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, 2006

[ ]  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, #6
                    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 Issuer is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act.  [ ]

     Check whether the Issuer (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 Issuer 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 the Issuer'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.  [ ]

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

     State the Issuer's revenues for its most recent fiscal year: December
31, 2006 - $5,563.

     State the aggregate market value of the voting stock of the Issuer
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 20, 2007 - $4,997,747.76.  There are
approximately 41,647,898 shares of common voting stock of the Issuer
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 ($0.12).

               (Issuers Involved in Bankruptcy Proceedings
                        During the past Five Years)

     Not Applicable.

                   (Applicable Only to Corporate Issuers)

     State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date: March 19, 2007 -
82,842,825 shares of common stock.

                    Documents Incorporated by Reference

     See Part III, Item I.

Transitional Small Business Issuer Format:   Yes     No  X

<PAGE>
                              PART I

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

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

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

     We completed the restructuring of our financial statements that involved
the 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, that was filed with the Securities and
Exchange Commission on October 7, 2004, and which is incorporated herein by
reference.  See Part III, Item 13.

     The testing of our red blood cell substitute product, PHER-02, in various
phases of animal toxicity trials, was begun.  The universities of Chicago,
Maryland and the University of Alberta (Canada) medical schools conducted
testing that focused on its effectiveness in perfusion for pancreas
preservation for transplantation.

     PHER-02 is still  being used to develop a deep sea diving oxygenation
treatment of the bends for the U.S. Navy submarine crews.

     We also continue to confer 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.

     We have successfully completed animal toxicity and efficacy trials at the
University of Alberta (Canada) respecting transporting of pancreas islet
cells.  See our 8-K Current Report dated November 17, 2004, that was filed
with the Securities and Exchange Commission on November 18, 2004, and which is
incorporated herein by reference.  See Part III, Item 13.

     For information about additional developments during 2004, see our 10-KSB
Annual Report for the calendar year ended December 31, 2004, that was filed
with the Securities and Exchange Commission on May 6, 2005, and which is
incorporated herein by reference.  See Part III, Item 13.

     Developmental Information for the Year Ended December 31, 2005.
     ---------------------------------------------------------------

     We 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.

     Developmental Information for the Year Ended December 31, 2006.
     ---------------------------------------------------------------

     On February 16, 2006, we entered into an Agreement for Department of
Energy Funded Technology Assistance with the Battelle Memorial Institute,
Pacific Northwest National Laboratory, Office of Small Business Programs,
pursuant to which Pacific Northwest Laboratories will assess the affinity of
our proprietary product, PHER-O2, as an industrially useful carrier of
hydrogen and carbon dioxide.

     In March, 2006, our Board of Directors resolved to offer for sale in a
private placement 20,000,000 shares of our common stock that were "restricted
securities" as defined in Rule 144 of the Securities and Exchange Commission
for $0.07 per share to "accredited investors" only, as that term is defined in
Rule 501 of Regulation D.  The anticipated aggregate gross proceeds of
$1,400,000 were to be utilized by us to fund the FDA required animal studies
of our synthetic red cell blood product, PHER-02, for use in the
transportation of pancreas islet cells in the treatment of diabetes and for
other purposes.  This offering was terminated without making any sales in the
third quarter of 2006.

     On October 18, 2006, our Board of Directors resolved to offer for sale in
a private placement 6,666,667 shares of our common stock that are "restricted
securities" to "accredited investors" at $0.06 per share for aggregate gross
proceeds of $400,000.  This offering was closed on February 12, 2007, with
746,667 shares having been sold for gross proceeds of approximately $44,800.

     Developmental Information subsequent to the Year Ended December 31, 2006.
     -------------------------------------------------------------------------

     Effective January, 2007 we extended the expiration dates of 1,943,115
outstanding warrants to purchase shares of our common stock at $0.08 per share
to March, 2008, or a year from the date on which they were scheduled to
expire.

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 up to
three and one half years, much longer than human blood, which can only be
stored at room temperature for about 42 days.

     We have completed the compounding of PHER-O2, and we have and are
continuing to perform initial gross animal tests that do not require
regulatory approval prior to commencement.  However, regulatory agencies may
review the data gathered from any of these tests.  We have manufactured the
experimental doses of PHER-O2 required to conduct these tests.  Our current
second phase of development of PHER-02 involves:

     *    continual animal testing at certain universities as outlined above
under the caption "Developmental Information for the Year Ended December 31,
2004;"

     *    beginning our 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 its submarine crews; 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 2007, 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.  We will need additional funding for these purposes.

     In our final phase, we intend to:

     *    complete United States testing of PHER-O2;

     *    seek all necessary FDA approvals and begin American and Canadian
sales; and

     *    complete overseas testing and begin overseas sales in foreign
countries.

     In our final phase, we also intend to continue trials to test PHER-O2 for
other applications, 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 cannot assure
you that it will ever be successful.  PHER-O2 is made up of perfluoro-decalin,
which is a type of perfluorocarbon that is harmless to humans and the
atmosphere and was used in the FDA approved first generation product, Fluosol,
purified water and a proprietary surfactant to hold the emulsion together.
Perfluoro-decalin gives our product its oxygen carrying ability.  The
surfactant is non-toxic and was FDA approved in Fluosol and, being
fluorinated, helps increase PHER-O2's oxygen carrying capacity and emulsion
stability.  We believe that the unique chemical nature of PHER-O2 will make it
ideal for many medical applications, although each application will be subject
to the same types of rigorous testing, clinical trials and governmental
regulatory approval process.

     We believe that PHER-O2 has the following advantages over human blood:

     *    may carry three to four times the oxygen of human blood per unit
volume;

     *    free of HIV, hepatitis B & C, Mad Cow and other blood-borne disease;

     *    universal match for all blood types;

     *    may be mass-produced;

     *    may have a three and one half year shelf life;

     *    may be stored at room temperature;

     *    has controllable circulatory half-life; and

     *    may be 1/25th the size of a red blood cell.

     PHER-O2 is a second generation improved drug from Fluosol-DA, the only
synthetic red blood cell approved by the FDA.  This approval was completed
under the management of our President and CEO, Thomas C. Drees, Ph.D.

     We believe that its unique qualities may make PHER-O2 ideal for blood
transfusions and numerous other medical applications, including:

     *     transportation of pancreas islets for treatment of diabetes;

     *     ophthalmic retinal surgery;

     *     angioplasty;

     *     external oxygenation of infection, ischemic tissue and diabetic
ulcers;

     *     Alzheimer's;

     *     oxygenation of cancerous tumors;

     *     nuclear magnetic resonance imaging;

     *     CAT scans;

     *     cardioplegia, or the priming of heart-lung machines in open heart
surgery; and

     *     treatment of heart attacks, strokes, head and neck tumors and
hemorrhagic shock.

     We intend to fully exploit the immense worldwide market for each of 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.

Distribution Methods of the Products or Services.
-------------------------------------------------

None; not applicable.

Status of any Publicly Announced New Product or Service.
--------------------------------------------------------

None; not applicable.

Competitive Business Conditions and the Small Business Issuer's Competitive
Position in the Industry and Methods of Competition.
----------------------------------------------------

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

     *     Biopure Corporation of Cambridge, Massachusetts;

     *     Northfield Laboratories, Inc. of Evanston, Illinois (Northfield is
currently engaged in FDA testing of its synthetic blood product, PolyHeme,
that it believes is compatible with all human blood types and can be used in
the treatment of all trauma victims [Associated Press, March 6, 2006]); and

     *     Synthetic Blood International, San Diego, California, (PFC).

     Each of these competitors files reports with the Securities and Exchange
Commission, and these reports are available for review in the Securities and
Exchange Commission's EDGAR Archives.  These competitors are involved in the
development of a wide variety of human blood substitutes, including synthetic
compounds, recycled outdated human blood and bovine hemoglobin.  Neither the
list of competitors nor the list of human blood substitutes is exhaustive.
Furthermore, some of our existing or potential competitors have significantly
greater technical and financial resources than we do and may be better able to
develop, test, produce and market products.  These competitors may develop
products that are competitive with or better than our product and that may
render our product obsolete.  We can provide no assurance that we will be able
to compete successfully.

