##### Table of Contents



OMB APPROVALOMB Number: 3235-0070Expires: August 31, 2008Estimated average burden hours per response...192.00
   SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended: June 30, 2008
 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.
  (Name of small business issuer in its charter)
 Delaware
    
    84-1010269(State or other jurisdiction of 
incorporation or organization)
    
    (I. R. S. Employer Identification No.)
 
   
  þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
 
 þ o
 SEC 1296 (02-08)
    
    Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently valid OMB
control number.




---



##### 



PART IItem 1. Financial StatementsConsolidated Balance Sheet on June 30, 2008 (Unaudited) and December 31, 2007Consolidated Statement of Operations for the three and six month
periods ended June 30, 2008 and 2007(Unaudited)Consolidated Statement of Cash Flows for the six
month periods ended June 30, 2008 and 2007(Unaudited)Notes to Consolidated Financial Statements (Unaudited)Item 2. Managements Discussion and Analysis of Financial Condition
and Results of OperationsItem 3. Qualitative and Quantitative Disclosures About Market RiskItem 4T. Controls and ProceduresPART IIItem 1. Legal ProceedingsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSignaturesEXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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At June 30,
    
    
    At December 31,2008
    
    
    2007ASSETSCURRENT ASSETS:Cash & cash equivalents
    
    $
    1,188,821
    
    
    $
    7,767,196Marketable securities
    
    
    6,279,554
    
    
    
    10,782,372Certificates of deposit  Short term
    
    
    1,708,774
    
    
    
    754,616Accounts Receivable, Net
    
    
    108,330
    
    
    
    31,603Inventory, net
    
    
    346,298
    
    
    
    410,569Prepaid expenses
    
    
    57,347
    
    
    
    54,558Total current assets
    
    
    9,689,124
    
    
    
    19,800,914LONG TERM ASSETSProperty & equipment, net
    
    
    600,636
    
    
    
    251,404Certificates of deposit  Long term
    
    
    288,885
    
    
    
    380,702Deposits
    
    
    265,367
    
    
    
    201,263Total long term assets
    
    
    1,154,888
    
    
    
    833,369$
    10,844,012
    
    
    $
    20,634,283LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    1,705,504
    
    
    $
    3,358,047Loan payable  officers
    
    
    124,667
    
    
    
    119,858Customer deposits
    
    
    949,543
    
    
    
    1,006,311Notes payable  related party
    
    
    188,433
    
    
    
    161,823Convertible notes payable- officers
    
    
    1,000,519
    
    
    
    926,408Convertible notes payable- net of beneficial conversion
    
    
    13,270,308
    
    
    
    3,811,698Total current liabilities
    
    
    17,238,974
    
    
    
    9,484,145LONG TERM LIABILITIES:Convertible notes payable- net of beneficial conversion
    
    
    
    
    
    
    16,556,134Notes payables
    
    
    1,700,000
    
    
    
    1,700,000Notes payables officers
    
    
    400,000
    
    
    
    400,000Total long term liabilities
    
    
    2,100,000
    
    
    
    18,656,134COMMITMENTS AND CONTINGENCIES
    
    
    
    
    
    
    STOCKHOLDERS DEFICITSeries A convertible preferred stock, $0.001 par value;
2,000,000 shares authorized, none issued and outstanding
    
    
    
    
    
    
    Common stock, $0.001 par value; 500,000,000 shares authorized;
issued and outstanding 337,816,037 shares as at June 30,
2008 and 272,650,262 shares at December 31, 2007
    
    
    337,816
    
    
    
    272,650Additional paid in capital
    
    
    56,334,831
    
    
    
    50,941,329Accumulated deficit
    
    
    (64,135,996
    )
    
    
    (57,661,739
    )Other comprehensive loss
    
    
    (1,031,613
    )
    
    
    (1,058,236
    )Total stockholders deficit
    
    
    (8,494,962
    )
    
    
    (7,505,996
    )$
    10,844,012
    
    
    $
    20,634,283




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THREE MONTHS
    
    
    THREE MONTHS
    
    
    SIX MONTHS
    
    
    SIX MONTHS2008
    
    
    2007
    
    
    2008
    
    
    2007NET SALES
    
    $
    152,784
    
    
    $
    57,362
    
    
    $
    205,164
    
    
    $
    138,978COST OF GOODS SOLD(1)
    
    
    574,993
    
    
    
    425,258
    
    
    
    1,138,728
    
    
    
    907,575GROSS LOSS
    
    
    (422,209
    )
    
    
    (367,897
    )
    
