##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended: June 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For transition period from  to
 Commission File Number: 000-25548
 SUTURA, INC.
 (formerly
Technology Visions, Inc.)
  Delaware
    
    84-1010269(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer Identification
No.)
 
   
  þ o
  o þ
  o þ




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##### 



PART IItem 1. Financial StatementsConsolidated Balance Sheet on June 30, 2006 (Unaudited)
    
    3Consolidated Statement of Operations for the three and six month
periods ended June 30, 2006 and 2005 (Unaudited)
    
    4Consolidated Statement of Cash Flows for the six
month periods ended June 30, 2006 and 2005(Unaudited)
    
    5Notes to Consolidated Financial Statements (Unaudited)Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    21Item 3. Controls and Procedures
    
    27PART IIItem 1. Legal Proceedings
    
    27Item 2. Changes In Securities
    
    28Item 3. Defaults Upon Senior Securities
    
    28Item 4. Submission of Matters to a Vote of Security Holders
    
    28Item 5. Other Information
    
    29Item 6. Exhibits and Reports on Form 8-K
    
    29Signatures
    
    31EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  2




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PART I: FINANCIAL INFORMATION
 
 Item 1.
  
    ASSETSCURRENT ASSETS:Cash & cash equivalents
    
    $
    339,368Accounts Receivable, Net
    
    
    163,294Inventory
    
    
    563,944Prepaid expenses
    
    
    609,047Total current assets
    
    
    1,675,652PROPERTY AND EQUIPMENT, net
    
    
    548,928DEPOSITS
    
    
    101,587$
    2,326,167LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    5,204,878Loan payable - officers
    
    
    134,056Customer deposits
    
    
    1,165,975Notes payable - officers
    
    
    857,784Notes payable - related party
    
    
    131,147Total current liabilities
    
    
    7,493,840LONG TERM LIABILITIES:Convertible notes payable- net of beneficial conversion feature
    
    
    15,655,933COMMITMENTS AND CONTINGENCIES
    
    
    STOCKHOLDERS DEFICITSeries A convertible preferred stock, $0.001 par value;
2,000,000 shares authorized, issued and outstanding
    
    
    Common stock, $0.001 par value; 500,000,000 shares authorized;
186,637,990 shares issued and outstanding
    
    
    186,637Additional paid in capital
    
    
    42,943,706Accumulated deficit
    
    
    (63,030,930
    )Other comprehensive loss
    
    
    (923,018
    )Total stockholders deficit
    
    
    (20,823,605
    )$
    2,326,167
  3




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##### Table of Contents



THREE MONTHS
    
    
    THREE MONTHS
    
    
    SIX MONTHS
    
    
    SIX MONTHS2006
    
    
    2005
    
    
    2006
    
    
    2005NET SALES
    
    $
    153,689
    
    
    $
    49,587
    
    
    $
    396,800
    
    
    $
    77,983COST OF GOODS SOLD(1)
    
    
    428,399
    
    
    
    394,943
    
    
    
    1,053,680
    
    
    
    829,905GROSS LOSS
    
    
    (274,710
    )
    
    
    (345,355
    )
    
    
    (656,881
    )
    
    
    (751,922
    )OPERATING EXPENSES:Research and development(1)
    
    
    145,701
    
    
    
    111,046
    
    
    
    272,607
    
    
    
    202,346General and administrative(1)
    
    
    1,029,338
    
    
    
    752,215
    
    
    
    2,443,028
    
    
    
    1,255,315Sales and marketing(1)
    
    
    518,453
    
    
    
    229,411
    
    
    
    993,917
    
    
    
    426,869Total operating expenses
    
    
    1,693,492
    
    
    
    1,092,672
    
    
    
    3,709,551
    
    
    
    1,884,531OPERATING LOSS
    
    
    (1,968,202
    )
    
    
    (1,438,028
    )
    
    
    (4,366,432
    )
    
    
    (2,636,454
    )OTHER INCOME (EXPENSE)Interest Income
    
    
    772
    
    
    
    740
    
    
    
    14,828
    
    
    
    1,014Interest Expense(2)
    
    
    (877,662
    )
    
    
    (1,363,530
    )
    
    
    (2,042,258
    )
    
    
    (2,362,014
    )Other Income (Expense)
    
    
    
    
    
    
    (191,910
    )
    
    
    
    
    
    
    (298,370
    )Total other income (expense), net
    
    
    (876,890
    )
    
    
    (1,554,700
    )
    
    
    (2,027,430
    )
    
    
    (2,659,370
    )NET LOSS
    
    
    (2,845,091
    )
    