Sources and Availability of Raw Materials and Names of Principal Suppliers.
---------------------------------------------------------------------------

     We plan to purchase highly purified medical-grade perfluorocarbons and
surfactants from reliable vendors and to emulsify these ingredients in our own
or other facilities, depending upon funding.  FluoroMed, LP, F2 Chemicals,
Ltd. and KC America are qualified medical grade perfluorocarbon vendors.
Surfactants are available through several U. S. vendors.  Because sterile
intravenous solutions manufacturing plants are very expensive and FDA approval
of these plants is a lengthy process, we intend to hire a third party to
package the product in sterile plastic bags with intravenous sets attached.
Abbott Laboratories, Baxter, B. Braun Medical Inc., Fresenius Kabi, and
Alliance Medical Products, Inc. are a few of the U. S. companies with the
qualifications and capacity to perform this function.  However, we cannot
assure you that any of these ingredients or services will be available or that
they will be available at prices that are low enough to make our operations
profitable.

Dependence on One or a Few Major Customers.
-------------------------------------------

None; not applicable.

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

     We filed United States Application Patent Nos. 07/952/403 and 08/230/672,
covering PHER-O2, with the United States Patent Office on September 28, 1992
and April 21, 1994, respectively.  No patent has been issued, and we may have
to amend our patent application before any patent is issued, if ever.

     We filed European Application Patent No. (UK)EPO261802, covering PHER-O2,
with the European Patent Office on August 25, 1997.  No patent has been issued
and, and we may have to amend our patent application before any patent is
issued, if ever.

     We have formulated certain proprietary GRAS surfactants during the course
of our research and development activities.  The surfactant is mixed with the
basic chemical of our product, perfluoro-decalin, to maintain the small
particle size in the emulsion of PHER-O2 because the particle size of decalin
alone in the blood stream may quickly increase in size and block arteries and
veins.

     We have a Consulting Agreement with Beckloff, a Cardinal Health company,
that was effective for one year commencing on March 25, 2005, whereby Beckloff
agreed to assist us in implementing, conducting and completing our FDA testing
and approval process.  Subject to available funding, we expect these services
to continue through 2007 for the same purposes.

Need for any Governmental Approval of Principal Products or Services.
---------------------------------------------------------------------

     The FDA and comparable foreign agencies require laboratory testing,
animal and human clinical testing and other costly and time-consuming
procedures before biomedical products such as PHER-O2 can be marketed.  To
date, we have not begun any of these procedures.  Our plan for obtaining FDA
and overseas approval of PHER-O2 is set forth under the heading "Plan of
Operation" of the caption "Management's Discussion and Analysis or Plan of
Operation" in Part I, Item 6.

     We cannot assure you that these testing procedures will be successfully
completed, that if completed, they will show PHER-O2 to be safe and
efficacious, or that we will obtain any required governmental approvals.  Nor
can we assure you that we will ever be permitted to market PHER-O2 in the
United States or most foreign countries.  The same holds true for any other
related products or proprietary rights that we may develop.

Effect of Existing or Probable Governmental Regulations on the Business.
------------------------------------------------------------------------

     Regulation by governmental authorities in the United States and
foreign countries will significantly affect our ability to manufacture and
market our product and to conduct our ongoing research and product development
activities.  Our lead product, PHER-O2, will require regulatory approval by
appropriate governmental agencies before it can be commercialized.  Human
therapeutic products are subject to rigorous pre-clinical and clinical testing
and other approval procedures by the FDA and similar health authorities in
foreign countries.  Various federal, state and foreign statutes also govern or
influence the manufacturing, safety, labeling, storage, record-keeping and
marketing of such products.  The process of obtaining these approvals is
costly and time consuming.  In addition, ongoing compliance with these
requirements can require the expenditure of substantial resources.  If we or
our collaborators or licensees fail to obtain or experience delay in obtaining
required regulatory approvals the marketing of our product and our ability to
derive product or royalty revenue would be severely limited.

     Pre-clinical testing is generally conducted in animal or in vitro
models to evaluate the potential efficacy and safety of a compound before it
is administered to humans.  The results of these studies are submitted to the
FDA as part of an Investigational New Drug application ("New Drug
Application"), which must be approved before human clinical testing can
begin.  Successful stability tests and some animal tests have been run on
PHER-O2.

     Clinical trials involve the administration of the investigational
new drug to healthy volunteers or to patients, under the supervision of a
qualified principal investigator.  Clinical trials are conducted in accordance
with certain standards under protocols that detail the objectives of the
study, the parameters to be used to monitor safety and the efficacy criteria
to be evaluated.  Each protocol must be submitted to the FDA as part of the
New Drug Application.  Further, each clinical study must be conducted under
the auspices of an independent investigational review board at the institution
where the study will be conducted.  Consideration will be given to ethical
factors, the safety of human subjects and the possible liability of the
institution, among other things.

     Clinical trials are typically conducted in three sequential phases, but
the phases may overlap.  In the first phase, the product is usually infused
into a limited number of human subjects and will be tested for safety or
adverse effects, dosage tolerance and pharmacokinetics, or clinical
pharmacology.  The second phase involves studies in a somewhat larger patient
population to identify possible adverse effects and safety risks and to begin
gathering preliminary efficacy data.  The third phase of trials is designed to
further evaluate clinical efficacy and to further test for safety within an
expanded patient population at geographically dispersed clinical study sites.
Although we believe that our product is substantially different from other
synthetic blood products, we may encounter problems in clinical trials which
will cause us to delay or suspend them.

     In the case of biologic products such as PHER-O2, the results of
pharmaceutical development and the pre-clinical and clinical testing are
submitted to the FDA in the form of a Product License Application.  This
application must be approved before commercial sales may begin.  We must also
file an Establishment License Application, which describes the manufacturing
process for the product and the facility at which the product will be
produced.  The FDA may respond to the filings by granting a license for the
manufacture of the product from a designated facility and the commercial sale
of the product.  It may also deny the applications if it finds that the
applications do not meet the criteria for regulatory approval, require
additional testing or information or require post-marketing testing and
surveillance to monitor the safety of the product if it does not believe that
the applications contains adequate evidence of the safety and efficacy of the
drug.  Despite the submission of this data, the FDA may ultimately
decide that the application does not satisfy its regulatory criteria for
approval.  The testing and approval process is likely to require substantial
time and effort.  We cannot guarantee that approval will be granted for
our product or our proposed facilities on a timely basis, if at all.

    In addition to regulations enforced by the FDA, we may also be subject to
regulation under the Occupational Safety and Health Act; the Environmental
Protection Act; the Toxic Substances Control Act; the Resource Conservation
and Recovery Act; the Comprehensive Environmental Response, Compensation and
Liability Act; the National Environmental Policy Act; the Clean Air Act; the
Medical Waste Tracking Act; the federal Water Pollution Control Act; and other
present and potential federal, state, local and foreign regulations.

Research and Development Costs During the Last Two Fiscal Years.
----------------------------------------------------------------

     Since inception, we have expended a total of approximately $1,900,000 on
research and development.  During years ended December 31, 2006, and 2005,
research and development expense was approximately $361,432 and $181,246,
respectively.  None of these costs were borne by customers or others.

Cost and Effects of Compliance with Environmental Laws.
-------------------------------------------------------

     Management believes that all of the substances making up PHER-O2 are
inert and non-toxic and that no toxic or hazardous materials will be
byproducts of the manufacturing process of PHER-O2.  PHER-O2 is totally
inert.  Accordingly, we do not believe that we will have any material
expenditures for compliance with environmental laws, rules or regulations.

Number of Total Employees and Number of Full Time Employees.
------------------------------------------------------------

     We presently have two employees, our Chairman, President and CEO,
Thomas C. Drees, Ph.D.; and our Chief Financial Officer, David E. Nelson.  Dr.
Drees is employed full time.  If we are able to commence initial FDA approved
animal testing and manufacturing of this product for these tests, we will need
additional employees.  We are presently unable to estimate the exact number of
employees that we may need for these services.

Reports to Security Holders.
----------------------------

     You may read and copy any materials that we file with the Securities and
Exchange Commission at the Securities and Exchange Commission's public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549.  You may also
find all of the reports that we have filed electronically with the Securities
and Exchange Commission at their Internet site www.sec.gov.