    
    (933,565
    )
    
    
    (768,597
    )OPERATING EXPENSES:Research and development(1)
    
    
    212,682
    
    
    
    114,157
    
    
    
    436,105
    
    
    
    276,748General and administrative(1)
    
    
    1,714,930
    
    
    
    991,775
    
    
    
    2,906,346
    
    
    
    2,183,160Sales and marketing(1)
    
    
    282,513
    
    
    
    181,163
    
    
    
    433,659
    
    
    
    334,422Total operating expenses
    
    
    2,210,125
    
    
    
    1,287,096
    
    
    
    3,776,110
    
    
    
    2,794,330OPERATING LOSS
    
    
    (2,632,334
    )
    
    
    (1,654,992
    )
    
    
    (4,709,674
    )
    
    
    (3,562,927
    )OTHER INCOME (EXPENSE)Interest Income
    
    
    139,622
    
    
    
    1,504
    
    
    
    307,790
    
    
    
    8,440Interest Expense(2)
    
    
    (961,347
    )
    
    
    (1,112,443
    )
    
    
    (2,087,372
    )
    
    
    (2,183,668
    )Other Income (Expense)
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    Total other income (expense),net
    
    
    (821,725
    )
    
    
    (1,110,938
    )
    
    
    (1,764,583
    )
    
    
    (2,175,228
    )NET LOSS
    
    
    (3,454,058
    )
    
    
    (2,765,930
    )
    
    
    (6,474,257
    )
    
    
    (5,738,155
    )OTHER COMPREHENSIVE GAIN (LOSS)Unrealized gain(loss)securities
    
    
    (73,717
    )
    
    
    
    
    
    
    56,570
    
    
    
    Translation adjustment
    
    
    20,524
    
    
    
    (2,520
    )
    
    
    (29,947
    )
    
    
    (10,770
    )TOTAL COMPREHENSIVE GAIN (LOSS)
    
    
    (53,193
    )
    
    
    (2,520
    )
    
    
    26,623
    
    
    
    (10,770
    )COMPREHENSIVE (LOSS)
    
    $
    (3,507,251
    )
    
    $
    (2,768,450
    )
    
    $
    (6,447,634
    )
    
    $
    (5,748,925
    )BASIC AND DILUTED NET LOSS PER SHARE
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.02
    )BASIC AND DILUTED WEIGHTED AVERAGE
SHARES OUTSTANDING*
    
    
    305,233,150
    
    
    
    268,188,599
    
    
    
    304,875,096
    
    
    
    262,157,278
 
 *
    
    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 consolidated financial statements. (1) Includes stock-based compensation charges of:Cost of good sold
    
    $
    15,128
    
    
    $
    15,128
    
    
    $
    30,256
    
    
    $
    30,256Research and development
    
    
    14,208
    
    
    
    14,208
    
    
    
    28,416
    
    
    
    28,416General and administrative
    
    
    45,373
    
    
    
    49,115
    
    
    
    92,929
    
    
    
    98,230Sales and Marketing
    
    
    4,181
    
    
    
    4,181
    
    
    
    8,362
    
    
    
    8,362(2) Includes amortization of beneficial conversion
feature and warrants issued of:
    
    $
    342,852
    
    
    $
    580,657
    
    
    $
    700,267
    
    
    $
    1,150,606




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2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (6,474,257
    )
    
    $
    (5,738,155
    )Adjustments to reconcile net loss to net cash
used in operating activitiesDepreciation and amortization
    
    
    93,268
    
    
    
    115,560Beneficial conversion feature
    
    
    700,267
    
    
    
    1,150,606Stock based compensation expenses  employees
    
    
    159,963
    
    
    
    165,264Stock based compensation expenses  non employees
    
    
    85,444
    
    
    
    76,366Interest expenses converted into shares.
    
    
    200,510
    
    
    
    959,667(Increase) decrease in current assets:Accounts receivables
    
    
    (72,407
    )
    
    
    (20,990
    )Inventory
    
    
    66,572
    
    
    
    28,174Prepaid expenses
    
    
    84,255
    
    
    
    17,117Increase (decrease) in current liabilities:Accounts payable and accrued liabilities
    
    
    55,704
    
    
    
    48,907Accrued payroll
    
    
    (1,532,081
    )
    
    
    (4,914
    )Customer deposits
    
    
    (56,768
    )
    
    
    (23,125
    )Total Adjustments
    
    
    (215,272
    )
    
    
    2,512,631Net cash used in operating activities
    
    
    (6,689,530
    )
    