    
    (2,992,729
    )
    
    
    (6,393,862
    )
    
    
    (5,295,824
    )OTHER COMPREHENSIVE GAIN (LOSS)Translation adjustment
    
    
    (25,144
    )
    
    
    227,636
    
    
    
    (37,044
    )
    
    
    358,325COMPREHENSIVE LOSS
    
    $
    (2,870,235
    )
    
    $
    (2,765,093
    )
    
    $
    (6,430,907
    )
    
    $
    (4,937,499
    )BASIC AND DILUTED NET LOSS PER SHARE
    
    $
    (0.02
    )
    
    $
    (0.02
    )
    
    $
    (0.03
    )
    
    $
    (0.03
    )BASIC AND DILUTED WEIGHTED AVERAGE
    
    
    186,637,990
    
    
    
    159,807,252
    
    
    
    186,031,080
    
    
    
    159,782,046SHARES OUTSTANDING**Weighted average number of shares used to compute basic and diluted loss per share
is the same since the effect of dilutive securities is anti-dilutive.The accompanying notes are an integral part of these unaudited consolidated financial statements.(1)Includes stock-based compensation charges of:Cost of good sold
    
    
    15,797
    
    
    
    
    
    
    
    101,888
    
    
    
    Research and development
    
    
    16,717
    
    
    
    
    
    
    
    33,434
    
    
    
    General and administrative
    
    
    46,314
    
    
    
    
    
    
    
    418,062
    
    
    
    Sales and Marketing
    
    
    21,408
    
    
    
    
    
    
    
    68,851
    
    
    
    (2)Includes amortization of beneficial conversion
feature and warrants issued of:
    
    
    148,128
    
    
    
    1,028,600
    
    
    
    868,631
    
    
    
    1,725,318
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2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (6,393,862
    )
    
    $
    (5,295,824
    )Adjustments to reconcile net loss to net cash used
in operating activities:Depreciation and amortization
    
    
    137,534
    
    
    
    159,480Beneficial conversion feature
    
    
    1,168,580
    
    
    
    1,725,318Stock based compensation expenses-
employees
    
    
    622,235
    
    
    
    Stock based compensation expenses- non
employees
    
    
    52,212
    
    
    
    (Increase) decrease in current assets:Accounts receivables
    
    
    (57,512
    )
    
    
    (50,312
    )Inventory
    
    
    (314,069
    )
    
    
    (201,512
    )Prepaid expenses
    
    
    70,484
    
    
    
    (38,598
    )Increase (decrease) in current liabilities:Accounts payable and accrued liabilities
    
    
    1,190,274
    
    
    
    822,400Accrued payroll
    
    
    (68,966
    )
    
    
    (115,094
    )Customer deposits
    
    
    (5,000
    )
    
    
    Total Adjustments
    
    
    2,795,773
    
    
    
    2,301,683Net cash used for operating activities
    
    
    (3,598,090
    )
    
    
    (2,994,140
    )CASH FLOWS INVESTING ACTIVITIES:Acquisition of property and equipment, net
    
    
    (132,297
    )
    
    
    (92,529
    )Total cash flow investing activities
    
    
    (132,297
    )
    
    
    (92,529
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from private placements
    
    
    
    
    
    
    100,015Proceeds from notes payable
    
    
    1,750,000
    
    
    
    3,500,000Net cash provided by financing activities
    
    
    1,750,000
    
    
    
    3,600,015Effect of rate changes on cash and cash equivalents
    
    
    2,751
    
    
    
    NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
    
    
    (1,977,635
    )
    
    
    513,346CASH & CASH EQUIVALENTS, BEGINNING BALANCE
    
    
    2,317,003
    
    
    
    623,729CASH & CASH EQUIVALENTS, ENDING BALANCE
    
    $
    339,368
    
    
    $
    1,137,074SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Interest paid
    
    $
    
    
    
    $
    Income taxes
    
    $
    
    
    
    $
    
  5




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1.
    
    Requires an entity to recognize a servicing asset or servicing liability each time it
undertakes an obligation to service a financial asset by entering into a servicing
contract.2.
    
    Requires all separately recognized servicing assets and servicing liabilities to be
initially measured at fair value, if practicable.3.
    
    Permits an entity to choose Amortization method or Fair value measurement method
for each class of separately recognized servicing assets and servicing liabilities:4.
    
    At its initial adoption, permits a one-time reclassification of available-for-sale
securities to trading securities by entities with recognized servicing rights, without
calling into question the treatment of other available-for-sale securities under Statement
115, provided that the available-for-sale securities are identified in some manner as
offsetting the entitys exposure to changes in fair value of servicing assets or servicing
liabilities that a servicer elects to subsequently measure at fair value.5.
    
