U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form S-3-A1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SANGUINE CORPORATION
--------------------
(Name of small business issuer in its charter)
Nevada 95-4347608
------ ----------
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
101 East Green Street, #11
Pasadena, California 91105
(626) 405-0079
--------------
(Address and telephone number of principal executive offices)
Thomas C. Drees, Ph.D.
101 East Green Street, #11
Pasadena, California 91105
(626) 405-0079
--------------
(Name, address and telephone number of agent for service)
Copies to:
Branden T. Burningham, Esq.
455 East 500 South, Suite 205
Salt Lake City, Utah 84111
(801) 363-7411
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
==============================================================================
CALCULATION OF REGISTRATION FEE
Title of
Each Proposed Proposed
Class of Maximum Maximum
Securities Amount of Offering Aggregate Amount of
to be shares to be Price per Offering Registration
Registered Registered Share (1) Price (1) Fee
==============================================================================
Common Stock (2)(3) 1,799,567 $0.35 $ 629,848 $150.53
Common Stock (2)(4) 3,000,000 $0.15 $ 450,000 $107.55
Common Stock (2)(5) 300,000 $0.125 $ 37,500 $ 8.96
Common Stock (2)(6) 5,937,500 $0.08 $ 475,000 $113.53
Common Stock (2)(7) 500,000 $0.07 $ 35,000 $ 8.37
Common Stock (2)(8) 359,375 $0.08 $ 28,750 $ 6.87
TOTALS 11,896,442 $1,656,098 $395.81
==============================================================================
(1) Estimated solely for the purpose of calculating the registration fee
under Rule 457(c) under the Securities Act on the basis of the average of the
bid and asked price of our common stock as quoted on the OTC Electronic
Bulletin Board on April 25, 2002.
(2) We are registering 11,896,442 shares of common stock that the selling
stockholders may sell as outlined herein. In accordance with Rule 416
promulgated under the Securities Act, a presently undeterminable number of
shares of common stock are also being registered hereunder which may be issued
in the event the anti-dilution provisions of our outstanding warrants become
operative. Additional shares issuable to holders of our Convertible Notes
(see footnote 7, below) because of market price declines of our common stock
will not be covered by this registration statement.
(3) Represents shares issuable upon the exercise of warrants issued by us and
having an exercise price of $0.35 per share as outlined in our warrant table.
(4) Represents shares issuable upon the exercise of warrants issued by us and
having an exercise price of $0.15 per share as outlined in our warrant table.
(5) Represents shares issuable upon the exercise of warrants issued by us and
having an exercise price of $0.125 per share as outlined in our warrant table.
(6) Represents shares issuable upon the exercise of warrants issued by us and
having an exercise price of the lesser of $0.08 per share or 66-2/3% of the
average of the closing bid prices for our common stock for the five trading
days preceding, but not including, the effective date of this registration
statement, as outlined in our warrant table. As of April 25, 2002,
the exercise price of these warrants was $0.08 per share, and this amount has
been used in determining the offering price for these shares and the
registration fee.
(7) Represents shares issuable upon the exercise of warrants issued by us and
having an exercise price, payable in services or in cash, of the lesser of
$0.08 per share or 50% of the bid prices for our common stock for the five
trading days prior to the exercise of the warrants, as outlined in our warrant
table. As of April 25, 2002, the exercise price of these warrants was $0.07
per share, and this amount has been used in determining the offering price for
these shares and the registration fee.
(8) Represents the maximum number of shares issuable upon the conversion of
$28,750 in 5% Convertible Notes.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES
AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
SANGUINE CORPORATION
11,896,442 Shares of Common Stock
This prospectus covers an aggregate of 11,896,442 shares of our common
stock (the "Shares") that the selling stockholders may sell as outlined
herein. It has been filed with the Securities and Exchange Commission as part
of a registration statement that you may examine in the Securities and
Exchange Commission's EDGAR Archives.
Our common stock is quoted on the OTC Bulletin Board of the National
Association of Securities Dealers, Inc.(the "NASD") under the symbol "SGNC."
Our common stock bid and asked prices on April 25, 2002, were $0.14 bid and
$0.15 asked.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE THE CAPTION "RISK
FACTORS," BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved any of these securities or passed upon
the adequacy or accuracy of the prospectus. Any representation to the
contrary is a criminal offense.
The date of this prospectus is __________, 2002.
1
PROSPECTUS SUMMARY
SANGUINE CORPORATION
--------------------
The Company
-----------
You should carefully read our entire prospectus and consolidated
financial statements and related notes. Unless the context requires
otherwise, "we," "us," "our" and similar terms, as well as references to
"Sanguine," refer to Sanguine Corporation, a Nevada corporation.
We are engaged in the development of a synthetic red blood cell product
called "PHER-O2." Our product is in the research and development stage. No
government has approved its use or the testing of its efficacy. We have never
sold any PHER-O2. We have generated only limited revenues from the sale of
licenses or rights to market PHER-O2 if it ever proves to be useful and its
use is approved.