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

     We lease approximately 600 square feet of office space located at 101
East Green Street, Suite 6, Pasadena California, 91105, at a base rent of
$896 per month.  The lease is on a month to month basis.

Item 3.  Legal Proceedings.
         ------------------

     We are not a party to any pending legal proceeding.  To the knowledge of
our management, no federal, state or local governmental agency is presently
contemplating any proceeding against us.  No director, executive officer or
other person who may be deemed to be our "affiliate" or who is the owner of
record or beneficially of more than five percent of our common stock is a
party adverse to us or has a material interest adverse to us in any
proceeding.

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

     No matter was submitted to a vote of our Company's stockholders during
the fourth quarter of the period covered by this Annual Report or during the
previous two fiscal years.

                                  PART II

Item 5.  Market for Common Equity and Related Stockholder Matters and Small
Business Issuer 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, 2005, and December 31, 2006, is
presented below.  Prices are inter-dealer quotations as reported by the NASD
(or the NQB, LLC) and do not necessarily reflect transactions, retail markups,
mark downs or commissions.

                             STOCK QUOTATIONS*

                                                  BID

Quarter ended:                          High                Low
--------------                          ----                ---
March 31, 2005                          $.35                $.26

June 30, 2005                           $.29                $.145

September 30, 2005                      $.16                $.10

December 31, 2005                       $.17                $.095

March 31, 2006                          $.16                $.12

June 30, 2006                           $.22                $.105

September 30, 2006                      $.24                $.11

December 31, 2006                       $.125                $.075


          *    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.

Holders.
--------

     The number of record holders of our common stock as of March 20, 2007,
was approximately 563.

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.

Securities Authorized for Issuance under Equity Compensation Plans.
-------------------------------------------------------------------

                    Equity Compensation Plan Information
                    ------------------------------------

            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)
--------    ----------          -------------------    -----------------------
               (a)                      (b)                      (c)

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

Equity
compen-
sation
plans not      2,123,115                .08                   4,375,000
approved
by
security
holders

Total          2,123,115                                      4,375,000


Recent Sales of Unregistered 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
----                   ---------------         ----            -------------

Leonard W. Burningham,  500,000                 9/2004          Services
Esq. (2)

Seven (7) persons
and/or entities (3)   2,800,000                 9/2004          Services

Nine (9) persons
and/or entities (4)     773,902                 9/2004        Conversion of
                                                            Convertible Notes
Ascendiant Capital
Group LLC (5)           228,666                 9/2004      Conversion of Debt

Thomas C. Drees,
Ph.D. (6)            31,604,000                 9/2004      Conversion of Debt

Anthony & Audrey
Hargreaves Trust (7)    924,600                 9/2004      Conversion of Debt

Richard H. Walker (5)   300,000                12/2004      Warrant Exercise

Jossef Kahlon (5)       700,000                12/2004      Warrant Exercise

Medical Advisory Board  150,000                12/2004            Services
(1)

Kelly Trimble (8)       163,691                12/2004      Warrant Exercise

Mark Sansom   (8)       163,690                12/2004      Warrant Exercise

Jason Douglas (8)       100,000                12/2004      Warrant Exercise

Max Sabour (8)          100,000                12/2004      Warrant Exercise

Todd Kinney (8)         100,000                12/2004      Warrant Exercise

Robert Kwun (1)         100,000                12/2004      Warrant Exercise

Leonard W. Burningham,  513,750                12/2004      Warrant Exercise
Esq. (8)

Branden Burningham,     350,000                12/2004      Warrant Exercise
Esq. (8)

Brad Burningham,        350,000                12/2004      Warrant Exercise
Esq. (8)

Leonard W. Burningham,  300,000                12/2004      Warrant Exercise
Esq. C/F (8)

Richard P. Stanton (5)   83,629                12/2004      Warrant Exercise

Leonard W. Burningham,  200,000                2005         Warrant Exercise
Esq.(8)

Joseph Trabacoone(8)    100,000                2005         Warrant Exercise

Todd Kinney(8)          100,000                2005         Warrant Exercise

William P. Archer(8)    100,000                2005         Warrant Exercise

Robert S. Howell(8)      46,627                2005         Warrant Exercise

SCS, Inc.(9)            160,000                2005         Warrant Exercise

Susan Johnston(8)       100,000                2005         Warrant Exercise

James R. Dunn(8)        100,000                2005         Warrant Exercise

Joseph Trabaccone(8)     90,000                2/2005       Warrant Exercise

Robert Kwun(1)           73,313                2/2005       Services

Medical Advisory Board   37,500                4/2005       Services
(1)

Robert Kwun(1)           50,000                4/2005       Services

Joseph Trabaccone(8)     83,314                4/2005       Warrant Exercise

Thomas C. Drees(1)       25,000                4/2005       Services

David E. Nelson(1)       25,000                4/2005       Services

Edward L. Kunkel(1)      25,000                4/2005       Services

Leonard W. Burningham,  200,000                5/2005       Warrant Exercise
Esq. (8)

Thomas C. Drees(1)       25,000               10/2005       Services

David E. Nelson(1)       25,000               10/2005       Services

Edward L. Kunkel(1)      25,000               10/2005       Services

Medical Advisory Board   75,000               10/2005       Services
(1)

Robert Kwun(1)          100,000               10/2005       Services


Thomas C. Drees(1)       25,000               5/2006        Services


David E. Nelson(1)       25,000               5/2006        Services

Edward L. Kunkel(1)      25,000               5/2006        Services

Medical Advisory Board   75,000               5/2006        Services
(1)

Robert Kwun(1)           25,000               5/2006        Services

Jonathan Lakey(1)       100,000               5/2006        Services

James Shapiro(1)         50,000               5/2006        Services

Leonard W. Burningham(8)250,000               5/2006        Warrant Exercise

M. E. Dancy Consulting
Services, Inc. (10)     400,000               7/2006        Services

Thomas C. Drees(1)       37,500               1/2007        Services

David E. Nelson(1)       37,500               1/2007        Services

Edward L. Kunkel(1)      37,500               1/2007        Services

Medical Advisory Board  112,500               1/2007        Services
(1)

Robert Kwun(1)           37,500               1/2007        Services

James Shapiro(1)        150,000               1/2007        Services

Private Placement       746,667               3/8/07        $0.06 per share

          (1)  Issued for service as a member of the Board of Directors or the
Medical Advisory Board.

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

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

          (4) The Convertible Note executed in favor of Barbara R. Mittman on
March 19, 2002, in the amount of $3,750.00, together with accrued interest,
was converted to 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 by the holders thereof to 676,800 shares of common stock of our
Company.

         (5) The Letter Agreement executed in favor of Ascendiant Capital
Group, LLC ("Ascendiant"), pursuant to which Ascendiant loaned $12,000 to the
Company, together with accrued interest, was converted to 228,666 shares of
common stock of our Company; and for previously extending the term of the
Letter Agreement, an additional Common Stock Purchase Warrant was granted to
Ascendiant for the option to purchase 30,000 shares of common stock of our
Company that are "restricted securities" under Rule 144 of the Securities and
Exchange Commission.

          (6) Thomas C. Drees, Ph.D., MBA, our President, CEO and a Director
agreed to exchange $1,264,160 of debt owed to him by us for 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.

          (7) The Anthony and Audrey Hargreaves Trust (the "Trust") agreed to
exchange $36,984 of debt owed by us to Mr. Hargreaves prior to his death for
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.

          (8) Issued at $0.08 per share on the exercise of outstanding
warrants.

          (9) Issued at $0.06 per share for the payment of expenses on our
behalf.

         (10) Issued for services related to public relations.

          We issued all of these securities to persons who were either
"accredited investors," or "sophisticated investors" who, by reason of
education, business acumen, experience or other factors, were fully capable of
evaluating the risks and merits of an investment in our company; and each had
prior access to all material information about us.  We believe that the offer
and sale of these securities were exempt from the registration requirements of
the Securities Act, pursuant to Sections 4(2) and 4(6) thereof, and Rule 506
of Regulation D of the Securities and Exchange Commission and from various
similar state exemptions.

