##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-QSB
 x
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
  o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
   SUTURA, INC.
  
 Delaware
    
    84-1010269(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 
   
  x o
  o x
  o x




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PART IItem 1.
    
    Financial StatementsConsolidated Balance Sheet on March 31, 2007 (Unaudited)Consolidated Statement of Operations for the three month periods ended March 31, 2007 and 2006 (Unaudited)Consolidated Statement of Cash Flows for the three month periods ended March 31, 2007 and 2006(Unaudited)Notes to Consolidated Financial Statements (Unaudited)Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Controls and ProceduresPART IIItem 1.
    
    Legal Proceedings.Item 2.
    
    Changes In Securities.Item 3.
    
    Defaults Upon Senior SecuritiesItem 4.
    
    Submission of Matters to a Vote of Security HoldersItem 5.
    
    Other InformationItem 6.
    
    Exhibits and Reports on Form 8-KSignaturesEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1




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PART I: FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 
 
 2007ASSETSCURRENT ASSETS:Cash & cash equivalents
    
    $
    892,417Accounts Receivable, Net
    
    
    104,887Inventory
    
    
    398,397Prepaid expenses
    
    
    46,485Total current assets
    
    
    1,442,187PROPERTY AND EQUIPMENT, net
    
    
    400,328DEPOSITS
    
    
    202,372$
    2,044,887LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    4,441,798Loan payable  officers
    
    
    110,085Customer deposits
    
    
    1,122,600Notes payable  officers
    
    
    926,408Notes payable  related party
    
    
    152,815Convertible notes payable- net of beneficial conversion feature
    
    
    12,425,745Total current liabilities
    
    
    19,179,452LONG TERM LIABILITIES:Convertible notes payable- net of beneficial conversion feature
    
    
    5,586,047COMMITMENTS 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;
265,113,600 shares issued and outstanding
    
    
    265,114Additional paid in capital
    
    
    49,566,599Accumulated deficit
    
    
    (71,606,911
    )Other comprehensive loss
    
    
    (945,413
    )Total stockholders deficit
    
    
    (22,720,613
    )$
    2,044,887




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2007
    
    
    2006NET SALES
    
    $
    81,616
    
    
    $
    243,111COST OF GOODS SOLD(1)
    
    
    482,317
    
    
    
    625,282GROSS LOSS
    
    
    (400,701
    )
    
    
    (382,171
    )OPERATING EXPENSES:Research and development(1)
    
    
    162,591
    
    
    
    126,906General and administrative(1)
    
    
    1,191,384
    
    
    
    1,413,690Sales and marketing(1)
    
    
    153,259
    
    
    
    475,464Total operating expenses
    
    
    1,507,234
    
    
    
    2,016,059OPERATING LOSS
    
    
    (1,907,935
    )
    
    
    (2,398,230
    )OTHER INCOME (EXPENSE)Interest Income
    
    
    6,935
    
    
    
    14,055Interest Expense(2)
    
    
    (1,071,225
    )
    
    
    (1,164,596
    )Total other income (expense), net
    
    
    (1,064,290
    )
    
    
    (1,150,541
    )NET LOSS
    
    
    (2,972,224
    )
    
    
    (3,548,771
    )OTHER COMPREHENSIVE GAIN (LOSS)Translation adjustment
    
    
    (8,249
    )
    
    
    (11,901
    )COMPREHENSIVE LOSS
    
    $
    (2,980,474
    )
    
    $
    (3,560,672
    )BASIC AND DILUTED NET LOSS PER SHARE
    
    $
    (0.01
    )
    
    $
    (0.02
    )BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING*
    
    
    259,168,108
    
    
    
    185,417,425* 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.(1) Includes stock-based compensation charges (credits) of:Cost of good sold
    
    $
    15,128
    
    
    $
    86,091Research and development
    
    
    14,208
    
    
    
    16,717General and administrative
    
    
    49,115
    
    
    
    371,748Sales and Marketing
    
    
    4,181
    
    
    
    47,443(2) Includes amortization of beneficial conversion
feature and fair value of warrants of:
    
    $
    569,949
    
    
    $
    720,503




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2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (2,972,224
    )
    
    $
    (3,548,771
    )Adjustments to reconcile net loss to net cash used
in operating activities:Depreciation and amortization
    
    
    57,372
    
    
    
    63,951Beneficial conversion feature
    
    
    569,949
    
    
    
    720,503Stock based compensation expenses- employees
    
    
    82,632
    
    
    
    521,999Stock based compensation expenses- non employees
    
    
    34,838
    
    
    
    26,106Interest expenses converted into shares.
    
