10-Q

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, 2011

[   ] 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).  The registrant is not yet part of the Interactive Data reporting system.

Yes [  ]  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.

6,704,572 shares of $0.001 par value common stock on May 19, 2011

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

Sanguine Corporation

FINANCIAL STATEMENTS

(UNAUDITED)

March 31, 2011

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.

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SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Consolidated Balance Sheets

ASSETS

		March 31, 2011		December 31, 2010
		(Unaudited)
CURRENT ASSETS
Cash	$	14,797	$	1,195
Accounts receivable		-		28,000
Total Current Assets		14,797		29,195
PROPERTY AND EQUIPMENT, NET		418		463
TOTAL ASSETS	$	15,215	$	29,658

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

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SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Consolidated Balance Sheets (Continued)

LIABILITIES AND SHAREHOLDERS’ DEFICIT

		March 31, 2011		December 31, 2010
		(Unaudited)
CURRENT LIABILITIES
Accounts payable	$	260,541	$	244,359
Accrued interest		3,360		2,330
Related party payable		219,641		182,675
Notes payable		66,700		29,700
Accrued compensation		-		6,075
Total Current Liabilities		550,242		465,139
Total Liabilities		550,242		465,139
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ DEFICIT
Preferred stock, 10,000,000 shares authorized of   $0.001 par value, 150,000 shares issued and    outstanding, respectively		150		150
Common stock, 200,000,000 shares authorized of   $0.001 par value, 6,704,572 and 6,682,072 shares    issued and outstanding, respectively		6,705		6,682
Additional paid in capital		9,694,836		8,697,935
Preferred stock subscribed		8,500		8,500
Deficit accumulated during the development stage		(10,245,218)		(9,148,748)
Total Shareholders’ Deficit		(535,027)		(435,481)
TOTAL LIABILITIES AND SHAREHOLDERS’   DEFICIT	$	15,215	$	29,658

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

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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
2011	2010	2011

REVENUES	$	-	$	-	$	224,732
COST OF SALES		-		-		18,297
GROSS PROFIT		-		-		206,435
OPERATING EXPENSES
Professional fees		54,186		47,355		5,469,968
Research and development		10,870		-		1,984,028
Stock based compensation		984,975		-		984,975
Selling, general and administrative		42,087		7,245		2,921,303
Total Operating Expenses		1,092,118		54,600		11,360,274
LOSS FROM OPERATIONS		(1,092,118)		(54,600)		(11,153,839)
OTHER INCOME (EXPENSE)
Interest income		-		-		40,195
Interest expense		(4,352)		(2,794)		(692,289)
Gain (loss) on foreign currency exchange		-		6,024		(9,099)
Loss on cash deposit		-		-		(10,020)
Gain on settlement of debt		-		-		1,579,834
Total Other Income (Expense)		(4,352)		3,230		908,621
NET LOSS BEFORE PROVISION FOR INCOME TAX		(1,096,470)		(51,370)		(10,245,218)
PROVISION FOR INCOME TAX		-		-		-
NET LOSS	$	(1,096,470)	$	(51,370)	$	(10,245,218)
BASIC AND DILUTED LOSS PER SHARE	$	(0.16)	$	(0.01)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING –BASIC AND DILUTED		6,693,322		6,682,072

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

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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
		2011		2010		2011
Net loss	$	(1,096,470)	$	(51,370)	$	(10,245,218)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		45		119		6,578
Common stock issued for services		-		-		3,365,446
Contributed capital		3,324		2,636		21,464
Stock options granted		987,525		-		987,525
Stock warrants granted		-		-		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		-		-		(181,753)
Gain on conversions of debt to equity		-		-		(1,398,081)
Recognition of expenses prepaid with common stock		-		-		456,184
Warrant extension		-		-		34,493
Gain (loss) on foreign currency exchange		-		(6,024)		9,099
Changes in assets and liabilities:
Decrease in accounts receivable		28,000		-		-
Decrease in prepaid expense		-		27,961		1,198,717
Increase in accounts payable and related party payables		53,148		17,371		843,737
Increase in accrued interest payable		1,030		158		550,640
Increase in accrued liabilities		-		-		10,125
Increase in customer deposits		-		-		45,000
Increase in accrued salaries		-		831		987,661
Net Cash Used by Operating Activities		(23,398)		(8,318)		(2,543,033)
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		37,000		-		296,800
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		-		8,500		33,500
Preferred stock issued for cash		-		-		125,000
Common stock issued for cash		-		-		1,566,975
Net Cash Provided by Financing Activities		37,000		15,116		2,564,825
NET INCREASE (DECREASE) IN CASH		13,602		182		14,797
CASH AT BEGINNING OF PERIOD		1,195		1,928		-
CASH AT END OF PERIOD	$	14,797	$	2,110	$	14,797

