 8-K.
--------------------

     See below, for Exhibits that are incorporated herein by reference.

Exhibits Incorporated by Reference.*
------------------------------------
          (i)
                                          Where Incorporated
                                            in this Report
                                            --------------

10-KSB for the fiscal year ended           Part I, Item 1
December 31, 2002.**

10-KSB for the fiscal year ended            Part I, Item 1
December 31, 2003.**

8-K/A Current Report dated                  Part II, Item 8
December 11, 2003.**

8-K Current Report dated                    Part I, Item 1 &
September 29, 2004.**                       Part III, Item 12

8-K Current Report dated                    Part I, Item 1
November 17, 2004.**

          (ii)

Exhibit
Number
Description
------               -----------
 23.1         Consent of HJ Associates & Consultants, LLP

 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.

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, 2004, and
December 31, 2003:

     Fee category                      2004           2003
     ------------                      ----           ----

     Audit fees                        $23,500        $6,149

     Audit-related fees                $     0        $    0

     Tax fees                          $     0        $    0

     All other fees                    $     0        $    0

     Total fees                        $23,500        $6,149

     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.

     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.

                                SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, this Report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated:

                                       SANGUINE CORPORATION




Date: 5/5/2005                       By /s/ Thomas C. Drees
      ---------------                    -------------------------------------
                                         Thomas C. Drees, Ph.D., MBA
                                         CEO, President and Chairman of the
                                         Board of Directors

Date: 5/5/2005                       By /s/ David E. Nelson
      ---------------                   -------------------------------------
                                        David E. Nelson, CPA
                                        CFO and Director
<PAGE>


Exhibit 23.1

HJ Associates and Consultants, LLP [Letterhead]

             Consent of Independent Public Accountants


The Board of Directors
Sanguine Corporation

We consent to the incorporation by reference in the registration statement No.
333-102389 on Form S-8 of Sanguine Corporation filed on January 7, 2003, and
in the registration statement No. 333-87140 on Form S-3 of Sanguine
Corporation filed on April 29, 2002, of our reports dated March 23, 2004, and
April   , 2005, relating to the financial statements of Sanguine Corporation
as of December
31, 2004, 2003 and 2002, which reports appear in the December 31, 2004, 2003
and 2002 annual reports on Form 10-KSB of Sanguine Corporation.

We consent only to the reference of our reports as they relate to Item 3 of
Form S-8 and Item 12 of Form S-3, as documents filed pursuant to Section 15(d)
of the Securities Exchange Act of 1934 subsequent to the filing of the
documents, but prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters the
remaining unsold underlying shares.  We did not perform review procedures with
respect to the initial filings of these registration statements on Forms S-8
and S-3 as we were not auditors of record.


HJ Associates & Consultants, LLP
April , 2005
Salt Lake City, Utah



<PAGE>