    
    470,500
    
    
    
    (Increase) decrease in current assets:Accounts receivables
    
    
    (15,167
    )
    
    
    (63,020
    )Inventory
    
    
    58,117
    
    
    
    (127,711
    )Prepaid expenses
    
    
    (94,914
    )
    
    
    (1,554
    )Increase (decrease) in current liabilities:Accounts payable and accrued liabilities
    
    
    20,965
    
    
    
    713,975Accrued payroll
    
    
    (6,552
    )
    
    
    16,358Customer deposits
    
    
    (17,375
    )
    
    
    Total Adjustments
    
    
    1,160,364
    
    
    
    1,870,607Net cash used for operating activities
    
    
    (1,811,860
    )
    
    
    (1,678,164
    )CASH FLOWS INVESTING ACTIVITIES:Acquisition of property and equipment, net
    
    
    (35,439
    )
    
    
    (98,898
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from notes payable
    
    
    1,500,000
    
    
    
    Effect of rate changes on cash and cash equivalents
    
    
    1,561
    
    
    
    NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
    
    
    (345,738
    )
    
    
    (1,777,062
    )CASH & CASH EQUIVALENTS, BEGINNING BALANCE
    
    
    1,238,154
    
    
    
    2,317,003CASH & CASH EQUIVALENTS, ENDING BALANCE
    
    $
    892,417
    
    
    $
    539,940SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Interest paid
    
    $
    
    
    
    $
    Income taxes
    
    $
    
    
    
    $
    




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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.




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1.
    
    A brief description of the provisions of this Statement2.
    
    The date that adoption is required3.
    
    The date the employer plans to adopt the recognition provisions of this Statement, if
earlier.




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,
   AggegrateWeighted
    
    IntrinsicTotal
    
    price
    
    ValueOUTSTANDING, DECEMBER 31, 2006
    
    
    42,617,899
    
    
    
    0.103
    
    
    $
    493,159Granted in 2007
    
    
    Cancelled in 2007
    
    
    Exercised in 2007
    
    
    OUTSTANDING, MARCH 31, 2007
    
    
    42,617,899
    
    
    
    0.103
    
    
    $
    920,122
    
 March 312007Raw material/WIP
    
    $
    307,670Work in process
    
    
    278,777Finished goods
    
    
    161,950748,397Less: Reserve for obsolescence
    
    
    (350,000
    )$
    398,397




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March 312007Computers
    
    $
    361,000Office furniture and fixtures
    
    
    583,790Machinery and equipment
    
    
    2,631,5493,576,339Less: Accumulated depreciation
    
    
    (3,176,011
    )$
    400,328
   March 312007Accounts payable  trade creditors
    
    $
    608,354Accounts payable  legal and professional
    
    
    1,046,337Accrued expenses
    
    
    665,903Accrued compensation
    
    
    2,026,916Accrued interest payable
    
    
    94,289Total accounts payable & accrued expenses
    
    $
    4,441,798
     March 312007Opening balance per January 1st, 2007
    
    $
    1,139,975Applied against shipments
    
    
    17,375Ending balance per March 31, 2007
    
    $
    1,122,600
   st st  




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March 312007Notes payable with interest at 8%
due and demandable on December 31, 2007
    
    $
    152,815
   st st
  March 312007Notes payable to officer on demand
bearing interest rate of 8%, unsecured
    
    $
    926,408




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1.
    
    the shares issued in connection upon payment or conversion of the Whitebox V and VI
Notes;2.
    
    the shares issued in connection with prior financings with affiliates of Whitebox;3.
    
    the shares issued in connection with prior financings with affiliates of Whitebox;4.
    
    the common stock issuable upon exercise of warrants issued in connection with the prior
financings.
   March 312007Whitebox I
    
    $
    6,550,000Whitebox II
    
    
    3,000,000Whitebox III
    
    
    7,000,000Idylwood Partners LLP
    
    
    750,000Whitebox V
    
    
    1,500,000Whitebox VI
    
    
    1,500,000$
    20,300,000Debt issue costs
    
    
    (443,665
    )Beneficial conversion feature
    
    
    (1,844,542
    )$
    18,011,793Classified as current liability
    
    $
    12,425,745Classified as long term liabilty
    
    $
    5,586,047




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Intrinsic
    
    
    IntrinsicConversion
    
    
    Conversion
    
    
    value per
    
    
    value pershares
    
    
    price
    
    
    December
    
    
    end MarchWhitebox I
    
    
    43,666,667
    
    
    $
    0.1500
    
    
    $
    
    
    
    $Whitebox II
    
    
    20,000,000
    
    
    
    0.1500Whitebox III
    
    
    46,666,667
    
    
    