Use of Proceeds of Registered Securities.
-----------------------------------------

     Proceeds from the sale of registered securities received during the year
ended December 31, 2006, totaled $95,410, from warrant exercises. These funds
were primarily used for professional services and administrative expenses.

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, 2006.

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 2005, in formulation and stability testing.

      In January, 2005, we were successful in developing improved formulations
of our surfactants for PHER-02.

     In December, 2006, we completed a pre-IND meeting with the FDA, where
Company management presented data to determine an appropriate regulatory path
related to PHER-O2.

     Our plan of operation for the next 12 months is to complete the
preparation and submission of the U.S. FDA New Device Application to support
PHER-02 as a synthetic oxygen carrying product.

     Our proposed plan of operation is composed of "stages," each of which
coincides with a specific milestone in the process of developing PHER-O2.
Each stage, and the projected cost of each, is as follows:

     Stage A (approximately three-six months): Complete the development of
perfluoro-decalin and the synthetic surfactants that make up PHER-O2,
manufactured experimental doses in accordance with FDA and overseas
regulations and submit data to support a Master Drug Filing.  Estimated cost
is not to exceed $500,000, divided as follows: Completed surfactant
formulation (done) and the manufacture of sufficient product for testing, (on
going); animal safety and efficacy trials through a sub-contractor, (done);
and administrative, patent and proprietary right protection and marketing
costs,(in process) Optimize stabilized product to support the Master Drug
Filing (in process).

     Stage B (approximately three-six months): In the second period, we will
produce optimal quantities and conduct testing in accordance with FDA and
overseas requirements.  During the course of Stage A, we estimate that our
increased technical, administrative, sales/marketing and manufacturing
requirements will require us to the hire a few additional contractors and/or
employees.

     Stage C (approximately three-six months): In the third period, we intend
to prepare new 510(k) device application with the FDA.  Estimated cost is
$1,000,000, to be used as follows: set-up pilot facility, or subcontractor, to
manufacture small quantities of PHER-O2 for use in testing and in connection
with the New Drug Applications [done], prepare and submit data for use of
PHER-O2 as a whole organ transportation medium in support of FDA labeling, and
administrative, patent and proprietary right protection and marketing costs,
(in process).

     These cost estimates are based upon the prior experience of Thomas C.
Drees, Ph.D., our President and CEO.  Dr. Drees has more than 33 years'
experience in the blood industry with Abbott Scientific, Alpha Therapeutics
and Sanguine Corporation.

Management's Discussion and Analysis of Financial Condition and Results of
Operations.
-----------

     Revenues for the calendar years ending December 31, 2006, and 2005, were
$5,563 and $1,019, respectively.  We had no material operations, except the
research and development activities related to our subcontracted research and
development of our product, PHER-O2.

     We realized a net loss of $619,905 for the year ended December 31, 2006,
and a net loss of $337,751 for the year ended December 31, 2005.  Most of our
expense related to the value of equity securities issued by us for services
rendered.

     Our research and development expenses were $361,432 in 2006, compared to
$181,246 in 2005.

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

     As of December 31, 2006, we had $30,288 in cash, with $408,430 in
current liabilities.

     During the calendar year ended December 31, 2006, we had net expenses of
$624,307, while receiving $5,563 in revenues.  We received $1,019 in
revenues, and had total expenses of $348,032 during the calendar year ended
December 31, 2005.  Most of these expenses related to the value of equity
securities issued by us for services rendered.

     Cash resources at December 31, 2006, and 2005, were $30,288 and
$159,466, respectively.  Liquidity during 2005 was provided by additional
warrant exercises resulting in the issuance of 1,193,254 shares for an
aggregate gross proceeds of $95,410.

     In March, 2006, our Board of Directors resolved to offer for sale in a
private placement 20,000,000 shares of our common stock that were "restricted
securities" as defined in Rule 144 of the Securities and Exchange Commission
for $0.07 per share to "accredited investors" only, as that term is defined in
Rule 501 of Regulation D.  The anticipated aggregate gross proceeds of
$1,400,000 were to be utilized to fund the FDA required animal studies of
our synthetic red cell blood product, PHER-02, for use in the transportation
of pancreas islet cells in the treatment of diabetes and for other purposes.
This offering was terminated without making any sales in the third quarter of
2006.

     On October 18, 2006, our Board of Directors resolved to offer for sale in
a private placement 6,666,667 shares of our common stock that are "restricted
securities" to "accredited investors" at $0.06 per share for aggregate gross
proceeds of $400,000.  This offering was closed on February 12, 2007, with
746,667 shares having been sold for gross proceeds of approximately $44,800.

Off Balance Sheet Arrangements.
-------------------------------

     We had no off balance sheet arrangements during the year ended December
31, 2006.

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.
         ---------------------

     The financial statements in this Annual Report are being amended to
account for the potential risk to the Company of being unable to issue
registered common stock for certain outstanding warrants.
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A DEVELOPMENT STAGE COMPANY)

                CONSOLIDATED FINANCIAL STATEMENTS

                        DECEMBER 31, 2006
<PAGE>


                         C O N T E N T S


Report of Independent Registered Public Accounting Firm          F - 3

Consolidated Balance Sheet                                       F - 4

Consolidated Statements of Operations                            F - 6

Consolidated Statements of Stockholders' Deficit                 F - 7

Consolidated Statements of Cash Flows                            F - 17

Notes to the Consolidated Financial Statements                   F - 19

<PAGE>


     Report of Independent Registered Public Accounting Firm

To the Board of Directors
Sanguine Corporation and Subsidiary
(A Development Stage Company)
Pasadena, California

We have audited the consolidated balance sheet of Sanguine Corporation and
Subsidiary (a development stage company) as of December 31, 2006, and the
related consolidated statements of operations, stockholders' deficit and cash
flows for years ended December 31, 2006 and 2005, and for the period from
inception of the development stage on January 18, 1990, through December 31,
2006.  These consolidated financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements.  An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Sanguine
Corporation and Subsidiary (a development stage company) as of December 31,
2006, and the results of their operations and their cash flows for years ended
December 31, 2006 and 2005, and for the period from inception of the
development stage on January 18, 1990, through December 31, 2006, in
conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 6 to
the consolidated financial statements, the Company has incurred significant
losses which have resulted in an accumulated deficit and has a deficit in
working capital, raising substantial doubt about their ability to continue as
a going concern.  Management's plans in regard to these matters are also
discussed in Note 6.  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
March 20, 2007




<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
                   Consolidated Balance Sheet

                              ASSETS


                                                            December 31,
                                                               2006

CURRENT ASSETS

     Cash                                                  $     30,288
                                                           ------------
          Total Current Assets                                   30,288

PROPERTY AND EQUIPMENT, NET (Note 1)                                968
                                                           ------------
          TOTAL ASSETS                                     $     31,256
                                                           ============

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

              LIABILITIES AND STOCKHOLDERS' DEFICIT

                                                            December 31,
                                                               2006
CURRENT LIABILITIES

     Related party payables (Note 2)                        $      4,000
     Accounts payable                                            323,370
     Warrant liability                                             2,123
     Accrued compensation (Note 3)                                78,937
                                                            ------------
          Total Current Liabilities                              408,430
                                                            ------------

COMMITMENTS AND CONTINGENCIES (Note 3)

STOCKHOLDERS' DEFICIT

     Common stock: 200,000,000 shares authorized of
      $0.001 par value, 81,683,658 shares issued and
      outstanding                                                 81,684
     Common stock subscribed                                      27,800
     Additional paid-in capital                                5,873,443
     Accumulated other comprehensive income (loss)                (2,570)
     Deficit accumulated during the development stage         (6,357,531)
                                                            ------------
          Total Stockholders' Deficit                           (377,174)
                                                            ------------
          TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT       $     31,256
                                                            ============


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 Operations

                                                          From Inception of
                                                           the Development
                                                                 Stage
                                                            on January 18,
                                   For the Years Ended 1990     Through
                                      December 31,             December
                                     2006          2005        31,  2006

REVENUE                            $   5,563    $   1,019   $    181,762
                                 -----------    ---------   ------------
OPERATING EXPENSES