    
    (3,225,524
    )CASH FLOWS INVESTING ACTIVITIES:Acquisition of property and equipment, net
    
    
    (442,001
    )
    
    
    (39,018
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from (payments to) notes payable
    
    
    (3,160,000
    )
    
    
    2,050,000Sales of marketable securities
    
    
    3,697,046
    
    
    
    Net cash provided by (used in) financing activities
    
    
    537,046
    
    
    
    2,050,000Effect of rate changes on cash and cash equivalents
    
    
    16,109
    
    
    
    6,774NET DECREASE IN CASH & CASH EQUIVALENTS
    
    
    (6,578,376
    )
    
    
    (1,207,768
    )CASH & CASH EQUIVALENTS, BEGINNING BALANCE
    
    
    7,767,196
    
    
    
    1,238,154CASH & CASH EQUIVALENTS, ENDING BALANCE
    
    $
    1,188,821
    
    
    $
    30,387SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Interest paid
    
    $
    1,042,150
    
    
    $
    Income taxes
    
    $
    
    
    
    $
    




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Revenue Recognition
   Three months
    
    Three months
    
    Year to date
    
    Year to dateTotal sales
    
    2008
    
    2007
    
    2008
    
    2007Sales in USA
    
    $
    4,035
    
    
    
    3
    %
    
    
    8,177
    
    
    
    14
    %
    
    
    4,035
    
    
    
    2
    %
    
    
    15,846
    
    
    
    11
    %Sales in Europe
    
    
    123,748
    
    
    
    81
    %
    
    
    37,684
    
    
    
    66
    %
    
    
    149,078
    
    
    
    73
    %
    
    
    77,132
    
    
    
    55
    %Sales Far East
    
    
    25,000
    
    
    
    16
    %
    
    
    11,500
    
    
    
    20
    %
    
    
    52,050
    
    
    
    25
    %
    
    
    46,000
    
    
    
    33
    %Total sales
    
    $
    152,784
    
    
    
    100
    %
    
    $
    57,362
    
    
    
    100
    %
    
    $
    205,164
    
    
    
    100
    %
    
    $
    138,978
    
    
    
    100
    %Long lived
assets Europe
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    5,091
    
    
    
    
    
    
    $
    7,205




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Three months ended
    
    
    Three months ended
    
    
    Six months ended
    
    
    Six months endedSales major countries
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007France
    
    $
    35,648
    
    
    
    23
    %
    
    $
    22,173
    
    
    
    39
    %
    
    $
    60,810
    
    
    
    30
    %
    
    $
    33,096
    
    
    
    24
    %Spain
    
    
    14,775
    
    
    
    10
    %
    
    
    3,650
    
    
    
    6
    %
    
    
    14,755
    
    
    
    7
    %
    
    
    21,619
    
    
    
    16
    %Russia
    
    
    58,631
    
    
    
    38
    %
    
    
    
    
    
    
    0
    %
    
    
    58,631
    
    
    
    29
    %
    
    
    
    
    
    
    0
    %Hong Kong
    
    $
    25,000
    
    
    
    16
    %
    
    $
    11,500
    
    
    
    20
    %
    
    $
    52,050
    
    
    
    25
    %
    
    $
    46,000
    
    
    
    33
    %
  Three months ended
    
    
    Three months ended
    
    
    Six months ended
    
    
    Six months endedSales major customers
    
    June 30, 2008
    
    
    June 30, 2007
    
    
    June 30, 2008
    
    
    June 30, 2007Customer 1
    
    $
    58,631
    
    
    
    38
    %
    
    $
    
    
    
    
    0
    %
    
    $
    58,631
    
    
    
    29
    %
    
    $
    
    
    
    
    0
    %Customer 2
    
    
    25,000
    
    
    
    16
    %
    
    
    11,500
    
    
    
    20
    %
    
    
    52,050
    
    
    
    25
    %
    
    
    46,000
    
    
    
    33
    %Customer 3
    
    
    15,010
    
    
    
    10
    %
    
    
    11,357
    
    
    
    20
    %
    
    
    31,326
    
    
    
    15
    %
    
    
    22,420
    
    
    
    16
    %Customer 4
    
    
    20,638
    
    
    
    14
    %
    
    
    10,816
    
    
    
    19
    %
    
    
    29,484
    
    
    
    14
    %
    
    
    10,676
    
    
    
    8
    %Customer 5
    
    $
    14,775
    
    
    
    10
    %
    
    $
    3,650
    
    
    
    6
    %
    
    $
    14,755
    
    
    
    7
    %
    
    $
    21,619
    
    
    