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

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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
2011	2010	2011

SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES
CASH PAID FOR:
Interest	$	-	$	-	$	-
Income taxes	$	-	$	800	$	2,500
NON-CASH ACTIVITIES
Common stock issued for debt conversion	$	-	$	-	$	9,600
Contributed capital for interest contributed	$	3,324	$	2,636	$	21,464
Interest on beneficial conversion feature	$	-	$	-	$	25,000
Legal related to beneficial conversion feature	$	-	$	-	$	3,750
Common stock issued for prepaid services	$	-	$	-	$	585,019
Common stock issued for debt and accrued expenses	$	6,075	$	-	$	2,828,142

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

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SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2011 and December 31, 2010

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, 2010 Annual Report on Form 10-K.  Operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

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.

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SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2011 and December 31, 2010

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 which is estimated to enable the Company to complete the initial 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.

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SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2011 and December 31, 2010

NOTE 4 -

STOCK WARRANTS AND OPTIONS

The Company had no outstanding stock warrants during the three months ended March 31, 2011, and the year ended December 31, 2010.  During the three months ended March 31, 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 2,362 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, 2011 and December 31, 2010 and changes during the periods then ended is presented below:

	2011			2010
	Shares	Weighted Average Exercise Price		Shares	Weighted Average Exercise Price
Outstanding, beginning of year	701,433	$	.10	701,433	$	.10
Granted	3,002,362		.20	-		-
Expired/Cancelled	-		-	-		-
Exercised	-		-	-		-
Outstanding end of year	3,703,795	$	.18	701,433	$	.10
Exercisable	3,703,795	$	.18	701,433	$	.10

		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		3,703,795	4.44	3,703,795
			3,703,795		3,703,795

NOTE 5 -

NOTES PAYABLE

During 2010, the Company entered into a loan agreement with an investor.  The note carries an interest rate of 7% per annum.  The balance of this loan at March 31, 2011 and December 31, 2010, was $57,700 and $20,700, respectively, along with accrued interest of $1,303 and $649, respectively.  Subsequent to March 31, 2011, the Company obtained a letter of understanding from the investor waiving all payments and any requirements for the issuance of options until June 30, 2011.    

During 2009, the Company entered into loan agreements with investors for $9,000.  The notes carry an

interest rate of 7% and are due on demand.  Interest expense for the quarter ended March 31, 2011 was $158.  The balance on these notes at March 31, 2011 and December 31, 2010 was $9,000 and $9,000, respectively, along with accrued interest of $1,208 and $1,050 respectively.

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SANGUINE CORPORATION & SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial Statements

March 31, 2011 and December 31, 2010

NOTE 6 -

EQUITY TRANSACTIONS

During the three months ended March 31, 2010 the Company issued 22,500 shares of common stock for services rendered.  The shares were valued at $7,875.

During the quarter 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 in the current quarter.

NOTE 7 -

RELATED PARTY TRANSACTION

Related party payables at March 31, 2011 and December 31, 2010 represent amounts owed to officers of the Company for consulting fees and reimbursement of expenses paid of $219,641 and $182,675, respectively.  Interest of 6% -15% was computed on the balance of the related party payable and recorded as $3,324 of additional paid in capital and $217 of accrued interest.

During the quarter, the Company executed an employment agreement with the President of the Company.  See discussion in Note 6 above.