Our offices are located at 101 East Green Street, #11, Pasadena,
California 91105. Our telephone number is (626) 405-0079.
The Offering
------------
Securities offered by us . . . .None.
Securities that may be sold
by our stockholders . . . . . . 11,896,442 shares of our common stock.
Use of proceeds . . . . . . . . We will not receive any money from the
selling stockholders when they sell shares of
our common stock; however, at current market
prices for our common stock, we may receive up
to $1,627,348 from the exercise of
outstanding warrants to acquire shares that
are being registered. As of the date of this
prospectus, none of these warrants has been
exercised.
Offering Price . . . . . . . . .Market prices prevailing at the time of sale,
at prices related to the prevailing market
prices, at negotiated prices or at fixed
prices, all of which may change.
Transfer Agent . . . . . . . . .Colonial Stock Transfer, 455 East 400 South,
Suite #100, Salt Lake City, Utah
84111, serves as the transfer agent and
registrar for our outstanding securities.
We have agreed to pay all costs and expenses relating to the registration
of our common stock. The selling stockholders will be responsible for any
related commissions, taxes, attorney's fees and other charges relating to the
offer or sale of these securities. The selling stockholders may sell their
common stock through one or more broker/dealers, and these broker/dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the selling stockholders as they shall agree.
2
RISK FACTORS
------------
Our present and intended business operations are highly speculative and
involve substantial risks. Only investors who can bear the risk of losing
their entire investment should consider buying our shares. Among the risk
factors that you should consider are the following:
General Risks Related To Our Business.
- --------------------------------------
If we do not meet our research and development goals or obtain regulatory
approvals, our business may fail.
- ---------------------------------
We have not received any revenues from the sale of our only product,
PHER-O2. Our ability to sell our product will depend upon our ability to
successfully develop, obtain regulatory approval for, manufacture and market
it. No one has performed many tests of any kind on PHER-O2. In addition, it
takes a long, uncertain amount of time to achieve regulatory approval and
market success. Our product may require significant additional research and
development, and extensive preclinical and clinical testing, before we may be
able to obtain United States Food and Drug Administration ("FDA") approval for
any use, if at all. We can not assure you that:
* our research and development activities may be successful;
* our product may prove to be safe or effective in any testing or
trials that are conducted;
* we may obtain FDA approval;
* we may be able to manufacture our product at a cost that will make
it commercially viable; or
* if and when it receives any approval, we may be able to market it
successfully.
If we do not receive additional funding, we may not be able to develop
our product.
- ------------
We have limited operating capital. We estimate that we will need about
$20,000,000 to develop our product through the anticipated FDA and comparable
foreign agency approval. We will need to raise these funds through equity or
debt offerings, which will be very difficult for such a highly speculative
enterprise. Approximately $475,000 of these funds may be available to us if
the warrants whose exercise prices are currently less than the market price of
our common stock are exercised, but any exercise of these warrants will depend
upon the market price for our common stock being substantially higher than the
exercise prices of the warrants. We can not assure you that we may be able to
get the required funding or that any funding will be on terms satisfactory to
us. This funding may also cause substantial dilution to our existing
stockholders. If we do not get the required funding, we believe that we may
be unable to develop our product for its intended uses, and our business may
fail.
3
We face substantial governmental regulation and product approval
requirements.
- -------------
We will face extensive regulation by several governmental authorities in
the United States and foreign countries. These regulations may affect our
research and development activities, as well as preclinical and clinical
trials, manufacturing and marketing of our product. All trials, manufacturing
and marketing of our product will have to undergo the rigorous testing and
approval processes of the FDA and corresponding foreign regulatory bodies.
Each clinical trial must be conducted under the auspices of an Independent
Review Board, which will consider, among other factors:
* ethical considerations;
* the safety of human subjects; and
* the possible liability of the institution.
The regulatory process, which includes pre-clinical, clinical and post-
clinical testing of the product to establish its safety and efficacy, can take
years and requires the expenditure of large amounts of money. Data
obtained from these trials is always subject to varying interpretations, all
of which may extend the process, or result in limited or denied approval.
Regulations often change during the approval process, and these changes may
cause further delay and additional expense, and may prohibit approval. We may
encounter similar problems in foreign countries. We can not assure you that
we may get regulatory approval even after spending this time and money. If we
do obtain it, we can not guarantee that we may be able to commercially and
economically market the product. Even if we get approval, our product and
facilities may face continual review and periodic inspections. The
subsequent discovery of previously unknown problems with the product, the
manufacturer or its facilities may result in further restrictions on the
product or the manufacturer, and may include withdrawal of the product from
the market. If we fail to adhere to the stringent governmental regulations,
we may also receive fines, suspensions of regulatory approval, product
recalls, operating restrictions and criminal prosecution of our principals.
Because we do not have patent protection, we may lose business to
competitors with similar technologies.
- --------------------------------------
We have no patents on our product, and have filed only one United States
patent application and one foreign patent application. We can not assure you
that we will be able to prove our product to be efficacious and to obtain any
required governmental approvals during the life of any patent or any
extensions of any patent that may be granted. Patents offer some protection
for products, but they are generally highly uncertain and involve complex
legal and factual questions. To date, no consistent policy has emerged as to
the breadth of claims allowed in biotechnology patents. We can not guarantee
that any patent may protect us against competitors with similar technologies
or who develop similar technologies.