    16
    %
     Three months ended June 30
    
    
    Six months ended June 302008
    
    
    2007
    
    
    2008
    
    
    2007Weighted average
shares outstanding
 basic
    
    
    305,233,150
    
    
    
    268,188,599
    
    
    
    304,875,096
    
    
    
    262,157,278Weighted average
shares outstanding
 diluted
    
    
    305,233,150
    
    
    
    268,188,599
    
    
    
    304,875,096
    
    
    
    262,157,278




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Six months ended June 302008
    
    2007Expected life (years)
    
    
    10
    
    
    
    10Expected stock price volatility
    
    
    95%-191%
    
    
    
    95%-191%Weighted average stock price volatility
    
    
    115%
    
    
    
    115%Expected dividend yield
    
    
    0
    
    
    
    0Risk-free interest rate
    
    
    4.10%-4.80%
    
    
    
    4.10%-4.80%
   WeightedaverageremainingWeighted
    
    
    contractual
    
    
    AggregateTotal
    
    
    price
    
    
    term(years)
    
    
    Intrinsic ValueOUTSTANDING, DECEMBER 31, 2007
    
    
    45,017,899
    
    
    $
    0.101
    
    
    
    3
    
    
    
    691,890Granted in 2008
    
    
    Cancelled in 2008
    
    
    (2,459,346
    )
    
    $
    0.115Exercised in 2008
    
    
    OUTSTANDING, JUNE 30, 2008
    
    
    42,558,553
    
    
    $
    0.100
    
    
    
    2.3
    
    
    $
    1,144,354Exercisable at June 30, 2008
    
    
    34,528,553
    
    
    $
    0.105
    
    
    
    1.8
    
    
    $
    1,102,489




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Amortized
    
    
    Gross
    
    
    Gross
    
    
    Faircost at
    
    
    unrealized
    
    
    unrealized
    
    
    value atJune 30 2008
    
    
    Gain
    
    
    Loss
    
    
    June 30 2008Government bonds
    
    $
    2,447,130
    
    
    $
    18,224
    
    
    $
    
    
    
    $
    2,465,354Corporate bonds
    
    
    485,645
    
    
    
    3,555
    
    
    
    
    
    
    
    489,200Taxable auction rate securities
    
    
    3,325,197
    
    
    
    0
    
    
    
    197
    
    
    
    3,325,000Total marketable securities for sale
    
    $
    6,257,972
    
    
    $
    21,779
    
    
    $
    197
    
    
    $
    6,279,554
  Amortized
    
    
    Gross
    
    
    Gross
    
    
    Faircost at
    
    
    unrealized
    
    
    unrealized
    
    
    value atJune 30 2008
    
    
    Gain
    
    
    Loss
    
    
    June 30 2008Certificates of deposit  Short term
    
    $
    1,710,952
    
    
    $
    
    
    
    $
    2,178
    
    
    
    1,708,774Certificates of deposit  Long term
    
    
    290,874
    
    
    
    
    
    
    
    1,989
    
    
    
    288,885Totals
    
    $
    2,001,826
    
    
    $
    
    
    
    $
    4,167
    
    
    $
    1,997,659
  Amortized
    
    
    Fair
    
    
    AccumulatedGovernment bonds
    
    cost
    
    
    value
    
    
    Gain(Loss)Totals per March 31, 2008
    
    $
    6,323,402
    
    
    $
    6,408,709
    
    
    $
    85,307Purchases
    
    
    
    
    
    
    
    
    
    
    Sales
    
    
    3,876,272
    
    
    
    3,943,355
    
    
    
    67,083Adjustment to fair value
    
    
    
    
    
    
    
    
    
    
    Totals per the end June 30, 2008
    
    $
    2,447,130
    
    
    $
    2,465,354
    
    
    $
    18,224Amortized
    
    
    Fair
    
    
    AccumulatedCorporate bonds
    
    cost
    
    
    value
    
    
    Gain(Loss)Totals per March 31, 2008
    
    $
    481,436
    
    
    $
    489,705
    
    
    $
    8,269Purchases
    
    
    
    
    
    
    
    
    
    
    Sales
    
    
    
    
    
    
    
    
    
    
    Adjustment to fair value
    
    
    (4,209
    )
    
    
    505
    
    
    
    4,714Totals per the end June 30, 2008
    
    $
    485,645
    
    
    $
    489,200
    
    
    $
    3,555Amortized
    
    
    Fair
    
    
    AccumulatedCertificate of deposits
    
    cost
    
    
    value
    
    
    Gain(Loss)Totals per March 31, 2008
    
    $
    2,097,114
    
    
    $
    2,089,786
    
    
    $
    (7,328
    )Purchases
    
    
    
