PINX:SGUI Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


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


For the quarterly period ended March 31, 2012


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


For the transition period from __________ to __________


Commission File Number 000-24480

                                           

Sanguine Corporation

(Exact name of registrant as specified in its charter)


Nevada

95-4347608

(State or other jurisdiction of

(IRS Employer Identification No.)

incorporation or organization)


110 Founders Mill Ct., Roswell Georgia

  

  30075

 (Address of principal executive offices)                            (Zip Code)


(678) 352-9060

 (Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

Yes [X]   No [   ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                                                                                                           Yes [X]  No  [  ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large Accelerated filer ¨

      Accelerated filer ¨

Non-accelerated filer  ¨ (Do not check if a smaller reporting company)

      Smaller reporting company x


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]   No [X]


Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

7,246,822 shares of $0.001 par value common stock on May 7, 2012





Part I - FINANCIAL INFORMATION


Item 1. Financial Statements

Sanguine Corporation

FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2012


The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  However, in the opinion of management, all adjustments (which include only normal recurring accruals) necessary to present fairly the financial position and results of operations for the periods presented have been made.  These financial statements should be read in conjunction with the accompanying notes, and with the historical financial information of the Company.








SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Consolidated Balance Sheets



ASSETS




 

March 31,

2012

 

December 31,

2011

 

 

(Unaudited)

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

$

1,858

$

1,436

 

 

 

 

 

  Total Current Assets

 

1,858

 

1,436

 

 

 

 

 

PROPERTY AND EQUIPMENT, NET

 

239

 

284

 

 

 

 

 

 

 

 

 

 

     TOTAL ASSETS

$

2,097

$

1,720




























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





SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Consolidated Balance Sheets (Continued)



LIABILITIES AND SHAREHOLDERS’ DEFICIT



 

 

March 31,

2012

 

December 31,

2011

 

 

(Unaudited)

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

Accounts payable

$

254,371

$

261,814

Accrued interest

 

20,059

 

14,539

Related party payable

 

407,641

 

357,641

Convertible promissory notes payable, net of debt discounts of 

   $49,778 and $64,461,  respectively

 



157,422

 



121,739

 

 

 

 

 

  Total Current Liabilities

 

839,493

 

755,733

 

 

 

 

 

     Total Liabilities

 

839,493

 

755,733

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

 

Preferred stock, 10,000,000 shares authorized of $0.001 par value,

  75,000 and 150,000 shares issued and outstanding, respectively

 



75

 



75

Common stock, 200,000,000 shares authorized of $0.001 par value,

  7,246,822 issued and outstanding, respectively

 


7,247

 


7,247

Additional paid in capital

 

9,820,611

 

9,817,416

Deficit accumulated during the development stage

 

(10,665,329)

 

(10,578,751)

 

 

 

 

 

   Total Shareholders’ Deficit

 

(837,396)

 

(754,013)

 

 

 

 

 

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT

$

2,097

$

1,720











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




SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)


 

 

For the Three Months Ended

March 31,

 

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

 

 

2012

 

2011

 

2012

REVENUES

$

-

$

-

$

224,732

 

 

 

 

 

 

 

COST OF SALES

 

-

 

-

 

18,297

 

 

 

 

 

 

 

GROSS PROFIT

 

-

 

-

 

206,435

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

  Professional fees

 

19,929

 

54,186

 

5,619,171

  Research and development

 

-

 

10,870

 

1,991,260

  Stock based compensation

 

-

 

984,975

 

986,775

  Selling, general and administrative

 

43,250

 

42,087

 

3,113,748

 

 

 

 

 

 

 

     Total Operating Expenses

 

63,179

 

1,092,118

 

11,710,954

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(63,179)

 

(1,092,118)

 

(11,504,519)

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

  Interest income

 

-

 

-

 

40,195

  Interest expense

 

(23,399)

 

(4,352)

 

(759,858)

  Gain (loss) on foreign currency exchange

 

-

 

-

 

(9,099)

  Loss on cash deposit

 

-

 

-

 

(10,020)

  Gain on settlement of debt

 

-

 

-

 

1,577,972

 

 

 

 

 

 

 

     Total Other Income (Expense)

 

(23,399)

 

(4,352)