    Requires separate presentation of servicing assets and servicing liabilities
subsequently measured at fair value in the statement of financial position and additional
disclosures for all separately recognized servicing assets and servicing liabilities.
    8




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.
  AggegrateWeighted
    
    
    IntrinsicTotal
    
    
    price
    
    
    ValueOUTSTANDING, DECEMBER 2005
    
    
    42,862,253
    
    
    $
    0.11
    
    
    $
    18,327,247Granted in 2006
    
    
    5,625,000
    
    
    
    0.31Cancelled in 2006
    
    
    (274,284
    )Exercised in 2006
    
    
    OUTSTANDING, JUNE 2006
    
    
    48,212,969
    
    
    $
    0.13
    
    
    $
    2,562,597
 ,
    9




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Net loss, as reported
    
    $
    (5,295,824
    )Deduct: Total stock-based employee compensation
expense determined under fair-value based method
for all awards
    
    
    (74,192
    )Pro forma net loss
    
    $
    (5,370,016
    )Basic and diluted weighted average shares outstanding
    
    
    159,782,046Basic and diluted as reported
    
    $
    (0.03
    )Basic and diluted pro forma
    
    
    (0.03
    )
    
 June 302006Raw material/WIP
    
    $
    415,365Work in process
    
    
    102,259Finished goods
    
    
    66,320583,944Less: Reserve for obsolescence
    
    
    (20,000
    )$
    563,944
   10




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June 302006Financial consulting Whitebox II
    
    $
    80,000Financial consulting Whitebox III
    
    
    403,666Other prepaid expenses
    
    
    125,381Total prepaid expenses
    
    $
    609,047
   June 302006Computers
    
    $
    383,115Office furniture and fixtures
    
    
    561,650Machinery and equipment
    
    
    2,567,2013,511,966Less: Accumulated depreciation
    
    
    (2,963,038
    )$
    548,928
   June 302006Accounts payable  - trade creditors
    
    $
    605,941Accounts payable  - legal and professional
    
    
    1,268,010Accrued expenses
    
    
    150,995Accrued compensation
    
    
    2,316,810Accrued interest payable
    
    
    863,122Total accounts payable & accrued expenses
    
    $
    5,204,878
   June 302006Loans payable to officers on demand,
interest free and unsecured.
    
    $
    72,717Loans payable to officers on demand,
interest free and unsecured.
    
    
    61,339$
    134,056
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June 302006Opening balance per January 1st, 2006
    
    $
    1,170,975Applied against shipments
    
    
    5,000Ending balance per June 30, 2006
    
    $
    1,165,975
   st 
  June 302006Notes payable with interest at 8%
due and demandable on December 31, 2006
    
    $
    131,147
   st
  June 302006Notes payable to officer on demand
bearing interest rate of 8%, unsecured
    
    $
    857,784
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The unpaid principal balance under the Whitebox I, Whitebox II and Whitebox III notes hereof
from time to time outstanding shall bear interest at the rate of eight percent (8%) per
annum if Maker raises $10 million or more in equity financing on or before July 31, 2006.
Notwithstanding the preceding, if Maker raises at least $10 million in capital on or before
July 31, 2006, but such capital consists of less than $10 million of equity financing, then
commencing on September 18, 2006, as to the Whitebox II Notes, and September 7, 2007, as to
the Whitebox III notes, the interest rates under such notes shall be nine percent (9%) per
annum. Further, if Maker fails to raise $10 million of capital by July 31, 2006, then
commencing on September 18, 2006 , as to the Whitebox II Notes, and September 7, 2007, as to
the Whitebox III notes, the interest rate under such notes shall be twelve percent (12%) per
annum.The interest payments due on March 31, 2006 under the Whitebox I, Whitebox II and Whitebox
III notes are deferred to July 31, 2006.
  14




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June 302006Whitebox I
    
    $
    6,550,000Whitebox II
    
    
    3,000,000Whitebox III
    
    
    7,000,000Idylwood Partners L.P.
    