4
If we are unable to compete with larger competitors, our business may
fail.
- -----
If it is proved efficacious for its intended uses and approved for use by
the FDA or any corresponding foreign agencies, PHER-O2 may compete directly
with established therapies for blood loss. Patients whose oxygen-carrying
ability has been significantly depleted by blood loss frequently receive
transfusions of red blood cells. Patients who have suffered more moderate
blood loss can be treated with various intravenous solutions, such as saline
or human serum albumin, which replace the volume of blood lost, but not its
oxygen carrying capacity. Even if the FDA or any corresponding governmental
agency approves this product for use, it may not have any significant
advantages over other products to cause the medical profession to adopt it
rather than continue to use established therapies. We will also be competing
with many other companies, research foundations and institutions seeking to
develop synthetic blood products. Almost all of these entities may have
substantially greater resources, personnel and facilities than we may have,
even if we succeed in raising the required capital to fund our proposed
business operations. We can not assure you that we may even be able to raise
the necessary funding.
If we lose Dr. Drees or Mr. Hargreaves, our operations will suffer.
-------------------------------------------------------------------
Thomas C. Drees, Ph.D., our President and Chief Executive
Officer, is the inventor of PHER-O2. He previously served for ten years as
the President and CEO of Alpha Therapeutics Corporation, a subsidiary of Green
Cross Corporation of Japan, that developed "Fluosol DA 20," the only synthetic
blood product that has received FDA approval to date. He has also written a
widely-acclaimed book on this subject, "Blood Plasma: The Promise and the
Politics," Ashley Books, New York, 1983. Dr. Drees has been with us since
inception, and his retirement, disability or death may significantly impair
the development of our product and our intended business operations. Anthony
G. Hargreaves, who is the Vice Chairman of the Board of Directors, and our
Vice President and Secretary/Treasurer, has significant background in the
medical field. This includes service as General Manager of VK Limited of
Pasadena, California, where he was instrumental in securing funding for a
wearable, continuously-operating artificial kidney machine. Mr. Hargreaves
has been with us since our inception, and his retirement, disability or death
could also hurt our operations. We also believe that our other members of
management are very important to our success.
Successful product liability claims may seriously impair our
operations.
- -----------
The use of PHER-O2 in clinical trials and, if we receive regulatory
approval, the manufacture and marketing of this product, may expose us to
liability claims. These claims may seriously impair our business. Claims
may be made by users of the product or by entities that sell it. As a
result, it must be rigorously purified because impurities may lead to serious
5
and potentially fatal toxic reactions. We intend to seek limited product
liability insurance, subject to available funding, before we begin any human
clinical trials. However, this insurance coverage is expensive, and we can
not assure you that we will be able to obtain it. If we can obtain it, we can
not guarantee that it will be at a reasonable cost or in sufficient amounts to
protect us against losses that may result from this liability. If we do not
obtain insurance at an acceptable cost, or otherwise protect against potential
product liability, we may not be able to commercialize our product.
The auditor's "going concern" qualification in our financial statements
might create additional doubt about our ability to stay in business.
- --------------------------------------------------------------------
Our Independent Auditors' Report issued on March 12, 2002, with respect
to our audited financial statements for the years ended December 31, 2001 and
2000, expresses substantial doubt about our ability to continue as a going
concern, due to our deficit in working capital and stockholders' deficit, and
the facts that we have not generated revenues from operations and have
incurred significant losses since inception.
Risks Related To Our Common Stock.
- ----------------------------------
Due to the great instability in our common stock price, you may not be
able to sell your shares at a profit.
- -------------------------------------
The public market for our common stock is limited and volatile. As with
the market for many other biotechnological companies, any market price for our
shares is likely to continue to be very volatile. In addition, factors such
as the following may significantly affect our stock price:
* results of our clinical trials;
* our competitors' announcements and successes or failures;
* other evidence about the safety or efficacy of our product;
* announcements of new competitive products or failures by our
competitors;
* increased governmental regulation of our product;
* our competitors' developments of patents or proprietary rights; and
* fluctuations in our operating results.
6
In addition, the stock markets generally have experienced and continue to
experience extreme price and volume fluctuations. These fluctuations have
affected the market price of many biotechnological companies and have often
been unrelated to these companies' operating performance. These broad market
fluctuations, as well as general economic and political conditions, may reduce
the market price of our common stock.
The sale of already outstanding shares of our common stock may hurt our
common stock market price.
- --------------------------
Approximately 13,974,109 shares of our common stock are publicly traded.
This number will be increased by the 11,896,442 shares underlying the warrants
and the convertible notes that also may be offered by this prospectus.
Furthermore, most shares that are owned by members of management have been
held for a sufficient period of time that they may sell the allowed percentage
of these shares under Rule 144 of the Securities and Exchange Commission.