 

839,190

 

 

 

 

 

 

 

NET LOSS BEFORE PROVISION FOR INCOME TAX

 

(86,578)

 

(1,096,470)

 

(10,665,329)

 

 

 

 

 

 

 

PROVISION FOR INCOME TAX

 

-

 

-

 

-

 

 

 

 

 

 

 

NET LOSS

$

(86,578)

$

(1,096,470)

$

(10,665,329)

 

 

 

 

 

 

 

BASIC AND DILUTED LOSS PER SHARE

$

(0.01)

$

(0.16)

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING –BASIC AND DILUTED

 


7,246,822

 


6,693,322

 

 

 

 

 

 

 

 

 



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






SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

 Consolidated Statements of Cash Flows

(Unaudited)

 

 

For the Three Months Ended

March 31,

 

From Inception of the Development Stage

on January 18, 1990

through  March 31,

 

 

2012

 

2011

 

2012

Net loss

$

(86,578)

$

(1,096,470)

$

(10,665,329)

Adjustments to reconcile net loss to net cash used

  by operating activities:

 

 

 

 

 

 

  Depreciation and amortization

 

45

 

45

 

6,757

  Common stock issued for services

 

-

 

-

 

3,365,446

  Contributed capital

 

3,195

 

3,324

 

32,692

  Stock based compensation

 

-

 

987,525

 

1,002,259

  Stock warrants granted

 

-

 

-

 

8,650

  Amortization of debt discounts

 

14,683

 

-

 

63,322

  Legal expense related to beneficial conversion feature

 

-

 

-

 

3,750

  Note payable issued for services

 

-

 

-

 

727,950

  Gain on extinguishments of debt

 

-

 

-

 

(181,753)

  Gain on conversions of debt to equity

 

-

 

-

 

(1,396,219)

  Recognition of expenses prepaid with common stock

 

-

 

-

 

456,184

  Warrant extension

 

-

 

-

 

34,493

  Gain (loss) on foreign currency exchange

 

-

 

-

 

9,099

Changes in assets and liabilities:

 

 

 

 

 

 

  (Increase) decrease in accounts receivable

 

-

 

28,000

 

-

  (Increase) decrease in prepaid expense

 

-

 

-

 

1,198,717

  Increase in accounts payable and related party payables

 

42,557

 

53,148

 

1,025,567

  Increase in accrued interest payable

 

5,520

 

1,030

 

568,657

  Increase in accrued liabilities

 

-

 

-

 

10,125

  Increase in customer deposits

 

-

 

-

 

45,000

  Increase in accrued salaries

 

-

 

-

 

987,661

      Net Cash Used by Operating Activities

 

(20,578)

 

(23,398)

 

(2,696,972)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

   Cash paid for fixed assets

 

-

 

-

 

(6,995)

      Net Cash Used by Investing Activities

 

-

 

-

 

(6,995)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

  Proceeds from warrant conversion

 

-

 

-

 

524,700

  Proceeds from notes payable and notes payable-

  related party

 


21,000

 


37,000

 


437,800

  Payments on notes payable and notes payable –

  related party

 


-

 


-

 


(22,900)

  Proceeds from issuance of convertible debentures

 

-

 

-

 

40,000

  Contributed capital

 

-

 

-

 

750

  Preferred stock subscription

 

-

 

-

 

33,500

  Preferred stock issued for cash

 

-

 

-

 

125,000

  Common stock issued for cash

 

-

 

-

 

1,566,975

      Net Cash Provided by Financing Activities

 

21,000

 

37,000

 

2,705,825

NET INCREASE (DECREASE) IN CASH

 

422

 

13,602

 

1,858

CASH AT BEGINNING OF PERIOD

 

1,436

 

1,195

 

-

CASH AT END OF PERIOD

$

1,858

$

14,797

$

1,858

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




SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Consolidated Statements of Cash Flows (Continued)

(Unaudited)



 

 

 

For the Three Months Ended

March 31,

 

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

 

 

2012

 

2011

 

2012

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

 

 

 

 

 

 

CASH PAID FOR:

 

 

 

 

 

 

   Interest

$

-

$

-

$

-

   Income taxes

$

-

$

800

$

2,500

 