     Professional fees               154,724       76,231      2,896,178
     Research and development        361,432      181,246      1,899,648
     Selling, general &
      administrative                 108,151       90,555      2,601,632
                                 -----------    ---------   ------------
       Total Operating Expenses      624,307      348,032      7,397,458
                                 -----------    ---------   ------------
LOSS FROM OPERATIONS                (618,744)    (347,013)    (7,215,696)
                                 -----------    ---------   ------------
OTHER INCOME (EXPENSE)

     Interest income                   1,929        9,262         39,264
     Interest expense                   (520)           -       (667,986)
     Loss on cash deposit                  -            -        (10,020)
     Gain on settlement of debt            -            -      1,496,907
                                 -----------    ---------   ------------
          Total Other Income
            (Expense)                  1,409        9,262        858,165
                                 -----------    ---------   ------------
NET LOSS                            (617,335)    (337,751)    (6,357,531)

OTHER COMPREHENSIVE LOSS

     Loss on Foreign Currency
      Exchange                        (2,570)           -         (2,570)
                                 -----------    ---------   ------------
TOTAL COMPREHENSIVE LOSS         $  (619,905)   $(337,751)  $ (6,360,101)
                                 ===========    =========   ============

BASIC LOSS PER SHARE             $     (0.01)   $   (0.00)
                                 ===========    =========
DILUTED LOSS PER SHARE           $     (0.01)   $   (0.00)
                                 ===========    =========
WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING - BASIC      81,078,726   80,322,502
                                 ===========   ==========
WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING - DILUTED    81,078,726   80,322,502
                                 ===========   ==========

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

                               F-6
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
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
Corp.    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-7
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
Balance,
December
31, 1993 16,530,859 $16,530 $ 2,533,454 $       - $      - $(2,575,221)$     -

Quasi-re
organization      -       -  (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         -        -           -       -
         ---------- ------- ----------- --------- -------- ----------- -------
Balance
Forward  19,898,365 $19,898 $   596,942 $       - $      - $  (748,879)$     -
         ---------- ------- ----------- --------- -------- ----------- -------


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

                               F-8
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
Balance
Forward  19,898,365 $19,898 $   596,942 $       - $      - $  (748,879)$     -

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)      -

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

Common
stock
issued for
debt and
payables
at $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 $       - $      - $(1,491,547)$     -
         ---------- ------- ----------- --------- -------- ----------- -------


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

                               F-9
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
Balance,
December
31, 1998 23,010,217 $23,010 $   858,097 $       - $      - $(1,491,547)$     -

Common
stock
issued
for cash
at $0.18
per share    52,777      53      9,447          -        -          -        -

Common
stock
issued for
services
at $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,
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-10
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
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
shareholders840,195     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)$      - $(4,191,597)$     -
         ---------- ------- ----------- --------- -------- ----------- -------


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 Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
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)       -           -       -

Common
stock
issued for
Cash-less
warrant
exercise
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)$      - $(5,921,298)$     -
         ---------- ------- ----------- --------- -------- ----------- -------


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 Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
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-13
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
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   (62,943)       -           -       -

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          -       -           -         -        -     843,384       -
         ---------- ------- ----------- --------- -------- ----------- -------
Balance,
December
31, 2004 78,942,904 $78,943 $ 5,517,066 $       - $      - $(5,402,445)$     -
         ---------- ------- ----------- --------- -------- ----------- -------



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

                               F-14
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
Balance,
December
31, 2004 78,942,904 $78,943 $ 5,517,066 $       - $      - $(5,402,445)$     -

Common
stock
issued for
services
at $0.11
-$0.30
per share   412,500     413      80,713         -        -           -       -

Common
stock
issued for
Cash at
$0.08 per
share     1,193,254   1,193     102,867         -        -           -       -

Common
stock
issued for
Debt
reduction
at $0.06
per share  160,000      160       9,440         -        -           -       -

Net loss
for the
year ended
December
31, 2005          -       -           -         -        -    (337,751)      -
         ---------- ------- ----------- --------- -------- ----------- -------
Balance,
December
31, 2005 80,708,658  80,709   5,710,086         -        -  (5,741,196)      -

Common
stock
issued for
services
at $0.12
-$0.25
per share   725,000     725     143,087         -        -           -       -

Common
stock
issued for
Cash at
$0.08
per share   250,000     250      19,750         -        -           -       -

Common
stock
subscribed        -       -           -         -   27,800           -       -
         ---------- ------- ----------- --------- -------- ----------- -------
Balance
Forward  81,683,658 $81,684 $ 5,872,923 $       - $ 27,800 $(5,741,196)$     -
         ---------- ------- ----------- --------- -------- ----------- -------



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

                               F-15
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
        Consolidated Statements of Stockholders' Deficit

                                    Expenses                       Deficit
                                    Prepaid         Accumulated  Accumulated
                Common    Additional with   Common   During the     Other
             Common Stock  Paid-in  Common  Stock   Development Comprehensive
            Shares  Amount Capital  Stock  Subscribed   Stage       Income
Balance
Forward  81,683,658 $81,684 $ 5,872,923 $       - $ 27,800 $(5,741,196)$     -

Contributed
capital for
Contributed
interest on
Notes payable     -       -         520         -        -           -       -

Loss on
Foreign
Currency
Exchange          -       -           -         -        -           - (2,570)

Net loss
for the
year ended
December
31, 2006          -       -           -         -        -    (617,335)      -
         ---------- ------- ----------- --------- -------- ----------- -------
Balance,
December
31, 2006 81,683,658 $81,684 $ 5,873,443 $       - $ 27,800$(6,357,531)$(2,570)
         ========== ======= =========== ========= ======== ==========  =======


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

                               F-16
<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
                                     2006          2005        31,  2006

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income (loss)                 $ (617,335)  $ (337,751) $ (6,357,531)
    Adjustments to reconcile
    net loss to net cash used
    by operating activities:
     Depreciation and amortization         299          224         5,132
     Common stock issued for
      services                         143,812       81,126     2,659,149
     Contributed capital                   520            -           520
     Stock warrants granted                  -        8,650         8,650
     Interest on beneficial
      conversion feature                     -            -        25,000
     Legal expense related to
      beneficial conversion feature          -            -         3,750
     Note payable issued for services        -            -       727,950
     Gain on extinguishments of debt         -            -       (98,826)
      Gain on conversion of debt to equity   -            -    (1,398,081)
     Recognition of prepaid expenses and
     expenses prepaid with common stock      -            -       456,184
   Changes in assets and liabilities:
     Increase in accounts payable and
      related party payables           257,307       41,020       648,988
     Increase in accrued interest
      payable                                -            -       547,279
     Increase in accrued liabilities         -            -        10,125
     Increase in customer deposits           -            -        45,000
     Increase (decrease) in warrant
      liability                        (19,205)     (43,013)        2,123
     Increase in accrued salaries       57,624       11,188       912,812
                                   -----------    ---------   -----------
          Net Cash Used by
            Operating Activities      (176,978)    (238,556)   (1,801,776)
                                   -----------    ---------   -----------

CASH FLOWS FROM INVESTING ACTIVITIES
   Cash paid for fixed assets                -       (1,491)       (6,100)
                                   -----------    ---------   -----------
          Net Cash Used by
            Investing Activities             -       (1,491)       (6,100)
                                   -----------    ---------   -----------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from warrant conversion          -       95,410       424,700
   Proceeds from notes payable
   and notes payable-related party           -            -       212,139
   Payments on notes payable and
   notes payable - related party             -            -        (9,400)
   Proceeds from issuance of
   convertible debentures                    -            -        40,000
   Contributed capital                       -            -           750
   Proceeds from Common stock
   subscribed                           27,800            -        27,800
   Common stock issued for cash         20,000            -     1,142,175
                                   -----------    ---------   -----------
          Net Cash Provided by
            Financing Activities        47,800       95,410     1,838,164
                                   -----------    ---------   -----------
NET INCREASE (DECREASE) IN CASH       (129,178)    (144,637)       30,288

CASH AT BEGINNING OF YEAR              159,466      304,103             -
                                   -----------    ---------   -----------
CASH AT END OF YEAR                $    30,288    $ 159,466   $    30,288
                                   ===========    =========   ===========

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

                               F-17
<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
                                     2006          2005        31,  2006

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

CASH PAID FOR:
     Interest                       $         -    $       -   $         -
     Income taxes                   $         -    $       -   $         -

NON-CASH FINANCING ACTIVITIES

     Conversion stock issued for
      debt conversion               $         -    $   9,600   $     9,600
     Common stock issued for
      services rendered             $   143,812    $  81,126   $ 2,515,337
     Contributed capital for
      interest contributed          $       520    $       -   $       520
     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              $         -    $       -   $   236,284
     Common stock issued for debt   $         -    $       -   $ 2,822,067



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

                               F-18
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005

NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.  Organization


Sanguine Corporation, (the "Company") was incorporated January 27, 1974, in
the State of Utah, using the name Sight and Sound Systems, Inc.  On July 8,
1974, the Company changed its name to International Health Resorts, Inc., and
on June 25, 1993, the Company filed a Certificate of Amendment changing the
name to Sanguine Corporation.  In May of 1992, the Company changed its
domicile to the State of Nevada.