These shares of our common stock will substantially increase the number of
shares that may be available for public trading. The sale of these shares in
the public market may reduce the price of our common stock.
Our common stock is deemed to be "penny stock."
-----------------------------------------------
Our common stock is presently deemed to be "penny stock" that can only be
purchased by certain qualified persons, and broker/dealers are required to
determine that the purchase of securities that are "penny stocks" are suitable
investments for customers before completing the purchase of any of these
securities. This designation may limit the public market for our common
stock.
FORWARD-LOOKING INFORMATION
---------------------------
This is a summary of the terms of the common stock described in and
offered by this prospectus. It does not contain all of the information that
may be important to you. This prospectus contains "forward-looking"
information within the meaning of the Private Securities Litigation Reform
Act of 1995. Forward-looking statements contained in this prospectus involve
known and unknown risks, uncertainties and other factors that could cause
actual results, financial or operating performance to differ from the future
results, financial or operating performance or achievements expressed or
7
implied by these forward-looking statements. You should carefully read the
this prospectus and the risks factors outlined above, along with the more
detailed information, financial statements and the notes to the financial
statements appearing elsewhere in this prospectus before you decide whether to
purchase the common stock described in this prospectus.
USE OF PROCEEDS
---------------
We are registering a total of 11,537,067 shares that underlie warrants.
Of this amount, 5,937,500 warrants are exercisable at the lower of:
* $0.08 per share; or
* the average bid price of our common stock on the five trading days
before the effective date of the registration statement of which this
prospectus is a part.
An additional 3,000,000 warrants are exercisable at a price of $0.15 per
share; 300,000 warrants are exercisable at $0.125 per share; and 1,799,567
warrants are exercisable at $0.35 per share.
In addition, our legal counsel, Leonard W. Burningham, Esq., holds
warrants to purchase 500,000 shares of our common stock at the lower of:
* 50% of the bid price of our common stock for the five trading days
prior to the date of exercise; or
* $0.08 per share.
Mr. Burningham's warrants were granted in the expectation that they would
be exercised in payment of legal services rendered and to be rendered in
connection with the preparation of Sanguine's periodic and current reports,
post-effective amendment to its Registration Statement on Form SB-2, and the
registration statement of which this prospectus is a part, and which were
estimated at approximately $46,000. Of this amount, $17,500 was paid from the
proceeds that Sanguine received in connection with its 5% Convertible Note in
favor of First York Partners, Inc.
At current market prices for our common stock, if all of the warrants are
exercised, we will receive proceeds of $1,592,348. This does not include the
500,000 warrants held by Mr. Burningham, which we expect to be exercised in
exchange for legal services.
As of the date of this prospectus, none of these 11,537,067 warrants had
been exercised. At current market prices, the exercise prices of the warrants
range from $0.07 to $0.35 per share; as of April 23, 2002, the bid price of
our common stock was $0.13 per share. The warrant holders are very unlikely
to exercise their warrants unless our stock price exceeds the exercise price
of the warrants. As of April 23, 2002, our stock price was less than the
exercise price of 4,799,567 of our 11,537,067 outstanding warrants.
8
The following table shows the use during the next 12 months of the
$512,500 in gross proceeds that we would receive upon the exercise of all
6,237,500 warrants that are currently exercisable at prices below the bid
price for our common stock and for which we may properly expect to receive
cash payment:
Rent $21,212
Salary 72,000
Financial Consulting
Fees and Expenses 35,800
Shareholder
communications 8,400
U.S. and State
Employee Taxes 6,000
Pre-Animal Trial
FDA Submission 60,000
Travel 12,000
General Administration 113,104
Miscellaneous Accounts
Payable 83,984
Legal and Accounting 60,000
Directors' and
Officers' Insurance 40,000
------
Total $512,500
If all of these warrants were exercised, with the exception of Mr.
Burningham's warrants as discussed above, we would receive proceeds of
$1,592,348, based on the current market price of our common stock. The
following table shows our anticipated use of these proceeds:
Rent $21,212
Salary 72,000
Financial Consulting
Fees and Expenses 35,800
Shareholder
communications 8,400
U.S. and State
Employee Taxes 6,000
Pre-Animal Trial
FDA Submission 60,000
Travel 12,000
General Administration 82,904
Miscellaneous Accounts
Payable 83,984
Legal and Accounting 60,000
Directors' and
Officers' Insurance 40,000
Purchase of Chemicals
and raw materials 15,000
FDA Animal Safety and 980,696
Efficacy Trials
Partial Payment of Loan 72,000
from Officer*
Medical Advisory Board 42,352
------
Total $1,592,348
* As of December 31, 2001, Sanguine owed $198,943 on a note payable to
its Chief Executive Officer, President and Chairman, Thomas C. Drees. The
note is due on demand and bears interest at the rate of 12% per year.