NOTE 8 -    SUBSEQUENT EVENTS

Subsequent to March 31, 2011, the Company received $23,000 in proceeds from new notes payable and obtained a letter of understanding from an investor, delaying the payment date for an outstanding note. See discussion in Note 5.  The Company has evaluated subsequent events per the requirements of ASC Topic 855 and has determined that there are no additional reportable subsequent events.

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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 month periods ended March 31, 2011 and 2010, to the items disclosed as significant accounting policies since the Company’s last audited financial statements for the year ended December 31, 2010.

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 have not commenced planned principal operations, but have made progress, in formulation and stability testing. 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.

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Patents

Presently, we do not have any patents on our technology or processes.  Our prior patents have not been renewed 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, 2011.  The Company continues to focus on the development of its products.  As such, the Company has not had substantial revenue in either the quarter ended March 31, 2011 or 2010.  We continue to focus on the research and development activities related to our PHER-O2 and are focusing more on its use in research labs around the world.

We realized a net loss of $1,096,470 for the quarter ended March 31, 2011, and a net loss of $51,370 for the quarter ended March 31, 2010.  Most of our expense related to non-cash expenses related to employment contracts with our management.  In the quarter ended March 31, 2011, we entered into a new employment contract with our president and under the Black-Scholes model we recorded an expense related to the options of $984,475.  Without this non-cash expense, our loss would have been $111,495 for the quarter ended March 31, 2011.  Since we have limited 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 selling products to labs around the country, our selling, general and administrative expenses have been increasing.  For the quarter ended March 31, 2011, our selling, general and administrative expenses were $42,087 compared to $7,245 for the same period in 2010.  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.

Liquidity and Capital Resources

As of March 31, 2011, we had $14,797 in cash and $550,242 in current liabilities. Our cash position is not sufficient to cover our accounts payable or other current liabilities with working capital at March 31, 2011, of negative $535,445. 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.  In January 2011, we entered into a loan agreement with Wharton Capital, a company affiliated with our president, to provide additional financing of $25,000 which increased the outstanding balance payable to Wharton to $45,700 as of that time.  Wharton subsequently has loaned the Company an additional $35,000 of which $12,000 was received prior to March 31, 2011, with the remaining $23,000 loaned to the Company subsequent to March 31, 2011.  We are trying to restructure the loan agreement with Wharton recognizing we cannot pay Wharton under the current terms of the loan agreement.  Wharton has provided a waiver of payments until June 30, 2011 in an effort to restructure the loan agreement.  Under the terms of the loan agreement, the Company is required to issue Wharton 200,000 stock options with an exercise price of $0.20 per option.  At this time, Wharton has waived the issuance of the option until June 30, 2011 to provide us with time to restructure the loan agreement.  Even with restructuring the Wharton loan agreement, we still need additional funding to remain in business and advance our business plan.   

Off-balance sheet arrangements

We had no off-balance sheet arrangements during the quarter ended March 31, 2011.

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

13

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 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. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.  Management believes, however, that our controls do provide reasonable assurances.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes of accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management, with the participation of the President and Principal Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of March 31, 2011.  Based on this evaluation, our management,

14

with the participation of the President and Principal Financial Officer, concluded that, as of March 31, 2011, our internal control over financial reporting was ineffective in that it failed to timely book equity transactions.  We are working to resolve this issue and have added additional consultants to assist in reviewing all transactions to assure they are timely recorded.

Changes in internal control over financial reporting

There have been no changes in 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, 2011 quarter.  Please see our annual report on Form 10K for the year ended December 31, 2010 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, 2011, 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.  Removed and Reserved

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 January 3, 2011

This Filing

31.1

302 Certification of CEO

This Filing

31.2

302 Certification of Principal Financial Officer

This Filing

32

906 Certification

This Filing

15

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 20, 2011

By: /s/ Frank Marra

Frank Marra

CEO and Chairman of the

Board of Directors

Date: May 20, 2011

By: /s/ Frank Marra

Frank Marra

Principal Financial Officer and Director

16

EX-10

LOAN AGREEMENT AND PROMISSORY NOTE

THIS LOAN AGREEMENT AND PROMISSORY NOTE (the “Note”), is made this 3rd day of January, 2011, by and among Wharton Capital, LLC (hereinafter, known as “LENDER”) and SANGUINE CORP, a Corporation organized under the laws of the State of Nevada (hereinafter, known as “BORROWER”).  BORROWER and LENDER shall collectively be known herein as “the Parties”.  In determining the rights and duties of the Parties under this Loan Agreement, the entire document must be read as a whole.