The Company is engaged in developing oxygen carriers to be used by the medical
profession.  The Company is conducting research and development leading to
F.D.A. clinical trials.

On June 14, 1993, the Company entered into an Agreement and Plan of
Reorganization, wherein it was agreed that Sanguine Corporation (a Nevada
Corporation) would issue 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 consolidated financial statements are prepared using the accrual
method of accounting.  The Company has elected a December 31 year-end.

     c.  Basic and Diluted Income (Loss) Per Share

The computation of basic income (loss) per share of common stock is based on
the weighted average number of shares outstanding during the period.

                                       For the Years Ended
                                           December 31,
                                       2006            2005

     Loss (numerator)              $  (617,335)  $ (377,751)
     Shares (denominator)           81,683,658   80,322,502
     Per share amount              $      (.01)  $     (.00)


                               F-19
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005

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

     c.  Basic and Diluted Income (Loss) Per Share (continued)

The computation of diluted income (loss) per share of common stock is based on
the weighted average number of shares outstanding during the period.

                                       For the Years Ended
                                           December 31,
                                       2006            2005

     Loss (numerator)              $  (617,335)  $ (377,751)
     Shares (denominator)           81,683,658   80,322,502
     Per share amount              $      (.01)  $     (.00)

The Company's outstanding stock options have been excluded from the 2006 basic
net loss per share calculation as they are anti-dilutive.  The Company has
excluded common stock equivalents.

     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.

     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.


                               F-20
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005

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

     e.  Income Taxes (Continued)

Net deferred tax liabilities asset consists of the following components as of
December 31, 2006 and 2005:

                                          2006           2005

     Deferred tax assets:

     Research and Development        $    84,067      $         -
     NOL Carryover                       597,593        1,011,800
     Accrued Salaries                     30,800           16,600
                                    ------------      -----------
                                         712,460        1,028,400
     Deferred tax liabilities:

     Depreciation                           (100)               -

      Valuation allowance               (712,360)      (1,028,400)
                                    ------------      -----------
     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, 2006 and 2005 due
to the following:

                                          2006           2005
     Book Income                   $    (240,761)     $  (131,720)
     Research and Development             23,420                -
     Stock for Services/Options
      Expense                             56,087           21,980
     Meals and Entertainment                 268               58
     Warranty liability                        -          (12,405)
     Accrued compensation                 30,785                -
      Change in valuation allowance      130,201          122,087
                                    ------------      -----------
                                    $          -      $         -
                                    ============      ===========

At December 31, 2006, the Company had net operating loss carryforwards of
approximately $1,500,000 that may be offset against future taxable income from
the year 2006 through 2026.  No tax benefit has been reported in the December
31, 2006 consolidated financial statements since the potential tax benefit is
offset by a valuation allowance of the same amount.


                               F-21
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005

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

     e.  Income Taxes (Continued)

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.  Fixed assets and related depreciation for the period are as follows:

                                            December 31,
                                               2006

     Furniture and fixtures                $    1,491

      Accumulated depreciation                    (523)
                                            ----------
          Total Fixed Assets                $      968
                                            ==========

     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

New accounting pronouncements that have a current or future potential impact
on our financial statements are as follows:


                               F-22
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005


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

I.   Newly Adopted Accounting Pronouncements (continued)

In April 2006, the FASB issued FASB Staff Position FIN 46 )-6, Determining
the Variability to be Considered in Applying FASB Interpretation No. 46 )
that became effective for the third quarter of 2006. FSP FIN No. 46 )-6
clarifies that the variability to be considered in applying Interpretation
46 ) shall be based on an analysis of the design of the variable interest
entity. The adoption of this standard did not materially impact the Company's
consolidated financial statements.

In March 2005, the FASB issued FASB Interpretation No. 47, "Accounting for
Conditional Asset Retirement Obligations" ("FIN 47"). FIN 47 provides guidance
relating to the identification of and financial reporting for legal
obligations to perform an asset retirement activity. The Interpretation
requires recognition of a liability for the fair value of a conditional asset
retirement obligation when incurred if the liability's fair value can be
reasonably estimated. FIN 47 also defines when an entity would have sufficient
information to reasonably estimate the fair value of an asset retirement
obligation. The provision is effective no later than the end of fiscal years
ending after December 15, 2005. The Company will adopt FIN 47 beginning the
first quarter of fiscal year 2006 and does not believe the adoption will have
a material impact on its consolidated financial position or results of
operations or cash flows.

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes" ("FIN
48"). FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in the Company's financial statements in accordance with FASB
Statement No. 109 "Accounting for Income Taxes." FIN 48 also prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in
a return, as well as guidance on derecognition, classification, interest and
penalties and financial statement reporting disclosures. FIN 48 is effective
for the Company on January 1, 2007. Based on the Company's evaluation and
analysis, FIN 48 is not expected to have a material impact on the Company's
consolidated financial statements.

In February of 2006, the FASB issued SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments", which is intended to simplify the accounting
and improve the financial reporting of certain hybrid financial instruments
(i.e., derivatives embedded in other financial instruments). The statement
amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", and SFAS No. 140, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities" a replacement of FASB
Statement No. 125." SFAS No. 155 is effective for all financial instruments
issued or acquired after the beginning of an entity's first fiscal year that
begins after September 15, 2006. The Company does not expect the adoption of
SFAS No. 155 to have an impact on its consolidated financial statements.

In September 2006, the FASB issued FASB Statement No. 157, "Fair Value
Measurements" ("FAS 157"), which addresses how companies should measure fair
value when they are required to use a fair value measure for recognition or
disclosure purposes under generally accepted accounting principles. The FASB
believes that the new standard will make the measurement of fair value more
consistent and comparable and improve disclosures about those measures. FAS
157 is effective for fiscal years

                               F-23
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005

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

I. Newly Adopted Accounting Pronouncements (continued)

beginning after November 15, 2007. - The Company is currently evaluating the
requirements and impact of FAS 157 on the Company's consolidated financial
statements, and will adopt the provisions on January 1, 2008. FAS 157 is not
expected to have a material impact on the Company's consolidated financial
statements.

Also in September 2006, the FASB issued FASB Statement No. 158, "Employers'
Accounting for Defined Benefit Pension and other Postretirement Plans, an
amendment of FASB Statements No. 87, 88, 106 and 132- R" ("FAS 158"). FAS 158
requires an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan as an asset or liability in its statement
of financial position and to recognize changes in that funded status in the
year in which the changes occur through comprehensive income of a business
entity. FAS 158 also requires an employer to measure the funded status of a
plan as of the date of its year-end statement of financial position . This
statement is effective for the Company as of December 31, 2006, but did not
have an impact on the Company's consolidated financial statements as the
Company does not sponsor a defined benefit pension or postretirement plan.

In September 2006, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 108, Considering the Effects of Prior Year
Misstatements When Quantifying Misstatements in Current Year Financial
Statements ("SAB 108"), which provides interpretive guidance on how the
effects of the carryover or reversal of prior year misstatements should be
considered in quantifying a current year misstatement. The adoption of this
standard did not materially impact the Company's consolidated financial
statements.