9
DETERMINATION OF OFFERING PRICE AND DILUTION
--------------------------------------------
We will not receive any money from the selling stockholders when they
sell their shares of common stock, though we will receive funds from any
exercise of the warrants. The selling stockholders may sell all or any part
of their shares in private transactions or in the over-the-counter market at
prices related to the prevailing prices of our common stock at the time of
negotiation. Because we cannot accurately predict the prices of these sales,
we cannot accurately estimate the amount of any dilution that may result from
the purchase price of any of these shares. "Dilution" is the difference
between the price paid for the shares and our "net tangible book value." The
net tangible book value (deficit) of our common stock on December 31, 2001,
was ($2,008,169) or ($0.066) per share. Net tangible book value per share is
determined by subtracting our total liabilities from our total tangible assets
and dividing the remainder by the number of shares of common stock
outstanding. Taking into account the exercise of all warrants as of December
31, 2001, at exercise prices prevailing at the time of filing of the
registration statement of which this prospectus is a part, our net tangible
book value (deficit) at that date would be ($415,821), divided by 41,640,644
outstanding shares, resulting in a net tangible book value (deficit) of
($0.01) per share. As of the date of this prospectus, none of these warrants
has yet been exercised. The offer and sale by the selling stockholders of the
common stock that is outstanding, or those shares underlying the warrants,
will not have any effect on the net tangible book value (deficit)of our common
stock, after taking into account the exercise of the warrants.
We can not assure you that any public market for our common stock will
equal or exceed the sales price of our shares of common stock sold by our
stockholders. Purchasers of our shares face the risk that their shares will
not be worth what they paid for them.
SELLING SECURITY HOLDERS
------------------------
The following table provides information about the selling stockholders
and the common stock that each may sell, or retain after this offering, if
any:
10
Common Stock (1)
---------------
Names of Selling Number of Shares Number of Shares Number of Shares
Stockholders Beneficially to be Beneficially Owned
in the Offering Owned Registered after the Offering
- --------------- ---------------- ---------------- ------------------
Technogest S. A. 511,000 (2) 511,000 (2) -0-
Wegelin & Co. 1,329,910 (3) 499,970 (3) 829,940
Sun Investment 150,000 (4) 125,000 (4) 25,000
Partnership II
Geronimo Partners, 1,500,000 (5) 500,000 (5) 1,000,000
LP
Laidlaw Global 313,597 (6) 163,597 (6) 150,000
Securities, Inc.
Richard H. Walker 1,000,000 (7) 1,000,000 (7) -0-
Mark Bergendahl 1,000,000 (7) 1,000,000 (7) -0-
Bradley J. Wilhite 1,000,000 (7) 1,000,000 (7) -0-
Chapman Spira & 300,000 (8) 300,000 (8) -0-
Carson LLC
First York Partners, 6,250,000 (9) 6,250,000 (9) -0-
Inc.
Leonard W. Burningham, 608,163 (10) 500,000 (10) 108,163
Esq.
Barbara R. Mittman, 46,875 (11) 46,875 (11) -0-
Esq.
--------- ---------- ---------
14,009,545 11,896,442 2,113,103
(1) We assume no purchase in this offering by the selling stockholders of
any shares of our common stock. No director, advisory director, executive
officer or any "associate" of any director, advisory director or executive
officer has any interest, direct or indirect, by security holdings or
otherwise, in any of the selling stockholders.
(2) All of these shares underlie warrants to purchase shares of our
common stock at a price of $0.35 per share. These warrants will expire on
August 29, 2004.
(3) A total of 499,970 of these shares underlie warrants to purchase
shares of our common stock of a price of $0.35 per share. These warrants will
expire on August 29, 2004.
(4) A total of 125,000 of these shares underlie warrants to purchase
shares of our common stock at a price of $0.35 per share. These warrants will
expire on August 29, 2004.
(5) A total of 500,000 of these shares underlie warrants to purchase
shares of our common stock at a price of $0.35 per share. These warrants will
expire on August 29, 2004.
11
(6) A total of 163,597 of these shares underlie warrants to purchase
shares of our common stock at a price of $0.35 per share. These warrants will
expire on August 29, 2004.
(7) All of these shares underlie warrants to purchase shares of our
common stock at a price of $0.15 per share. These warrants will expire on
February 21, 2005.
(8) All of these shares underlie warrants to purchase shares of our
common stock at a price of $0.125 per share. These warrants will expire on
February 6, 2007.
(9) A total of 5,937,500 of these shares underlie warrants to purchase
shares of our common stock at a price of $0.08, provided, however, that the
purchase price shall be adjusted to be 66-2/3% of the average of the closing
bid prices for our common stock for the five trading days preceding but not
including the effective date of the registration statement of which this
prospectus is a part. The warrants will expire on March 19, 2007. This
figure also includes 312,500 shares of common stock issuable upon conversion
of a 5% Convertible Note at a conversion price of the lesser of (i) $0.08 per
share; or (ii) 66-2/3% of the average of the closing bid prices of our common
stock for the five trading days immediately preceding but not including the
conversion date.
(10) A total of 500,000 of these shares underlie warrants to purchase
shares of our common stock at an exercise price of (i) 50% of the bid price of
our common stock for the five trading days prior to the date of exercise or
(ii) $0.08 per share, whichever is lower, and may be paid in cash or legal
services to us. These warrants will expire on March 11, 2005.