PROMISSORY NOTE

FOR VALUE RECEIVED, BORROWER promises to repay to the order of LENDER, the sum of $45,000.00 dollars together with interest thereon at a rate of 7 percent (%) per annum.

ADDITIONAL LOAN TERMS

The BORROWER and LENDER, hereby further set forth their rights and obligations to one another under this Loan Agreement and Promissory Note and agree to be legal bound as follows:

A.

Principal Loan Amount $45,000.00.  The Principal amount of $45,000.00 shall be the total amount outstanding after new $25,000.00 Loan plus $20,000.00 remaining balance of Original Note (‘Original Note”) dated and executed on July 1, 2010 by and between the Parties hereto.  This Note shall replace the Original Note.

B.

Loan Repayment Terms.

BORROWER will make restitution to Lender as follows:

A. 10  payments to LENDER according to the following schedule:

1.

$3,000.00 within 15 days from receipt of funds,

2.

$4,500.00 on or before Feb 15, 2011

3.

$4,500.00 on or before March 15, 2011,  

4.

$4,500.00  on or before April 15, 2011,

5.

$4,500.00 on or before May 15, 2011,

6.

$4,500.00 on or before June 15, 2011,

7.

$4,500.00 on or before July 15, 2011,

8.

$5,000.00 on or before August 15, 2011,

9.

$5,000.00 on or before September 15, 2011,

10.

$7,362.50 representing final payment plus interest of $2,362.50.

1

B. Lender shall receive “cashless” options to purchase up to 200,000 SGUI common shares at a fixed price of $.20 with an expiration of 2015.    

C.

Collateral.

As collateral for repayment of Loan Amount, BORROWER agrees to put forth a total of 450,000 Sanguine Corp (SGUI) common shares.  Lender understands that these shares are restricted under Rule 144 of the Securities Act of 1933.  Upon default of any of the payments as defined in paragraph “A” above, LENDER may demand release of all “Collateral Shares” to satisfy Note.

D.

Method of Loan Payment.

The BORROWER shall make all payments called for under this loan agreement by sending check or other negotiable instrument made payable to the following individual or entity at the address indicated:

Wharton Capital

15150 Dickens

Sherman Oaks, CA 91403

If LENDER gives written notice to BORROWER that a different address shall be used for making payments under this loan agreement, BORROWER shall use the new address so given by LENDER.

E.

Default.

The occurrence of any of the following events shall constitute a Default by the BORROWER of the terms of this loan agreement and promissory note:

1)

BORROWER’S failure to pay any amount due as principal or interest on the date required under this loan agreement.

2)

BORROWER seeks an order of relief under the Federal Bankruptcy laws.

3)

A federal tax lien is filed against the assets of BORROWER.

F.

Additional Provisions Regarding Default.

1)

Addressee and Address to which LENDER is to give BORROWER written notice of default:

N/A

If BORROWER gives written notice to LENDER that a different address shall be used, LENDER shall use that address for giving notice of default (or any other notice called for herein) to BORROWER.

2)

Cure of Default.  Upon default, LENDER shall give BORROWER written notice of default.  Mailing of written notice by LENDER to BORROWER

2

via U.S. Postal Service Certified Mail shall constitute prima facie evidence of delivery.  BORROWER shall have 15 days after receipt of written notice of default from LENDER to cure said default.  In the case of default due solely to BORROWER’S failure to make timely payment as called for in this loan agreement, BORROWER may cure the default by either:  (i) making full payment of any principal and accrued interest (including interest on these amounts) whose payment to LENDER is overdue under the loan agreement and, also, the late-payment penalty described below; or (ii) release collateral to LENDER as described in paragraph B “Collateral”, above.  