     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.

     k.  Stock Options

As required by FASB Statement 123R "Share Based Payment", the Company elected
to measure and record compensation cost relative to employee stock option
costs. SFAS 123R requires compensation cost relating to share-based payment
transactions to be recognized in financial statements.  That cost will be
measured based on the fair value of the equity or liability instruments
issued.


                               F-24
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005

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

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 -  RELATED PARTY TRANSACTIONS

Related party payables at December 31, 2006 and 2005 represents amounts owed
to officers of the Company for reimbursement of expenses paid of $4,000.

During the year ended December 31, 2005, 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 the 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,
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 3 -  COMMITMENTS AND CONTINGENCIES

During February 1994, the Company entered into a lease for office space in
Pasadena, California.  The lease has been extended through October 2008 with
monthly rent payments of $789 with annual increases.

Future minimum lease payments under this non-cancelable operating lease are
$17,351 through October 2008.  Currently the lease is on a month-to-month
basis.

Rent expense was $9,948 and $19,412 for the years ended December 31, 2006 and
2005, respectively.


                               F-25
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005


NOTE 3 -  COMMITMENTS AND CONTINGENCIES (continued)


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 and restricted securities.  Such compensation is to be paid quarterly.
As of December 31, 2006, a total of $21,313 in salaries has been accrued.

NOTE 4 -  COMMON STOCK TRANSACTIONS

During the year ended December 31, 2006, the Company issued 725,000 shares of
common stock for services valued at $143,812; 250,000 shares issued for
warrants exercises valued at $20,000.

During the year ended December 31, 2005, the Company issued 412,500 shares of
common stock for services valued at $81,126; 160,000 shares issued for
payables of $10,000; 1,193,254 shares issued for warrants exercises valued at
$95,410.

Common stock issued for services, prepaid services and cash-less option
exercises have been accounted for at the fair market value of the securities
on the date of issue.

NOTE 5 -  STOCK OPTIONS AND WARRANTS

During February 2002, the Company entered into a consulting agreement which
provides for the issuance of 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, 2006, 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


                               F-26
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005


NOTE 5 -  STOCK OPTIONS AND WARRANTS (continued)

PHER-02 product in Asia (See Note 3).  The warrants are exercisable at a price
of $0.15 per share and expired February 21, 2006.  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.  Through
December 31, 2006, a total of 3,994,385 of these warrants have been exercised
with 1,943,115 remaining outstanding.

A summary of the status of the Company's outstanding stock options as of
December 31, 2006 and 2005 and changes during the years then ended is
presented below:

                                          2006                  2005

                                        Weighted       Weighted
                                        Average        Average
                                        Exercise       Exercise
                              Shares    Price         Shares     Price

     Outstanding, beginning of
      year                      2,843,757     $   0.15   8,756,578  $   0.15
     Granted                            -            -      80,000      0.10
     Expired/Cancelled           (470,642)        0.13  (4,799,567)     0.21
     Exercised                   (250,000)        0.08  (1,193,254)     0.08
                               ----------     --------  ----------  --------
     Outstanding end of year    2,123,115     $   0.08   2,843,757  $   0.09
                               ==========     ========  ==========  ========
     Exercisable                2,123,115     $   0.08   2,843,757  $   0.09
                               ==========     ========  ==========  ========

                         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, 2006      Life     Price      31, 2006      Price
$     0.08       1,943,115       1.50   $   0.08    1,943,115      $    0.08
      0.13         150,000        .10       0.13      150,000           0.13
      0.08          30,000       1.50       0.08       30,000           0.08

                 ---------              --------    ---------     ----------
                 2,123,115              $   0.08    2,123,115     $     0.08
                 =========              ========    =========     ==========

                               F-27
<PAGE>
               SANGUINE CORPORATION AND SUBSIDIARY
                  (A Development Stage Company)
          Notes to the Consolidated Financial Statements
                    December 31, 2006 and 2005


NOTE 6 -  GOING CONCERN

The Company's consolidated financial statements are prepared using generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business.  The Company has historically incurred significant
losses, which have resulted in an accumulated deficit of $6,357,531 at
December 31, 2006 which raises substantial doubt about the Company's ability
to continue as a going concern.  The accompanying financial statements do not
include any adjustments relating to the recoverability and classification of
asset carrying amounts or the amount and classification of liabilities that
might result from the outcome of this uncertainty.  The Company's management
has taken certain steps to maintain its operating and financial requirements
in an effort to enable the Company to continue as a going concern until such
time that revenues are sufficient to cover expenses, including:

The Company's management has taken certain steps to maintain its operating and
financial requirements in an effort to continue as a going concern until such
time as revenues are sufficient to cover expenses. Future plans include a debt
or equity offering for between $1,000,000 - $1,500,000 that should enable the
Company to complete the testing stage for FDA approval of its product.
However, management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plan described above, and
eventually attain profitable operations.  The accompanying financial
statements do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern.

NOTE 7 -  SUBSEQUENT EVENTS

     Effective January, 2007, the Company extended the expiration dates of
1,943,115 outstanding warrants to purchase shares of common stock to March,
2008.

     As a result, the Company will recognize an additional expense of $64,270.


                               F-28
<PAGE>
Item 8.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
---------------------

     During the past two fiscal years, and since then, there have been no
changes in our independent auditors or any disagreement on accounting and/or
financial disclosure.

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

Management's Annual Report on Internal Control Over Financial Reporting

     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 Secretary, of the effectiveness of the design and operation of
our disclosure controls and procedures. Based on this evaluation, our
President and Secretary concluded that information required to be disclosed is
recorded, processed, summarized and reported within the specified periods and
is accumulated and communicated to management, including our President and
Secretary, to allow for timely decisions regarding required disclosure of
material information required to be included in our periodic Securities and
Exchange Commission reports. Our disclosure controls and procedures are
designed to provide reasonable assurance of achieving their objectives and our
President and Secretary have concluded that our disclosure controls and
procedures are effective to a reasonable assurance level of achieving such
objectives. However, 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 over financial
reporting, and there have been no changes in our internal controls or in other
factors in the last fiscal quarter that has materially affected our internal
controls over financial reporting.

Changes in Internal Control Over Financial Reporting

     We had no changes in our internal control over financial reporting for
the period covered by this Annual Report.

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.

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

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

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.

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.

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

                                               Date of          Date of
                            Positions         Election or      Termination
  Name                      Held              Designation      or Resignation
  ----                      ----              -----------      --------------
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.

Robert Kwun, M.D.           Member               12/04               *

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

     Thomas C. Drees, Ph.D., MBA, Chairman, President, CEO and a Director. Dr.
Drees, age 78, is the founder of Sanguine California.  Dr. Drees was Vice
President and General Manager of Abbott Scientific Products Division,
collector of blood plasma derivatives and manufacturer of human blood
derivatives from 1973 to 1978.  From 1978 to 1984, he was the President and
CEO of Alpha Therapeutics Corporation, a subsidiary of Green Cross Corporation
of Japan and the developer of Fluosol DA 20, the only FDA-approved synthetic
blood product.  For 33 years, Dr. Drees has been involved at top management
levels with the collection, manufacture and marketing of human blood plasma
derivatives.  He has written many publications on the subject, including the
widely-acclaimed book "Blood Plasma: The Promise and the Politics," Ashley
Books, New York, 1983.

     David E. Nelson, CPA, Chief Financial Officer and Director.  Mr. Nelson,
age 63, 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 59 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 64 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 65 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 neurological disorders.

     Herbert J. Meiselman, Sc.D., Advisory Board Member, is 66 years of age.
He is an active Professor and Vice Chairman of the University of Southern
California School of Medicine, Department of Physiology and Biophysics.
Professor Meiselman graduated from Michigan Technical University with a BS
degree in 1962.  He received a Sc.D. degree from the Massachusetts Institute
of Technology in 1965.  As a Research Fellow at the California Institute of
Technology, he studied in-vivo microcirculatory blood flow from 1966 to 1968.
In 1968, he expanded his research studies to include in-vivo blood rheology, a
program jointly administered by the California Institute of Technology and the
University of Southern California Medical School.  Since 1972, Dr. Meiselman's
research at the University of Southern California has been concentrated in the
areas of blood rheology and the physical behavior of red blood cells and white
blood cells.  He has authored or co-authored over 300 papers on numerous
blood-related topics.