 

 

 

 

 

 

NON-CASH FINANCING ACTIVITIES

 

 

 

 

 

 

  Common stock issued for debt conversion

$

-

$

-

$

9,600

  Equity instruments issued for services rendered

$

-

$

-

$

3,236,641

  Contributed capital for interest contributed

$

3,195

$

3,324

$

32,692

  Interest on beneficial conversion feature

$

14,683

$

-

$

63,322

  Legal related to beneficial conversion feature

$

-

$

-

$

3,750

  Notes payable issued for services

$

-

$

-

$

727,950

  Common stock issued for prepaid services

$

-

$

-

$

585,019

  Common stock issued for debt

$

-

$

6,075

$

2,842,123

  Conversion of preferred stock to common stock

$

-

$

-

$

500

  Stock subscription converted to note payable

$

-

$

-

$

8,500


















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





SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2012 and December 31, 2011


NOTE 1 -

BASIS OF FINANCIAL STATEMENT PRESENTATION


The accompanying unaudited financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented are adequate to make the information not misleading, it is suggested that these interim financial statements be read in conjunction with the Company’s most recent audited financial statements and notes thereto included in its December 31, 2011 Annual Report on Form 10-K.  Operating results for the three months ended March 31, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.


NOTE 2 -

ORGANIZATION AND DESCRIPTION OF BUSINESS


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.


On March 7, 2008, the Company formed a wholly owned subsidiary called Sanguine Lifescience Corporation.  As part of the formation of Sanguine Lifescience Corporation, the Company transferred $15,000 to a bank account for Sanguine Lifescience use.  At this time, Sanguine Lifescience Corporation is not engaged in any business other than normal corporate matters.






SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2012 and December 31, 2011


NOTE 3 -

GOING CONCERN


The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease operations.


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 animal testing stage for FDA approval of its product.  However, management cannot provide any assurance 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 plans described in the preceding paragraph and eventually secure other sources of financing and 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.


























9





SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2012 and December 31, 2011




NOTE 4 -

STOCK WARRANTS AND OPTIONS


The Company had no outstanding stock warrants during the three months ended March 31, 2012, and the year ended December 31, 2011.  During 2011 the Company granted 3,000,000 options to purchase the Company’s common stock for an exercise price of $0.20 per share for a period of 60 months beginning in February 2011 and 59,283 options to purchase the Company’s common stock for an exercise price of $0.10 per share for a period of 35 months beginning in February 2011.  The options were granted as part of an employment agreement with Frank Marra entered into during the quarter.  The Company valued the options using the Black-Scholes option-pricing model with the following assumptions: dividend yield of zero percent; expected volatility of 176.85%; risk-free interest rate of 2.39%; and expected life of 5 years.   A summary of the status of the Company’s outstanding stock options as of March 31, 2012 and December 31, 2011 and changes during the periods then ended is presented below:


 

2012

 

2011

 




Shares

 

Weighted Average Exercise Price

 




Shares

 

Weighted Average Exercise Price

Outstanding, beginning of year

3,760,716

 

$

.18

 

701,433

 

$

.10

Granted

-

 

 

-

 

3,059,283

 

 

.20

Expired/Cancelled

-

 

 

-

 

-

 

 

-

Exercised

-

 

 

-

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

Outstanding end of year

3,760,716

 

$

.18

 

3,760,716

 

$

.18

 

 

 

 

 

 

 

 

 

 

Exercisable

3,760,716

 

$

.18

 

3,760,716

 

$

.18



 

 

Outstanding

 

Exercisable




Range of Exercise Prices

 




Number outstanding at March 31, 2011

 


Weighted Average Remaining Contractual Life

 


Number Exercisable at March 31, 2011

$

.10-.20

 

3,760,716

 

3.44

 

3,760,716

 

 

 

3,760,716

 

 

 

3,760,716









10




SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2012 and December 31, 2011


NOTE 5 -

NOTES PAYABLE


During 2011, the Company entered into a convertible promissory note agreement with an investor for $20,000.  The note carries an interest rate of 10% per annum.  The term of the loan is 18 months.  The principal and interest on the note may be converted into shares of common stock at the lower of $0.16 or a price equal to that of the thirty day moving average of the adjusted closing price for the Company’s common stock.    In accordance with FASB ASC 470 a beneficial conversion feature was recognized as a debt discount of $5,000 upon the issuance of this loan which will be amortized over the life of the loan.  As of March 31, 2012, $1,389 of the discount had been amortized to interest expense. Accrued interest on this note was $833 and $333 as of March 31, 2012 and December 31, 2011, respectively.