3)

Penalty for Late Payment.  There shall also be imposed upon BORROWER a 2% penalty for any late payment computed upon the amount of any principal and accrued interest whose payment to LENDER is overdue under this loan agreement and for which LENDER has delivered a notice of default to BORROWER

4)

Indemnification of Attorneys Fees and Out-of-Pocket Costs.  Should any party materially breach this agreement, the non-breaching party shall be indemnified by the breaching party for its reasonable attorneys fees and out-of-pocket costs which in any way relate to, or were precipitated by, the breach of this agreement.  The term “out-of-pocket costs”, as used herein, shall not include lost profits.  A default by BORROWER which is not cured within 15 days after receiving a written notice of default from LENDER constitutes a material breach of this agreement by BORROWER.

G.

Parties That Are Not Individuals.

If any Party to this agreement is other than an individual (i.e., a corporation, a Limited Liability Company, a Partnership, or a Trust), said Party, and the individual signing on behalf of said Party, hereby represents and warrants that all steps and actions have been taken under the entity’s governing instruments to authorize the entry into this Loan Agreement.  Breach of any representation contained in this paragraph is considered a material breach of the Loan Agreement.

H.

Integration.

This Agreement, including the attachments mentioned in the body as incorporated by reference, sets forth the entire agreement between the Parties with regard to the subject matter hereof.  All prior agreements, representations and warranties, express or implied, oral or written, with respect to the subject matter hereof, are superseded by this agreement.  This is an integrated agreement.

3

I.

Severability.

In the event any provision of this Agreement is deemed to be void, invalid, or unenforceable, that provision shall be severed from the remainder of this Agreement so as not to cause the invalidity or unenforceability of the remainder of this Agreement.  All remaining provisions of this Agreement shall then continue in full force and effect.  If any provision shall be deemed invalid due to its scope or breadth, such provision shall be deemed valid to the extent of the scope and breadth permitted by law.

J.

Modification.

Except as otherwise provided in this document, this agreement may be modified, superseded, or voided only upon the written and signed agreement of the Parties.  Further, the physical destruction or loss of this document shall not be construed as a modification or termination of the agreement contained herein.  

K.

Exclusive Jurisdiction for Suit in Case of Breach.

The Parties, by entering into this agreement, submit to jurisdiction in State of Nevada for adjudication of any disputes and/or claims between the Parties under this agreement.  Furthermore, the Parties hereby agree that the courts of State of Pennsylvania shall have exclusive jurisdiction over any disputes between the parties relative to this agreement, whether said disputes sounds in contract, tort, or other areas of the law.

L.

State Law.

This Agreement shall be interpreted under, and governed by, the laws of the State of Nevada.

IN WITNESS WHEREOF and acknowledging acceptance and agreement of the foregoing, BORROWER and LENDER affix their signatures hereto.

BORROWER:  

LENDER

_/s/Frank Marra______________________

_/s/Gary Corderman____________

Sanguine Corp.

Wharton Capital

Dated:  1/2, 2011

Dated:  1/3, 2011

4

EX-31

Exhibit 31  

EX-31

Exhibit 31.2

Certification of Principal Financial Officer
Pursuant to 18 U.S.C. 1350
(Section 302 of the Sarbanes-Oxley Act of 2002)

I, Frank Marra certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Sanguine, Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 20, 2011

 /s/ Frank Marra

 Frank Marra, Principal Financial Officer/CFO

EX-32

                                                                                                   EXHIBIT 32.1.

Certification of Principal Executive Officer

Pursuant to 18 U.S.C. 1350

(Section 906 of the Sarbanes-Oxley Act of 2002)

I, Frank Marra, Chief Executive Officer, and Frank Marra, Principal Financial Officer, of Sanguine Corporation (the "Registrant") do hereby certify, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge, based upon a review of the Quarterly Report on Form 10-Q for the period March 31, 2011 of the Registrant, as filed with the Securities and Exchange Commission on the date hereof (the "Report"):

 (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Dated:  May 20, 2011

By:  /s/ Frank Marra

       Frank Marra

       Chief Executive Officer

By:  /s/  Frank Marra

       Frank Marra, Chief Financial Officer/

       Principal Financial Officer

 * A signed original of this written statement required by Section 906 has been provided to Sanguine Corporation and will be retained by Sanguine Corporation and furnished to the Securities Exchange Commission or its staff upon request.