     Robert Kwun, M.D., Advisory Board Member, is 41 years of age.  He
graduated from Harvard University, and then received his medical degree from
Columbia University, in New York.  His clinical training includes Columbia
University's Manhattan Eye Ear and Throat Hospital, Los Angles Children's-USC
Medical Center, the Doheny Eye Institute and New York's St. Vincent's
Hospital.

Significant Employees.
----------------------

     There are no significant employees.

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.

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:

                                            Date Report        Date Report
Filer                 Transaction               Due               Filed
-----                 -----------               ---               -----
David E. Nelson       Disposal of               10/27/04         04/18/05
CPA                   110,000 shares
Director, CFO,        Acquisition of            04/13/05         04/18/05
Secretary/Treasurer   25,000 shares
                      Disposal of               01/05/05         04/18/05
                      246,627 warrants

Edward L. Kunkel      Acquisition of            04/13/05         04/19/05
Esq.                  25,000 shares
Director

Thomas C. Drees       Acquisition of            04/13/05         04/19/05
Ph.D.                 25,000 shares
Director and PresidentDisposal of              12/22/04         04/19/05
                      205,000 shares

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

     We have adopted a Code of Ethics which was attached as Exhibit 14 to our
Annual Report on Form 10-KSB for the calendar year ended December 31, 2002.
See Part III, Item 13.

Nominating Committee.
---------------------

     We have not established a Nominating Committee because we believe that
our three member Board of Directors is able to effectively manage the issues
normally considered by a Nominating Committee.

     If we do establish a Nominating Committee, we will disclose this change
to our procedures by which shareholders may recommend nominees to our board of
directors.

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

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

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:

                    SUMMARY COMPENSATION TABLE

(a)             (b)   (c)   (d)   (e)     (f)     (g)       (h)     (I)   (j)
                                               Non-Equity Non-      All  Total
                                               Incentive  Qualified Other Earn
Name and      Year               Stock  Option Plan       Deferred  Comp- ings
Principal           Salary Bonus Awards Awards Comp-      Comp-
Position              ($)   ($)    ($)    ($)   ($)        ($)       ($)   ($)
------------------------------------------------------------------------------
Thomas C.
Drees, Ph.D,12/31/06    *     0     0     0      *          0         0     0
MBA, CEO,   12/31/05    *     0     0     0      *          0         0     0
President   12/31/04    *     0     0     0      *          0         0     0
and Chairman
of the Board

David E.
Nelson, CPA 12/31/06    *     0     0      0     *          0         0     0
CFO and     12/31/05    *     0     0      0     *          0         0     0
Director    12/31/04    *     0     0      0     *          0         0     0

Edward L.
Kunkel, Esq.12/31/06    *     0     0     0      *          0         0     0
Director    12/31/05    *     0     0     0      *          0         0     0
            12/31/04    *     0     0     0      *          0         0     0

                *   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 employment contracts.  See
                    Part III, Items 12 and 13, below.

Outstanding Equity Awards.
--------------------------

     See the heading "Compensation of Directors" below.  Also, see the heading
"Securities Authorized for Issuance Under Equity Compensation Plans" in Part
II, Item 5, above.

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

     All directors, executive officers and Medical Advisory Board Members will
be paid 50,000 shares of our common stock per year, in quarterly issuances.

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:

Security Ownership of Certain Beneficial Owners.
------------------------------------------------

                                         Number of Shares         Percent
Name and Address                        Beneficially Owned       of Class *
----------------                        ------------------       --------
Thomas C. Drees, Ph.D., MBA                   40,315,633            48.7%
101 East Green Street, #11
Pasadena, California  91105
                                              ----------            -----
Total of all five percent                     40,315,633            48.7%
stockholders

               * Based upon 82,842,825 shares of outstanding common stock.


Security Ownership of Management.
---------------------------------

                                         Number of Shares        Percent
Name and Address                        Beneficially Owned       of Class*
----------------                        ------------------       --------
Thomas C. Drees, Ph.D., MBA                   40,315,633            48.7%
101 East Green Street, #11
Pasadena, California  91105

David E. Nelson, CPA                             566,794              .0068%
528 14th Avenue
Salt Lake City, Utah  84103

Edward L. Kunkel, Esq.                           312,500              .0038%
16 N. Marengo Ave, #517
Pasadena, California  91103
                                               ---------            -----
All directors and officers as a group         41,194,927            49.7%
(three persons)

               * Based upon 82,842,825 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.

Securities Authorized for Issuance under Equity Compensation Plans.
-------------------------------------------------------------------

                    Equity Compensation Plan Information
                    ------------------------------------

            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)
--------    ----------          -------------------    -----------------------
               (a)                      (b)                      (c)

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

Equity
compen-
sation
plans not      2,123,115                .08                   4,375,000
approved
by
security
holders

Total          2,123,115                                      4,375,000


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

Transactions with Related Persons.
----------------------------------

     Related party payables at December 31, 2006, and 2005, represents amounts
owed to our officers for reimbursement of expenses paid of $4,000.

     During the year ended December 31, 2005, we authorized the issuance of an
aggregate total of 32,777,266 shares of our common stock for: (I) the
cancellation of certain debts in the amount of $1,313,144, and (ii) the
contribution to the 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 us.  The
issuance of these shares is reflected in our financial statements.

     In addition, two convertible notes payable in the aggregate amount of
$28,750, plus accrued interest, were converted into 773,902 shares of our
common stock.  The issuance of these shares is also reflected in our financial
statements.

     Except as indicated above, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
our Company was or is to be a party, in which the amount involved exceeded
$60,000 and in which any director or executive officer, or any security holder
who is known to us to own of record or beneficially more than five percent of
our common stock, or any member of the immediate family of any of the
foregoing persons, or any promoter or founder had a material interest.

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

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

Transactions with Promoters and Control Persons.
------------------------------------------------

     Except as outlined above, there have been no material transactions,
series of similar transactions or currently proposed transactions, to which
our Company was or is to be a party, in which the amount involved exceeded
$60,000 and in which any director or executive officer, or any security holder
who is known to us to own of record or beneficially more than five percent of
our common stock, or any member of the immediate family of any of the
foregoing persons, or any promoter or founder had a material interest.

Item 13. Exhibits.
         ---------

Exhibits Incorporated by Reference.*
------------------------------------
          (I)
                                          Where Incorporated
                                            in this Report
                                            --------------
8-K Current Report dated September          Part I, Item 1
29, 2004**

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

Definitive Information Statement            Part I, Item 4
filed December 23, 2005

10-KSB for the fiscal year ended            Part I, Item 1
December 31, 2004**

          (ii)

Exhibit
Number               Description
------               -----------
3.2           Articles of Amendment increasing the authorized shares-
              Definitive Information Statement filed 12/23/2005**

3.3           Bylaws-8-K Current Report dated 11/28/2005**

14            Code of Ethics-Form 10KSB for the year ended December 31, 2002**

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, 2006, and
December 31, 2005:

     Fee category                      2006           2005
     ------------                      ----           ----

     Audit fees                        $21,705        $14,100

     Audit-related fees                $     0        $     0

     Tax fees                          $ 2,279        $     0

     All other fees                    $     0        $     0

     Total fees                        $23,984        $14,100

     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.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit
Services of Independent Auditors.
---------------------------------

     We do not have an Audit Committee; therefore, there is no Audit
Committee policy in this regard.  However, we do require approval in advance
of the performance of professional services to be provided us by our principal
accountant.  Additionally, all services rendered by our principal accountant
are performed pursuant to a written engagement letter between us and the
principal accountant.

                                SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act,
the Company caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                       SANGUINE CORPORATION




Date: 3/23/2007                      By /s/ Thomas C. Drees
      ---------------                    -------------------------------------
                                         Thomas C. Drees, Ph.D., MBA
                                         CEO, President and Chairman of the
                                         Board of Directors

Date: 3/23/2007                      By /s/ David E. Nelson
      ---------------                   -------------------------------------
                                        David E. Nelson, CPA
                                        CFO and Director
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