    
    
    
    
    
    
    
    Sales
    
    
    95,000
    
    
    
    95,000
    
    
    
    Adjustment to fair value
    
    
    288
    
    
    
    (2,873
    )
    
    
    (3,161
    )Totals per the end June 30, 2008
    
    $
    2,001,826
    
    
    $
    1,997,659
    
    
    $
    (4,167
    )Amortized
    
    
    Fair
    
    
    AccumulatedTaxable auction rate securities preferred
    
    cost
    
    
    value
    
    
    Gain(Loss)Totals per March 31, 2008
    
    $
    4,000,232
    
    
    $
    4,000,000
    
    
    $
    (232
    )Purchases
    
    
    
    
    
    
    
    
    
    
    Sales
    
    
    675,035
    
    
    
    675,000
    
    
    
    (35
    )Adjustment to fair value
    
    
    
    
    
    
    
    
    
    
    Totals per the end June 30, 2008
    
    $
    3,325,197
    
    
    $
    3,325,000
    
    
    $
    (197
    )
   
    
    Level 1 Inputs     Quoted prices (unadjusted) in active markets for
identical assets or liabilities.
    
    Level 2 Inputs     Inputs other than quoted prices in active markets
that are observable either directly or indirectly; and
    
    Level 3 Inputs     Unobservable inputs in which there is little or no
market data, which require us to develop our own assumptions.




---



##### Table of Contents



Fairvalue at
    
    
    Fair value measurement at reporting date usingJune 30 2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Government bonds
    
    $
    2,465,354
    
    
    $
    2,465,354
    
    
    $
    
    
    
    $
    Corporate bonds
    
    
    489,200
    
    
    
    489,200
    
    
    
    
    
    
    
    Auction rate
securities preferred
    
    
    3,325,000
    
    
    
    3,325,000
    
    
    
    
    
    
    
    Certificates of deposit
    
    
    1,997,659
    
    
    
    1,997,659
    
    
    
    
    
    
    
    $
    8,277,213
    
    
    $
    8,277,213
    
    
    $
    
    
    
    $
    
    
 June 30
    
    
    December 312008
    
    
    2007Raw material
    
    $
    311,064
    
    
    $
    367,473Work in process
    
    
    251,883
    
    
    
    279,721Finished goods
    
    
    93,351
    
    
    
    113,375656,298
    
    
    
    760,569Less: Reserve for obsolescence
    
    
    (310,000
    )
    
    
    (350,000
    )$
    346,298
    
    
    $
    410,569




---



##### Table of Contents



Property Plant & equipment
 June 30
    
    
    December 312008
    
    
    2007Computers
    
    $
    399,320
    
    
    $
    357,406Office furniture and fixtures
    
    
    590,162
    
    
    
    583,740Machinery and equipment
    
    
    2,921,636
    
    
    
    2,652,7883,911,119
    
    
    
    3,593,933Less: Accumulated depreciation
    
    
    (3,310,483
    )
    
    
    (3,342,530
    )$
    600,636
    
    
    $
    251,404
    Accounts payables
 June 30
    
    
    December 312008
    
    
    2007Accounts payable
    
    $
    176,899
    
    
    $
    281,275Accrued expenses
    
    
    162,470
    
    
    
    155,110Accrued compensation
    
    
    591,537
    
    
    
    2,080,446Accrued interest payable
    
    
    774,597
    
    
    
    841,215$
    1,705,504
    
    
    $
    3,358,046
     Deposits
 Ending balance per December 31st, 2007
    
    $
    1,006,311Applied against shipments
    
    
    56,768Ending balance per June 30, 2008
    
    $
    949,543
  st




---



##### Table of Contents



Notes payables related party
 June 30
    
    
    December 312008
    
    
    2007Notes payable with interest at 8%
due and demandable on December 31, 2008
    
    $
    188,433
    
    
    $
    161,823
     Notes payables-officers
 June 30
    
    
    December 312008
    
    
    2007Convertible notes payable to officer
bearing interest rate of 10%, unsecured
    
    $
    1,000,519
    
    
    $
    926,408
  Intrinsic
    
    Intrinsic
    
    Intrinsic
    
    Intrinsic
    
    IntrinsicConversion
    
    Conversion
    
    value per
    
    value per
    
    value per
    
    value per
    
    value pershares
    
    price
    
    December
    
    end June
    
    end June
    
    end Sept
    
    end DecRatering
    
    
    12,506,488
    
    
    $
    0.0800
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $




---



##### Table of Contents








---



##### Table of Contents








---



##### Table of Contents








---



##### Table of Contents








---



##### Table of Contents








---



##### Table of Contents



1.
    