(11) Consists of 46,875 shares of common stock issuable upon conversion
of a 5% Convertible Note at a conversion price of the lower of (i) $0.08 per
share or (ii) 66-2/3% of the average of the closing bid prices of our common
stock for the five trading days immediately preceding but not including the
conversion date.
PLAN OF DISTRIBUTION
--------------------
We are registering the shares of our common stock covered by this
prospectus.
We will pay the costs, expenses and fees of registering our common stock.
All of the selling stockholders will be responsible for any related
commissions, taxes, attorney's fees and other charges that each may incur in
connection with the offer or sale of these securities.
The selling stockholders may sell our common stock at market prices
prevailing at the time of the sale, at prices related to the prevailing market
prices, at negotiated prices or at fixed prices, any of which may change.
They may sell some or all of their common stock through:
* ordinary broker's transactions, which may include long or short
sales;
* purchases by brokers, dealers or underwriters as principal and
resale by those purchasers for their own accounts under this
prospectus;
* market makers or into an existing market for our common stock;
* transactions in options, swaps or other derivatives; or
* any combination of the selling options described in this
prospectus, or by any other legally available means.
12
In addition, the selling stockholders may enter into hedging transactions
with broker/dealers, who may engage in short sales of our common stock in the
course of hedging the positions they assume. Finally, they may enter into
options or other transactions with broker/dealers that require the delivery of
our common stock to those broker/dealers. Subsequently, the shares may be
resold under this prospectus.
In their selling activities, the selling stockholders will have to comply
with applicable provisions of the Securities Exchange Act of 1934 (the
"Exchange Act"), and its rules and regulations, including Regulation M. These
may limit the timing of purchases and sales of our common stock by the selling
stockholders.
The selling stockholders and any broker/dealers involved in the sale or
resale of our common stock may qualify as "underwriters" within the meaning of
Section 2(11) of the Securities Act. In addition, the broker/dealers'
commissions, discounts or concessions may qualify as underwriters'
compensation under the Exchange Act. If any broker/dealer or selling
stockholder qualifies as an "underwriter," he/it will have to deliver our
prospectus as required by Rule 154 of the Securities and Exchange Commission.
In addition, any broker/dealer that participates in a distribution of these
shares will not be able to bid for, purchase or attempt to induce any person
to bid for or purchase any of these shares as long as the broker/dealer is
participating in the distribution. The ability of participating
broker/dealers to stabilize the price of our shares will also be restricted.
If the selling stockholders sell our shares to or through brokers,
dealers or agents, they may agree to indemnify these brokers, dealers or
agents against liabilities arising under the Securities Act or the Exchange
Act. We do not know of any existing arrangements between the selling
stockholders and any other stockholder, broker, dealer, underwriter or agent
relating to the sale or distribution of our common stock.
In addition to selling their common stock under this prospectus, the
selling stockholders may:
* transfer their common stock in other ways not involving market
makers or established trading markets, including by gift,
distribution or other transfer; or
* sell their common stock under Rule 144 of the Securities and
Exchange Commission, if the transaction meets the requirements of
Rule 144.
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We have advised the selling stockholders that during the time they are
engaged in the distribution of our common stock that they own, they must
comply with Rule 10b-5 and Regulation M promulgated by the Securities and
Exchange Commission under the Exchange Act. They must do all of the following
under this Rule and Regulation:
* not engage in any stabilization activity in connection with our
common stock;
* furnish each broker who may be offering our common stock on their
behalf the number of copies of this prospectus required by each
broker;
* not bid for or purchase any of our common stock or attempt to
induce any person to purchase any of our common stock, other than
as permitted under the Exchange Act;
* not use any device to defraud;
* not make any untrue statement of material fact or fail to state
any material fact; and
* not engage in any act that would operate as a fraud or deceit upon
any person in connection with the purchase or sale of our shares.
To the extent that any selling stockholder may be an "affiliated
purchaser" as defined in Regulation M, he/it has been further advised that
he/it must coordinate his/its sales under this prospectus with us for the
purposes of Regulation M.
To the extent required by the Securities Act, a supplemental prospectus
will be filed, disclosing:
* the name of any broker/dealers;
* the number of securities involved;
* the price at which the securities are to be sold;
* the commissions paid or discounts or concessions allowed to the
broker/dealers, where applicable;
* that the broker/dealers did not conduct any investigation to
verify the information set out in this prospectus, as supplemented;
and
* other facts material to the transaction.
There is no assurance that any selling stockholder will sell any of our
common stock.
INTEREST OF NAMED EXPERTS AND COUNSEL
-------------------------------------
Sanguine Corporation's financial statements as of December 31, 2001 and
for the years ended December 31, 2001, and 2000, included in its Annual Report
on Form 10-KSB have been audited by Tanner + Co., independent auditors, as set
forth in its report included therein and incorporated herein by reference, and
are incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
14
Leonard W. Burningham, Esq. and Branden T. Burningham, Esq., lawyers, of
Salt Lake City, Utah, father and son, associates in the practice of law and
co-counsel for our company are each stockholders of our company, respectively
beneficially owning 108,163 and 45,000 of our shares of common stock. Leonard
W. Burningham also owns warrants to purchase 500,000 shares of Sanguine's
common stock, as discussed under the caption "Selling Security Holders."