During 2010, the Company entered into a loan agreement with an investor.  The note carried an interest rate of 7% per annum.  During the year ended December 31, 2011, the Company received $137,000 in proceeds from additional loans made under this agreement.  Effective August 1, 2011, a new agreement was entered into converting the note to a senior convertible promissory note, with a term of 18 months and an interest rate of 10% per annum.   The principal balance at that date was $166,200.  The principal and interest on the note may be converted into shares of common stock at the lower of $0.20 or a price equal to that of the thirty day moving average of the adjusted closing price for the Company’s common stock.   In accordance with FASB ASC 470 a beneficial conversion feature was recognized as a debt discount of $83,100 upon entry into the new agreement to be amortized over the life of the loan.  As of March 31, 2012, $36,933 of the discount had been amortized to interest expense.  In February 2012, the Company received $21,000 in proceeds from an additional loan made under this agreement.  The terms remain the same with the due date being extended to February 28, 2013.  The principal balance due was $187,200 and $166,200 at March 31, 2012 and December 31, 2011, respectively.  Interest accrued on this note is $15,145 and $10,815 as of March 31, 2012 and December 31, 2011, respectively.














11





SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2012 and December 31, 2011


NOTE 6 -

EQUITY TRANSACTIONS


During the year ended December 31, 2011, the Company executed an employment agreement with the President of the Company which provided 3,000,000 options to purchase the Company’s common stock for an exercise price of $0.20 per share for a 60 month period beginning in February 2011.  The options were valued using the Black-Scholes option pricing model, with the following assumptions: dividend yield of zero percent; expected volatility of 176.85%; risk-free interest rate of 2.39%; and expected life of 5 years.  The value of the options was $984,975 and was expensed.


The Company issued 42,000 shares of common stock during the year ended December 31, 2011.  The stock was issued as the result of the conversion of two notes payable valued at $9,000 and related accrued interests of $1,318.  The stock was issued at $0.29 per share for a total value of $12,180.  A loss of $1,862 was recognized in the transaction.


The Company issued 22,500 shares of common stock during the year ended December 31, 2011, as compensation to the members of the Board of Directors.  The shares were valued at $0.35 per share for a total expense of $7,875.


Also during the year ended December 31, 2011, a holder of 75,000 shares of series A preferred stock exercised the conversion of that preferred stock.  As a result the Company issued 500,250 shares of common stock to this stockholder.  The number of common shares was determined at the conversion rate of 6 2/3 shares of common stock per share of preferred stock as specified in the conversion terms for the series A preferred shares.


NOTE 7 -

RELATED PARTY TRANSACTION


Related party payables at March 31, 2012 and December 31, 2011 represent amounts owed to officers of the Company for consulting fees and reimbursement of expenses paid of $407,641 and $357,640, respectively.  Interest of 6% -15% was computed on the balance of the related party payable and recorded $3,195 as additional paid in capital and $690 of accrued interest.


NOTE 8 -    SUBSEQUENT EVENTS


The Company has evaluated subsequent events per the requirements of ASC Topic 855 and has determined that there are no reportable subsequent events.















12




Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations


Special Note Regarding Forward-Looking Statements


This periodic report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the Plan of Operations provided below, including information regarding the Company’s financial condition, results of operations, business strategies, operating efficiencies or synergies, competitive positions, growth opportunities, and the plans and objectives of management. The statements made as part of the Plan of Operations that are not historical facts are hereby identified as "forward-looking statements."


Critical Accounting Policies and Estimates


The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the unaudited Financial Statements and accompanying notes.  Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from these estimates under different assumptions or conditions.  The Company believes there have been no significant changes during the three and nine month periods ended March 31, 2012 and 2011, to the items disclosed as significant accounting policies since the Company’s last audited financial statements for the year ended December 31, 2011.