    the shares of Common Stock issuable upon conversion of any principal or interest due
under any notes issued in connection with any of the Whitebox financings;2.
    
    the shares of Common Stock issued in connection with any Whitebox financings;3.
    
    the shares of Common Stock issuable upon exercise of any warrants issued in connection
with any Whitebox financings; and4.
    
    the shares of Common Stock issuable upon conversion of principal or interest due under
the note issued to Synapse Capital, LLC in connection with the settlement of the
shareholder litigation.
       Convertible notes payables
 June 30
    
    
    December 312008
    
    
    2007Whitebox I
    
    $
    1,733,747
    
    
    $
    6,746,500Whitebox Ia
    
    
    202,395
    
    
    
    202,395Whitebox II
    
    
    3,090,000
    
    
    
    3,090,000Whitebox IIa
    
    
    92,700
    
    
    
    92,700Whitebox III
    
    
    7,210,000
    
    
    
    7,210,000Whitebox IIIa
    
    
    162,625
    
    
    
    162,625Whitebox V
    
    
    
    
    
    
    1,500,000Whitebox Va
    
    
    
    
    
    
    30,000Whitebox VI
    
    
    
    
    
    
    1,500,000Whitebox VIa
    
    
    
    
    
    
    30,000Synapse settlement note
    
    
    400,000
    
    
    
    400,000Whitebox VIII
    
    
    1,000,000
    
    
    
    1,000,000$
    13,891,467
    
    
    $
    21,964,220Debt issue costs
    
    
    (42,830
    )
    
    
    (193,664
    )Loan consent fees
    
    
    (248,248
    )
    
    
    (372,374
    )Beneficial conversion feature
    
    
    (330,080
    )
    
    
    (1,030,350
    )$
    13,270,308
    
    
    $
    20,367,833Classified as current liability
    
    $
    0
    
    
    
    3,811,698Classified as long term liability
    
    $
    13,270,308
    
    
    $
    16,556,134




---



##### Table of Contents



Conversion
    
    
    
    
    
    
    Intrinsic
    
    
    Conversion
    
    
    Intrinsicshares per
    
    
    Conversion
    
    
    value per
    
    
    shares per
    
    
    value perDec 31 2007
    
    
    price
    
    
    December
    
    
    June 30 2008
    
    
    June 30Whitebox I
    
    
    84,331,250
    
    
    $
    0.0800
    
    
    $
    
    
    
    
    21,671,844
    
    
    $
    Whitebox Ia
    
    
    2,529,938
    
    
    
    0.0800
    
    
    
    
    
    
    
    2,529,938
    
    
    
    Whitebox II
    
    
    38,625,000
    
    
    
    0.0800
    
    
    
    
    
    
    
    38,625,000
    
    
    
    Whitebox IIa
    
    
    1,158,750
    
    
    
    0.0800
    
    
    
    
    
    
    
    1,158,750
    
    
    
    Whitebox III
    
    
    90,125,000
    
    
    
    0.0800
    
    
    
    
    
    
    
    90,125,000
    
    
    
    Whitebox IIIa
    
    
    2,032,813
    
    
    
    0.0800
    
    
    
    
    
    
    
    2,032,813
    
    
    
    Whitebox V
    
    
    33,333,333
    
    
    
    0.0450
    
    
    
    500,000
    
    
    
    0
    
    
    
    Whitebox Va
    
    
    666,667
    
    
    
    0.0450
    
    
    
    10,000
    
    
    
    0
    
    
    
    Whitebox VI
    
    
    33,333,333
    
    
    
    0.0450
    
    
    
    500,000
    
    
    
    0
    
    
    
    Whitebox VIa
    
    
    666,667
    
    
    
    0.0450
    
    
    
    10,000
    
    
    
    0
    
    
    
    Synapse settlement
note
    
    
    2,666,667
    
    
    
    0.1500
    
    
    
    
    
    
    
    2,666,667
    
    
    
    Whitebox VIII
    
    
    14,285,714
    
    
    
    0.0700
    
    
    
    
    
    
    
    14,285,714
    
    
    
    142,857303,755,131
    
    
    
    
    
    
    $
    1,020,000
    
    
    