Messrs. Burningham and Burningham prepared the registration statement and this
prospectus and will provide any legal opinions required with respect to any
related matter.
We have not hired any expert or counsel on a contingent basis. Except as
indicated above, no expert or counsel will receive a direct or indirect
interest in our company, and no such person was a promoter, underwriter,
voting trustee, director, officer or employee of our company.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
-------------------------------------------------
The Securities and Exchange Commission allows us to "incorporate by
reference" into this prospectus information that we file with the Commission
in other documents. This means that we can disclose important information to
you by referring to other documents that contain that information. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file with the Commission in the future and
incorporate by reference will automatically update and may supersede the
information contained in this prospectus. We incorporate by reference the
documents listed below and any future filings we make with the Commission
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, prior to the sale of all the shares covered by this
prospectus.
* Our Annual Report on Form 10-KSB for the calendar year ended December
31, 2001;
* Our Current Report on Form 8-K filed with the SEC on March 25, 2002,
and our Current Report on Form 8-K-A1 filed with the SEC on May 7,
2002; and
* The description of our common stock contained in our Exchange Act
Registration Statement on Form 10-SB, filed on July 1, 1994, and our
Registration Statements on Form 10-SB-A1 and 10-SB-A2, filed on August
19, 1994, and August 30, 1994, respectively.
You may request free copies of these filings by writing or telephoning us
at the following address: 101 East Green Street, Suite 11, Pasadena,
California 91105; telephone (626) 405-0079.
WHERE YOU CAN FIND MORE INFORMATION
-----------------------------------
We file periodic reports and other documents with the Securities and
Exchange Commission. You may read and copy any document we file at the
Commission's public reference room at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549. You should call 1-800-SEC-0330 for more information
about the public reference room. Our Commission filings are also available on
the SEC's web site: www.sec.gov.
15
This prospectus is part of our registration statement and does not
contain all of the information included in the registration statement.
Whenever this prospectus refers to any contract or other document of Sanguine
Corporation, the reference may not be complete and you should refer to the
exhibits that are a part of the registration statement for a copy of the
contract or document.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
-----------
Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee or corporate
agent "who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the corporation" due to his or her corporate role. Section 78.751(1)
extends this protection "against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the
right of the corporation. The party must have been acting in good faith and
with the reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless a court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he or she be indemnified "against expenses, including attorneys'
fees, actually and reasonably incurred by him or her in connection with the
defense."
Section 78.751(4) of the NRS limits indemnification under Sections
78.751(1) and 78.751(2) to situations in which either (1) the stockholders,
(2)the majority of a disinterested quorum of directors, or (3) independent
legal counsel determine that indemnification is proper under the
circumstances.
Pursuant to Section 78.751(5) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides that
the rights to indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement, stockholder vote or
vote of disinterested directors. Section 78.751(6)(b) extends the rights to
indemnification and advancement of expenses to former directors, officers,
employees and agents, as well as their heirs, executors and administrators.
16
Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his or her behalf against liability resulting from his
or her corporate role.
Article V of our Bylaws requires us to indemnify our directors and
executive officers, former directors and executive officers and directors and
executive officers of subsidiaries against expenses necessarily incurred by
them in defending any action in which they are made parties due to their
service as directors or executive officers, except in relation to matters as
to which such directors or executive officers are adjudged to be liable for
negligence or misconduct.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, executive officers
and controlling persons pursuant to the foregoing provisions or otherwise, we
have been advised that in the opinion of the Securities and Exchange
Commission that indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance And Distribution.
--------------------------------------------
The following table sets forth the expenses which we expect to incur in
connection with the registration of the shares of common stock being
registered by this registration statement. Normal commission expenses and
brokerage fees are payable individually by the selling stockholders. All of
these expenses, except for the Commission registration fee, are estimated:
Securities and Exchange Commission registration fee........$ 395.81
Legal fees and expenses....................................$15,000.00
Accounting fees............................................$ 3,500.00
Total.................................................$18,895.81
Item 15. Indemnification of Directors And Officers.
------------------------------------------
Section 78.751(1) of the Nevada Revised Statutes ("NRS") authorizes a
Nevada corporation to indemnify any director, officer, employee or corporate
agent "who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the corporation" due to his or her corporate role. Section 78.751(1)
extends this protection "against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or her in connection with the action, suit or proceeding if he
or she acted in good faith and in a manner which he or she reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe his or her conduct was unlawful."
Section 78.751(2) of the NRS also authorizes indemnification of the
reasonable defense or settlement expenses of a corporate director, officer,
employee or agent who is sued, or is threatened with a suit, by or in the
right of the corporation. The party must have been acting in good faith and
with the reasonable belief that his or her actions were not opposed to the
corporation's best interests. Unless a court rules that the party is
reasonably entitled to indemnification, the party seeking indemnification must
not have been found liable to the corporation.