The Company’s accounting policies are more fully described in Note 1 of the consolidated financial statements.  As discussed in Note 1, the preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about the future events that affect the amounts reported in the consolidated financial statements and the accompanying notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances.  Actual results could differ from these estimates under different assumptions or conditions.  The Company believes that the following addresses the Company’s most critical accounting policies.


We recognize revenue in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, “Revenue Recognition” (“SAB 104”).  Under SAB 104, revenue is recognized at the point of passage to the customer of title and risk of loss, when there is persuasive evidence of an arrangement, the sales price is determinable, and collection of the resulting receivable is reasonably assured.  We recognize revenue as services are provided.  Revenues are reflected net of coupon discounts.


We account for income taxes in accordance with ASC Topic 740.  Under ASC Topic 740, deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets will be reflected on the balance sheet when it is determined that it is more likely than not that the asset will be realized.  A valuation allowance has currently been recorded to reduce our deferred tax asset to $0.  


Plan of Operation.


We are moving forward with testing of our product and seeking industry partners to assist in defraying the costs of testing.  Additionally, we are looking to start selling some of our product for use in research by labs around the country.  These efforts will be dependent on additional financing.  We have had communications with several labs and are in the process of investigating potential material supply contracts with such labs.  These contracts will allow us to start receiving potential revenues which would then be applied to further development and testing of our proposed products.


Patents


Presently, we do not have any patents on our technology or processes.  Our prior patents have not been renewed

13




and we are in the process of filing new patents on the new processes and formulas.  At this time, we cannot say if these applications will be successful.  Additionally, without additional funding, we will not be able to complete the patent process.


Results of Operations


The Company had no sales during the quarter ended March 31, 2012. We realized a net loss of $86,578 for the three months ended March 31, 2012, compared to a net loss of $1,096,470 for the three months ended March 31, 2011.  Most of our expense for the three month period related to professional fees and selling, general and administrative expenses.  For March 31, 2011, a majority of the expenses were non cash stock based compensation expenses of $984,975.  Since we had no revenues, we have had to rely on stock sales and loans to fund our operations and continue to increase our payables since we do not have the funds to pay all of our expenses.


As we move more to trying to sell products to labs around the country, our selling, general and administrative expenses have been increasing.  For the three months ended March 31, 2012, our selling, general and administrative expenses were $43,250 compared to $42,087 for the same periods in 2011.  We are hopeful these selling efforts are paying off and hope to be able to start shipping product to labs around the country in the upcoming quarters. Presently, we have not had much success in selling our products to labs and are evaluating our current focus to see if other avenues for sales may be better.


Liquidity and Capital Resources


As of March 31, 2012, we had $1,858 in cash and $839,493 in current liabilities. Our cash position is not sufficient to cover our accounts payable or other current liabilities with working capital at March 31, 2012, of negative $837,635. As such we will be dependent on our ability to raise additional debt or equity capital to be able to cover current liabilities.  Without additional equity or debt financing, it will be difficult for the Company to remain in business. During the quarter ended March 31, 2012, we borrowed an additional $21,000 from Wharton Capital, which is affiliated with our president, to pay ongoing expenses.  In August 2011, we entered into a loan agreement with Wharton Capital, a company affiliated with our president, to provide additional financing which increased the outstanding balance payable to Wharton to $166,200 as of that time.  The note combined all prior notes and advances between the Company and Wharton Capital into this one note.  The term of the note is eighteen months and bears interest at ten percent (10%) per annum.  Interest payments of $4,155 are due on a quarterly basis on the last day of each of the Company’s fiscal quarters.  The note is convertible into shares of the Company’s common stock at the lower of twenty cents ($0.20) per share or a price equal to a thirty day moving average stock price as posted on Yahoo finance or other quotation mediums.  Additionally, the note provides anti-dilution protection to Wharton Capital so that if the Company issued any equity, Wharton Capital will have the right, but not the obligation, to purchase additional shares of the Company’s common stock to maintain its current percentage of ownership in the Company.  Even with the Wharteon note, the Company still needs additional funding in order to continue developing its products and paying past and ongoing obligations.  At this time, the Company has no commitments for additional funding.