    0.1500Idylwood
    
    
    15,151,515
    
    
    
    0.0495
    
    
    
    7,576
    
    
    
    310,606Whitebox V
    
    
    33,333,333
    
    
    
    0.0450
    
    
    
    166,667
    
    
    
    833,333Whitebox VI
    
    
    33,333,333
    
    
    
    0.0450
    
    
    
    
    
    
    
    833,333192,151,515
    
    
    
    
    
    
    $
    174,242
    
    
    $
    1,977,273
     st
  st




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Remaining
    
    
    AggegrateLife in
    
    
    IntrinsicTotal
    
    
    Price
    
    
    years
    
    
    ValueWarrants issued in 2004
    
    
    6,311,951
    
    
    $
    0.6259
    
    
    
    2.0
    
    
    $Warrants Fusion
    
    
    1,220,565
    
    
    
    0.4464
    
    
    
    3.0Warrants Whitebox I
    
    
    14,423,512
    
    
    
    0.4541
    
    
    
    2.5Warrants Whitebox II
    
    
    1,666,667
    
    
    
    0.4500
    
    
    
    3.0Warrants Whitebox III
    
    
    1,609,197
    
    
    
    0.4500
    
    
    
    3.4Warrants Whitebox IV
    
    
    10,400,000
    
    
    
    0.0913
    
    
    
    4.7Cancelled in 2007
    
    
    
    
    
    
    
    
    
    
    Exercised in 2007
    
    
    
    
    
    
    
    
    
    
    OUTSTANDING, MARCH 2007
    
    
    35,631,891
    
    
    $
    0.3780
    
    
    
    3.1
    
    
    $
    




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Patent Infringement Litigation
      th
 
 Item 2.




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Financial Condition and Results of Operations for the three months period ended March 31, 2007
compared to three months period ended March 31, 2006
 rd




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Three months
    
    
    Three monthsInterest expenses
    
    2007
    
    
    2006Note payable related party in Euros
    
    $
    2,915
    
    
    $
    2,467Note payable officer
    
    
    18,528
    
    
    
    17,156Whitebox I
    
    
    196,500
    
    
    
    196,500Fusion
    
    
    
    
    
    
    11,971WhiteboxII
    
    
    90,000
    
    
    
    60,000Whitebox III
    
    
    140,000
    
    
    
    140,000Idylwood Partners L.P.
    
    
    15,000
    
    
    
    Whitebox V
    
    
    30,000
    
    
    
    Whitebox VI
    
    
    8,333
    
    
    
    Other
    
    
    
    
    
    
    16,000$
    501,276
    
    
    $
    444,094
 Three months
    
    
    Three monthsBeneficial conversion amortization
    
    2007
    
    
    2006Whitebox I
    
    $
    291,377
    
    
    $
    291,377Fusion
    
    
    
    
    
    
    144,153Whitebox II
    
    
    33,938
    
    
    
    33,938Repricing warrants Whitebox II
    
    
    
    
    
    
    41,362Whitebox III
    
    
    141,252
    
    
    
    117,153Repricing warrants Whitebox III
    
    
    
    
    
    
    92,520Idylwood Partners L.P.
    
    
    20,833
    
    
    
    Whitebox V
    
    
    82,549
    
    
    
    Total conversion feature expense
    
    $
    569,949
    
    
    $
    720,503Total expenses
    
    $
    1,071,224
    
    
    $
    1,164,597




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ITEM 3
 (a)
    
    Evaluation of Disclosure Controls and Procedures.
  (b)
    
    Changes in Internal Controls over Financial Reporting.




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PART II: OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS




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Patent Infringement Litigation




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ITEM 2.
    
    CHANGES IN SECURITIES
 th
 
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K
 (a)
    
    Exhibits
 3.1
    
    Certificate of Incorporation13.2
    
    Certificate of Amendment to Certificate of Incorporation23.3
    
    Certificate of Amendment to Certificate of Incorporation73.4
    
    Certificate of Merger73.5
    
    Bylaws74.1
    
    Form of Common Stock Certificate110.1
    
    Sutura Inc. 2001 Stock Option Plan710.2
    
    Sutura Inc. 1999 Stock Option Plan710.3
    
    Employment Agreement with Egbert Ratering710.4
    
    Employment Agreement with Anthony Nobles710.5
    
    Sutura Inc. 2006 Stock Option Plan710.6
    
    Lease for Fountain Valley Location710.7
    
    Sucor License Agreement710.8
    
    Sterilis License Agreement7




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10.9
    
    Option and Distribution Agreement with Getz Bros. & Co., Inc., dated September 20, 2002710.10
    
    Convertible Promissory Note in Favor of Getz Bros. & Co., Inc., dated September 20, 2002710.11
    