    173,095,725
    
    
    $
    142,857
    plus
 plus
  Notes payables
 June 30
    
    December 312008
    
    2007Whitebox VII
    
    $
    1,700,000
    
    
    $
    1,700,000




---



##### Table of Contents



plus
 Notes payables officers
 June 30
    
    
    December 312008
    
    
    2007GrootKasteel
    
    $
    200,000
    
    
    $
    200,000Teckman
    
    
    100,000
    
    
    
    100,000Bjorkman
    
    
    100,000
    
    
    
    100,000$
    400,000
    
    
    $
    400,000
    THREE MONTHS
    
    
    THREE MONTHS
    
    
    SIX MONTHS
    
    
    SIX MONTHS2008
    
    
    2007
    
    
    2008
    
    
    2007Unrealized gain (loss) securities
    
    $
    (73,717
    )
    
    $
    
    
    
    $
    56,570
    
    
    $
    Translation adjustment
    
    
    20,524
    
    
    
    (2,520
    )
    
    
    (29,947
    )
    
    
    (10,770
    )Total comprehensive
gain (loss)
    
    
    (53,193
    )
    
    
    (2,520
    )
    
    
    26,623
    
    
    
    (10,770
    )




---



##### Table of Contents



Remaining Life in
    
    
    Aggregate IntrinsicTotal
    
    
    Price
    
    
    years
    
    
    ValueWarrants issued in 2004
    
    
    6,311,951
    
    
    $
    0.6259
    
    
    
    0.8
    
    
    $Warrants Fusion
    
    
    1,220,565
    
    
    
    0.4464
    
    
    
    1.8Warrants Whitebox I
    
    
    14,423,512
    
    
    
    0.4541
    
    
    
    1.2Warrants Whitebox II
    
    
    1,666,667
    
    
    
    0.4500
    
    
    
    1.7Warrants Whitebox III
    
    
    1,609,197
    
    
    
    0.4500
    
    
    
    2.2Warrants Whitebox IV
    
    
    10,400,000
    
    
    
    0.0913
    
    
    
    3.5Cancelled in 2008
    
    
    
    
    
    
    
    
    
    
    Exercised in 2008
    
    
    
    
    
    
    
    
    
    
    Outstanding June 30, 2008
    
    
    35,631,891
    
    
    $
    0.3780
    
    
    
    1.9
    
    
    $
    
      Millenium Litigation




---



##### Table of Contents



Pham v. Nobles, et al.
      Recent Conversions of Debt-to-Equity by Whitebox Affiliates
  Whitebox Convertible Arbitrage Partners, L.P. -
    
    
    25,859,437Whitebox Hedged High yield Partners, L.P. -
    
    
    20,687,550Whitebox Intermarket Partners, L.P. -
    
    
    8,275,012Pandora Select Partners, L.P. -
    
    
    10,343,775




---



##### Table of Contents



Item 2.




---



##### Table of Contents








---



##### Table of Contents



Revenue Recognition




---



##### Table of Contents



Financial Condition and Results of Operations for the three and six month periods ended June 30,
2008 compared to three and six month periods ended June 30, 2007




---



##### Table of Contents








---



##### Table of Contents



nd
 Interest expenses.
 Three months
    
    
    Three months
    
    
    Year to date
    
    
    Year to date2008
    
    
    2007
    
    
    2008
    
    
    2007Note payable related
party in Euros
    
    $
    3,875
    
    
    $
    3,057
    
    
    $
    7,483
    
    
    $
    5,972Note payable officer
    
    
    25,013
    
    
    
    18,528
    
    
    
    50,026
    
    
    
    37,056Whitebox I
    
    
    52,012
    
    
    
    196,500
    
    
    
    254,407
    
    
    
    393,000Whitebox I Consent fee
    
    
    24,563
    
    
    
    
    
    
    
    49,126Whitebox I Interest note
    
    
    6,072
    
    
    
    
    
    
    
    12,144
    
    
    
    WhiteboxII
    
    
    92,700
    
    
    
    90,000
    
    
    
    185,400
    
    
    
    180,000WhiteboxII consent fee
    
    
    11,250
    
    
    
    
    
    
    
    22,500Whitebox II Interest note
    
    
    2,781
    
    
    
    
    
    
    
    5,562
    
    
    
    Whitebox III
    
    
    216,300
    
    
    
    140,000
    
    
    
    432,600
    
    
    
    280,000WhiteboxII consent fee
    
    
    26,250
    
    
    
    
    
    
    
    52,500Whitebox III Interest note
    
    
    4,879
    
    
    
    
    
    
    
    9,758
    
    
    
    Idylwood Partners L. P.
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    30,000Whitebox V
    