    
    750,000Whitebox IV
    
    
    1,000,000$
    18,300,000Beneficial conversion feature
    
    
    (2,644,067
    )$
    15,655,933
  AggegrateConversion
    
    
    Conversion
    
    
    Warrant
    
    
    Warrants
    
    
    Intrinsicshares
    
    
    price
    
    
    shares
    
    
    price
    
    
    ValueWhitebox I
    
    
    14,464,644
    
    
    
    0.4528
    
    
    
    14,423,512
    
    
    
    0.4541
    
    
    
    Whitebox II
    
    
    5,425,433
    
    
    
    0.5530
    
    
    
    1,666,667
    
    
    
    0.4500
    
    
    
    Whitebox III
    
    
    7,595,606
    
    
    
    0.9216
    
    
    
    1,609,197
    
    
    
    0.4500
    
    
    
    27,485,683
    
    
    
    
    
    
    
    17,699,375
    
    
    
    
    
    
    
    
  16




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AggegrateRemaining
    
    
    IntrinsicTotal
    
    
    Price
    
    
    Life
    
    
    ValueOUTSTANDING, DECEMBER 2005
    
    
    6,311,951
    
    
    
    0.6259
    
    
    3.0 Years
    
    
    Warrants issued Fusion
    
    
    1,220,565
    
    
    
    0.4464
    
    
    3.75 Years
    
    
    Cancelled in 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised in 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    OUTSTANDING, JUNE 2006
    
    
    7,532,516
    
    
    
    0.6259
    
    
    3.1 Years
    
    
    
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Item 2.
 
    21




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Financial Condition and Results of Operations for the three and six month periods ended June 30,
2006 compared to the three and six month periods ended June 30, 2005
    24




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Interest expenses.
    
    Three months
    
    Three months
    
    Six months
    
    Six months2006
    
    2005
    
    2006
    
    2005Note payables
    
    $
    2,580
    
    
    $
    3,557
    
    
    $
    5,047
    
    
    $
    11,233Note payable officer
    
    
    17,156
    
    
    
    16,732
    
    
    
    34,311
    
    
    
    33,465Convertible notes officers
    
    
    
    
    
    
    39,579
    
    
    
    
    
    
    
    123,483Whitebox I
    
    
    196,500
    
    
    
    196,500
    
    
    
    393,000
    
    
    
    393,000Fusion
    
    
    
    
    
    
    10,000
    
    
    
    11,971
    
    
    
    12,889Whitebox II
    
    
    60,000
    
    
    
    60,000
    
    
    
    120,000
    
    
    
    68,000Whitebox III
    
    
    140,000
    
    
    
    
    
    
    
    280,000
    
    
    
    Idylwood Partners L.P.
    
    
    10,500
    
    
    
    
    
    
    
    10,500
    
    
    
    Whitebox IV
    
    
    2,778
    
    
    
    
    
    
    
    2,778
    
    
    
    Other
    
    
    72
    
    
    
    8,562
    
    
    
    16,071
    
    
    
    (5,374
    )$
    429,585
    
    
    $
    334,930
    
    
    $
    873,678
    
    
    $
    636,696
 Beneficial conversion amortization
    
    Three months
    
    Three months
    
    Six months
    
    Six months2006
    
    2005
    
    2006
    
    2005Whitebox I
    
    $
    291,377
    
    
    $
    871,450
    
    
    $
    582,755
    
    
    $
    1,521,423Fusion
    
    
    
    
    
    
    77,130
    
    
    
    144,153
    
    
    
    95,069Whitebox II
    
    
    33,938
    
    
    
    80,020
    
    
    
    67,876
    
    
    
    108,826Repricing options Whitebox II
    
    
    
    
    
    
    
    
    
    
    41,362
    
    
    
    Whitebox III
    
    
    122,762
    
    
    
    
    
    
    
    239,915
    
    
    
    Repricing options Whitebox III
    
    
    
    
    
    
    
    
    
    
    92,520
    
    
    
    Total conversion feature expense
    
    $
    448,077
    
    
    $
    1,028,600
    
    
    $
    1,168,581
    
    
    $
    1,725,318Total interest and conversion expenses
    
    $
    877,662
    
    
    $
    1,363,530
    
    
    $
    2,042,258
    
    
    $
    2,362,014
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ITEM 3
 (a)
    
    Evaluation of disclosure controls and procedures. As of the end of the period covered
by this report, we carried out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and procedures were effective as
of the end of the applicable period to ensure that the information required to be disclosed
by us in reports that we file or submit under the Exchange Act (i) is recorded, processed,
summarized and reported within the time periods specified in Securities and Exchange
Commission rules and forms and (ii) is accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow
timely decisions regarding required disclosures.(b)
    
    Changes in internal controls over financial reporting. There was no change in our
internal control over financial reporting during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
 
 PART II: OTHER INFORMATION
 
 ITEM 1
   27




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##### Table of Contents



ITEM 2
   
 ITEM 3
  
 ITEM 4
  28




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ITEM 5
  ITEM 6
  ExhibitNumber
    