    Purchase Agreement, dated as of September 17, 2004 by and between Sutura, Inc. and certain other parties thereto.310.12
    
    Purchase Agreement, dated as of March 24, 2005 by and between Sutura, Inc. and certain other parties thereto.310.13
    
    Form of Secured Convertible Promissory Note, dated September 17, 2004.310.14
    
    Form of Secured Convertible Promissory Note dated March 24, 2005.310.15
    
    Form of Warrant, dated September 17, 2004.310.16
    
    Form of Warrant dated, March 24, 2005.310.17
    
    Purchase Agreement, dated September 9, 2005 by and between Sutura, Inc. and certain other parties thereto.310.18
    
    Second Amended Security Agreement, dated September 9, 2005 by and between Sutura, Inc. and certain other parties thereto.310.19
    
    Second Amended Patent and Trademark Security Agreement, dated September 7, 2005 by and between Sutura, Inc. and certain other
parties thereto.310.20
    
    Second Amended Registration Rights Agreement, dated September 7, 2005 by and between Sutura, Inc. and certain other parties
thereto.310.21
    
    Form of Secured Convertible Promissory Note, dated September 7, 2005.310.22
    
    Form of Warrant dated September 7, 2004.3




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10.23
    
    Amendment to Secured Convertible Promissory Notes and Warrants, dated September 7, 2005 by and between Sutura, Inc. and certain
other parties thereto.310.24
    
    Amendment to Secured Convertible Promissory Notes and Warrants, dated March 31, 2006 by and between Sutura, Inc. and certain other
parties thereto.410.25
    
    Agreement and Plan of Merger dated November 22, 2004.510.26
    
    Distributor Agreement with Getz Bros & Co., Inc. dated September 20, 2002. 710.27
    
    Distribution Agreement with The Lifemed Group, Inc. dated January 16, 2006.710.28
    
    Form of Secured Convertible Promissory Note, dated June 7, 2006.810.29
    
    Third Amended Security Agreement, dated June 7, 2006, by and between Sutura, Inc., and certain other parties thereto.810.30
    
    Third Amended Patent and Trademark Security Agreement, dated June 7, 2006, by and between Sutura, Inc., and certain other parties
thereto.810.31
    
    Form of Secured Convertible Promissory Note, dated June 28, 2006.910.32
    
    Fourth Amended Security Agreement, dated June 28, 2006, by and between Sutura, Inc., and certain other parties thereto.910.33
    
    Fourth Amended Patent and Trademark Security Agreement, dated June 28, 2006, by and between Sutura, Inc., and certain other
parties thereto.910.34
    
    Securities Purchase Agreement dated, August 25, 2006, by and between Sutura, Inc., and certain other parties thereto.1010.35
    
    Third Amended Registration Rights Agreement, dated August 25, 2006, by and between Sutura, Inc., and certain other parties
thereto.1010.36
    
    Side Agreement, dated August 25, 2006, by and between Sutura, Inc., and certain parties thereto.1010.37
    
    Form of Warrant, dated August 25, 2006.1010.38
    
    Purchase Agreement, dated December 13, 2006.1110.39
    
    Form of Secured Convertible Promissory Note, dated December 13, 2006.1110.40
    
    Fourth Amended Security Agreement, dated December 13, 2006, by and between Sutura, Inc. and certain other parties
thereto.1110.41
    
    Fourth Amended Patent and Trademark Security Agreement, dated December 13, 2006, by and between Sutura, Inc., and certain other
parties thereto.1110.42
    
    Fourth Amended Registration Rights Agreement, dated December 13, 2006, by and between Sutura, Inc., and certain other parties
thereto.1114.1
    
    Code of ethics for the Board of Directors.614.2
    
    Code of ethics for Executive Officers.631.1
    
    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.




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32.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer of Sutura, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
  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 part of the Form 10-KSB for the period ending December 31, 2003.7
    
    Previously filed as part of the Form 10-KSB for the period ending December 31, 2005.8
    
    Previously filed as an exhibit to Form 8-K filed on June 13, 2006.9
    
    Previously filed as an exhibit to Form 8-K filed on July 3, 2006.10
    
    Previously filed as an Exhibit to Form 8-K filed on August 31, 2006.11
    
    Previously filed as an Exhibit to Form 8-K filed on December 18, 2006. b)
    
    Reports on Form 8-K




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SUTURA, INC.RegistrantDate: May 21, 2007
    By:
    /s/ David  TeckmanDavid  Teckman,President and Chief Executive OfficerDate: May 21, 2007
    By:
    /s/ Richard BjorkmanRichard Bjorkman, Chief Financial Officer