    
    30,000
    
    
    
    30,000
    
    
    
    60,000
    
    
    
    60,000Whitebox V Interest note
    
    
    900
    
    
    
    
    
    
    
    1,800
    
    
    
    Whitebox VI
    
    
    30,000
    
    
    
    30,000
    
    
    
    60,000
    
    
    
    38,333Whitebox VI Interest note
    
    
    900
    
    
    
    
    
    
    
    1,800
    
    
    
    Synapse
    
    
    8,000
    
    
    
    2,667
    
    
    
    16,000
    
    
    
    2,667Whitebox VII
    
    
    51,000
    
    
    
    6,034
    
    
    
    102,000
    
    
    
    6,034Officers
    
    
    12,000
    
    
    
    
    
    
    
    24,000
    
    
    
    Whitebox VIII
    
    
    20,000
    
    
    
    
    
    
    
    40,000
    
    
    
    $
    618,495
    
    
    $
    531,785
    
    
    $
    1,387,106
    
    
    $
    1,033,062
 Beneficial conversion amortization
 Whitebox I
    
    $
    
    
    
    $
    291,377
    
    
    $
    
    
    
    $
    582,754Whitebox I BCF consent fee
    
    
    20,420
    
    
    
    
    
    
    
    40,840Whitebox II
    
    
    
    
    
    
    33,938
    
    
    
    c
    
    
    
    67,876Whitebox II BCF consent fee
    
    
    9,353
    
    
    
    
    
    
    
    18,706
    
    
    
    Whitebox III
    
    
    178,463
    
    
    
    148,015
    
    
    
    348,772
    
    
    
    289,267Whitebox III BCF consent fee
    
    
    21,823
    
    
    
    
    
    
    
    43,646
    
    
    
    Idylwood Partners L. P.
    
    
    
    
    
    
    13,889
    
    
    
    
    
    
    
    34,722Whitebox V
    
    
    112,792
    
    
    
    93,438
    
    
    
    248,302
    
    
    
    175,987Total conversion feature expense
    
    $
    342,851
    
    
    $
    580,657
    
    
    $
    700,266
    
    
    $
    1,150,606Total interest and conversion
expenses
    
    $
    961,345
    
    
    $
    1,112,442
    
    
    $
    2,087,371
    
    
    $
    2,183,668




---



##### Table of Contents



ITEM 3
  
 ITEM 4T




---



##### Table of Contents



PART II: OTHER INFORMATION
 
 ITEM 1
   Pham v. Nobles, et al.




---



##### Table of Contents



ITEM 2
  Whitebox Convertible Arbitrage Partners, L.P. -
    
    
    25,859,437Whitebox Hedged High yield Partners, L.P. -
    
    
    20,687,550Whitebox Intermarket Partners, L.P. -
    
    
    8,275,012Pandora Select Partners, L.P. -
    
    
    10,343,775
  
 ITEM 3
  
 ITEM 4
  
 ITEM 5
  
 ITEM 6
  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
    
    Bylaws7




---



##### Table of Contents



4.1
    
    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




---



##### Table of Contents



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




---



##### Table of Contents



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 June 30, 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.1110.43
    
    Form of Unsecured Promissory Note, dated May 18, 2006.1210.44
    
    Form of Unsecured Promissory Note, dated June 13, 2006.1310.45
    
    Settlement Agreement and Release.10.46
    
    Secured Convertible Promissory Note, dated June 1, 2007.




---



##### Table of Contents



10.47
    
    Fifth Amended Patent and Trademark Security Agreement, dated June 1, 2007, by and between Sutura, Inc., and certain other parties thereto.10.48
    
    Fifth Amended Security Agreement, dated June 1, 2007, by and between Sutura, Inc. and certain other parties
thereto.10.49
    
    Fourth Amended Registration Rights Agreement, dated June 1, 2007, by and between Sutura, Inc., and certain
other parties thereto14.1
    
    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 2002.32.1
    
    Certification of the Chief Executive Officer of Sutura, Inc. pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.32.2
    
    Certification of the 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 June 30, 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, 2006.12
    
    Previously filed as an Exhibit to Form 8-K filed on May 24, 2007.13
    
    Previously filed as an Exhibit to Form 8-K filed on July 6, 2007.




---



##### Table of Contents



SUTURA, INC.RegistrantDate: August 19, 2008
    By:
    /s/ Brian AbrahamBrian Abraham, Chief Executive OfficerDate: August 19, 2008
    By:
    /s/ Richard BjorkmanRichard Bjorkman, Chief Financial Officer