To the extent that a corporate director, officer, employee or agent is
successful on the merits or otherwise in defending any action or proceeding
referred to in Section 78.751(1) or 78.751(2), Section 78.751(3) of the NRS
requires that he or she be indemnified "against expenses, including attorneys'
fees, actually and reasonably incurred by him or her in connection with the
defense."
Section 78.751(4) of the NRS limits indemnification under Sections
78.751(1) and 78.751(2) to situations in which either (1) the stockholders,
(2)the majority of a disinterested quorum of directors, or (3) independent
legal counsel determine that indemnification is proper under the
circumstances.
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Pursuant to Section 78.751(5) of the NRS, the corporation may advance an
officer's or director's expenses incurred in defending any action or
proceeding upon receipt of an undertaking. Section 78.751(6)(a) provides that
the rights to indemnification and advancement of expenses shall not be deemed
exclusive of any other rights under any bylaw, agreement, stockholder vote or
vote of disinterested directors. Section 78.751(6)(b) extends the rights to
indemnification and advancement of expenses to former directors, officers,
employees and agents, as well as their heirs, executors and administrators.
Regardless of whether a director, officer, employee or agent has the
right to indemnity, Section 78.752 allows the corporation to purchase and
maintain insurance on his or her behalf against liability resulting from his
or her corporate role.
Article V of our Bylaws requires us to indemnify our directors and
executive officers, former directors and executive officers and directors and
executive officers of subsidiaries against expenses necessarily incurred by
them in defending any action in which they are made parties due to their
service as directors or executive officers, except in relation to matters as
to which such directors or executive officers are adjudged to be liable for
negligence or misconduct.
Item 16. Exhibits
--------
Exhibit
Number Description
- ------ ------------
1 Placement Agency Agreement (1)
4.1 Placement Agent's Warrant (1)
4.2 Investor's Warrant (1)
5.1 Opinion of Branden T. Burningham, Esq., regarding legality of
securities (2)
10.2 Subscription Agreement (3)
Exhibit A - Form of Note
Exhibit B - Form of Legal Opinion
Exhibit C - Form of Warrant
Schedule 2(d) - Additional Issuances
Schedule 2(t) - Capitalization
23.1 Consent of Branden T. Burningham, Esq. (See Exhibit 5.1) (2)
23.2 Consent of Tanner + Co.
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99.1 Warrant of Richard H. Walker (3)
99.2 Warrant of Mark Bergendahl (3)
99.3 Warrant of Bradley J. Wilhite (3)
99.4 Warrant of Leonard W. Burningham, Esq. (3)
99.5 Warrant of Chapman Spira & Carson LLC (4)
(1) Incorporated by reference from Current Report on Form 8-K, dated
September 1, 2000 and filed on September 15, 2000.
(2) Filed as an exhibit to Sanguine's Registration Statement on Form
S-3, filed on April 29, 2002.
(3) Incorporated by reference from Current Report on Form 8-K, dated
March 11, 2002 and filed on March 25, 2002.
(4) Incorporated by reference from Current Report on Form 8-K-A1, dated
March 11, 2002 and filed on May 7, 2002.
Item 17. Undertakings
------------
Sanguine hereby undertakes:
(1) To file, during any period in which it offers or sells securities,
a post-effective amendment to this registration statement to:
(i) include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and, notwithstanding the foregoing, any increase
or decrease in volume of securities offered, if the total dollar value of
securities offered would not exceed that which was registered, and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in the volume and price
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) include any additional or changed material information
on the plan of distribution;
Provided, however, that the undertakings set forth in paragraphs
(1)(i) and (1)(ii) above shall not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to the Securities Exchange
Act of 1934, as amended, that are incorporated by reference in the
registration statement.
(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering.
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(3) To file a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, executive officers
and controlling persons the foregoing provisions or otherwise, we have been
advised that in the opinion of the Securities and Exchange Commission that
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. If a claim for indemnification against
these liabilities, other than our payment of expenses incurred or paid by any
of our directors, executive officers or controlling persons in the successful
defense of any action, suit or proceeding, is asserted by the director,
executive officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has
been settled by a controlling precedent, submit to a court of appropriate
jurisdiction the question whether indemnification by us is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of that issue.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant
to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing of Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Pasadena, State of California, on
May 7, 2002.
SANGUINE CORPORATION
Date: 5/7/02 By /s/ Thomas C. Drees
------------ -------------------------------------
Thomas C. Drees, Ph.D., MBA
Chairman, CEO and President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: 5/7/02 /s/ Thomas C. Drees
------------ -------------------------------------
Thomas C. Drees, Ph.D., MBA
Chairman, CEO and President
Date: 5/7/02 /s/ Anthony G. Hargreaves
------------ -------------------------------------
Anthony G. Hargreaves, Vice Chairman,
Vice President, Secretary/Treasurer
and Director
Date: 5/7/02 /s/ David E. Nelson
------------ ------------------------------------
David E. Nelson, CPA
CFO and Director
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