    Description3.1
    
    Certificate of Incorporation.(1)3.2
    
    Certificate of Amendment to Certificate of Incorporation.(2)3.3
    
    Certificate of Amendment to Certificate of Incorporation.(6)3.4
    
    Certificate of Merger.(6)3.5
    
    Bylaws.(6)4.1
    
    Form of Common Stock Certificate.(1)10.1
    
    Sutura Inc. 2001 Stock Option Plan.(6)10.2
    
    Sutura Inc. 1999 Stock Option Plan.(6)10.3
    
    Employment Agreement with Egbert Ratering.(6)10.4
    
    Employment Agreement with Anthony Nobles.(6)10.5
    
    Sutura Inc. 2006 Stock Option Plan.(6)10.6
    
    Lease for Fountain Valley Location.(6)10.7
    
    Sucor License Agreement.(6)10.8
    
    Sterilis License Agreement.(6)10.9
    
    Option and Distribution Agreement with Getz Bros. & Co., Inc., dated September 20, 2002.(6)10.10
    
    Convertible Promissory Note in Favor of Getz Bros. & Co., Inc., dated September 20, 2002.(6)10.11
    
    Purchase Agreement, dated as of September 17, 2004 by and between Sutura,
Inc. and certain other parties thereto.(3)10.12
    
    Purchase Agreement, dated as of March 24, 2005 by and between Sutura, Inc.
and certain other parties thereto.(3)10.13
    
    Form of Secured Convertible Promissory Note, dated September 17, 2004.(3)10.14
    
    Form of Secured Convertible Promissory Note dated March 24, 2005.(3)10.15
    
    Form of Warrant, dated September 17, 2004.(3)10.16
    
    Form of Warrant dated, March 24, 2005.(3)10.17
    
    Purchase Agreement, dated September 9, 2005 by and between Sutura, Inc. and
certain other parties thereto.(3)10.18
    
    Fourth Amended Security Agreement, dated September 9, 2005 by and between
Sutura, Inc. and certain other parties thereto.(8)10.19
    
    Fourth Amended Patent and Trademark Security Agreement, dated September 7,
2005 by and between Sutura, Inc. and certain other parties thereto.(8)10.20
    
    Second Amended Registration Rights Agreement, dated September 7, 2005 by and
between Setura, Inc. and certain other parties thereto.(3)10.21
    
    Form of Secured Convertible Promissory Note, dated September 7, 2005.(3)10.22
    
    Form of Warrant dated September 7, 2004.(3)10.23
    
    Amendment to Secured Convertible Promissory Notes and Warrants, dated
September 7, 2005 by and between Sutura, Inc. and certain other parties
thereto.(3)10.24
    
    Amendment to Secured Convertible Promissory Notes and Warrants, dated March
31, 2006 by and between Sutura, Inc. and certain other parties thereto.(4)10.25
    
    Agreement and Plan of Merger dated November 22, 2004.(5)10.26
    
    Distributor Agreement with Getz Bros & Co., Inc. dated September 20, 2002.(6)10.27
    
    Distribution Agreement with The Lifemed Group, Inc. dated January 16, 2006.(6)10.28
    
    Form of Secured Convertible Promissory Note, dated June 7, 2006.(7)10.29
    
    Form of Secured Convertible Promissory Note, dated June 28, 2006.(8)31.1
    
    Certification of the Chief Executive Officer of Sutura, Inc. pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer of Sutura, Inc. pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer of Sutura, Inc. pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
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(1)
    
    Previously filed as part of the Form 10-KSB filed in May 1995 and amendments thereto which are hereby incorporated by reference.(2)
    
    Previously filed as part of the Form 10-KSB for the period ending December 31, 2001.(3)
    
    Previously filed as an exhibit to Form 8-K, filed on September 13, 2005.(4)
    
    Previously filed as an exhibit to Form 8-K filed on March 31, 2006.(5)
    
    Previously filed as an exhibit to Form 8-K filed on December 1, 2004(6)
    
    Previously filed as an exhibit to Form 10-KSB for the period ending December 31, 2005.(7)
    
    Previously filed as an exhibit to Form 8-K filed on June 13, 2006(8)
    
    Previously filed as an exhibit to Form 8-K filed on July 7, 2006        30




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##### Table of Contents



SUTURA, INC.RegistrantDate:
August 21, 2006
    By:
    /s/ ANTHONY NOBLESAnthony Nobles, President and Chief Executive OfficerDate: August 21, 2006
    By:
    /s/ EGBERT RATERINGEgbert Ratering, Chief Financial Officer
 31