Off-balance sheet arrangements


We had no off-balance sheet arrangements during the quarter ended March 31, 2012.


Forward-looking Statements


Our Company and our representatives may from time to time make written or oral statements that are “forward-looking,” including statements contained in this Annual Report and other filings with the Securities and Exchange Commission and in reports to our Company’s stockholders. Management believes that all statements that express expectations and projections with respect to future matters, as well as from developments beyond our Company’s control including changes in global economic conditions are forward-looking statements within the meaning of the Act. These statements are made on the basis of management’s views and assumptions, as of the time the statements are made, regarding future events and business performance. There can be no assurance, however, that



14




management’s expectations will necessarily come to pass. Factors that may affect forward- looking statements include a wide range of factors that could materially affect future developments and performance, including the following:


Changes in Company-wide strategies, which may result in changes in the types or mix of businesses in which our Company is involved or chooses to invest; changes in U.S., global or regional economic conditions, changes in U.S. and global financial and equity markets, including significant interest rate fluctuations, which may impede our Company’s access to, or increase the cost of, external financing for our operations and investments; increased competitive pressures, both domestically and internationally, legal and regulatory developments, such as regulatory actions affecting environmental activities, the imposition by foreign countries of trade restrictions and changes in international tax laws or currency controls; adverse weather conditions or natural disasters, such as hurricanes and earthquakes, labor disputes, which may lead to increased costs or disruption of operations.


This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative, but by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk.


NA-Small Reporting Company


Item 4.  Controls and Procedures.


Evaluation of Disclosure Controls and Procedures


Our management, with the participation of our President and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our President and Principal Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President and Principal Financial Officer, as appropriate to allow timely decisions regarding disclosure.


Changes in internal control over financial reporting


There have been no changes in internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  



PART II - OTHER INFORMATION


ITEM 1.  Legal Proceedings


None


ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds


Recent Sales of Unregistered Securities


No additional sales of unregistered securities occurred during the March 31, 2012 quarter, except for the addition of $21,000 in debt financing.  In August 2011, we did issue a convertible promissory note to with Wharton Capital, a company affiliated with our CEO.  The note is for a period of 18 months and bears interest at 10% per annum.  The principal balance at the time of issuance was $166,200 with interest payments due and payable quarterly. The note is



15




convertible into shares of the Company’s common stock at the lower of twenty cents ($0.20) per share or a price equal to a thirty day moving average stock price as posted on Yahoo finance or other quotation mediums.  During the quarter ended March 31, 2012, the additional $21,000 in debt financing was received from Wharton Capital under the terms of the above note.  Please see our annual report on Form 10K for the year ended December 31, 2011 for all sales during the prior two years.


Use of Proceeds of Registered Securities


None; not applicable.


Purchases of Equity Securities by Us and Affiliated Purchasers


During the three months ended March 31, 2012, we have not purchased any equity securities nor have any officers or directors of the Company.


ITEM 3.  Defaults Upon Senior Securities


We are not aware of any defaults upon senior securities.


ITEM 4.  Mine Safety Disclosure


NA – We are not engaged in any mining activity.


ITEM 5.  Other Information.


None


ITEM 6.  Exhibits


(a)

Exhibits.


The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed.

Exhibit

Number               Description

Location

10.1

Loan Agreement – Wharton Capital, LC August 1, 2011

Incorporated by Reference

From June 30, 2011 10Q


31.1

302 Certification of CEO

This Filing


31.2

302 Certification of Principal Financial Officer

This Filing


32

906 Certification

This Filing


101.INS

 XBRL Instance*


101.XSD 

XBRL Schema*


101.CAL

 XBRL Calculation*


101.DEF

 XBRL Definition*


101.LAB

XBRL Label*


101.PRE

XBRL Presentation*



16





**XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Sanguine Corporation

(Registrant)





Date: May 14, 2012

By: /s/ Frank Marra

Frank Marra

CEO and Chairman of the

Board of Directors


Date: May 14, 2012

By: /s/ Frank Marra

Frank Marra

Principal Financial Officer and Director





17



PINX:SGUI Sanguine Corp Quarterly Report 10-Q Filling

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PINX:SGUI Quarterly Report 10-Q Filing - 3/31/2012
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