##### Table of Contents



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: September 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
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 
   
  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.




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##### 



PART IItem 1. Financial StatementsReport
of Independent Registered Public Accounting FirmCondensed Balance Sheet on September 30, 2008 (Unaudited)Condensed Statement of Operations for the three and nine month
periods ended September 30, 2008 and 2007 (Unaudited)Condensed Statement of Cash Flows for the nine
month periods ended September 30, 2008 and 2007 (Unaudited)Notes to Condensed Financial Statements (Unaudited)Item 2. Managements Discussion and Analysis of Financial Condition and Results of Discontinued OperationsItem 3. Quantitative and Qualitative Disclosure About Market RiskItem 4T. Controls and ProceduresPART IIItem 1. Legal ProceedingsItem 2. Changes in SecuritiesItem 3. Defaults upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. ExhibitsSignaturesEX-31.1EX-31.2EX-32.1EX-32.2




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/s/  KABANI & COMPANY, INC.CERTIFIED PUBLIC ACCOUNTANTSLos Angeles, CaliforniaNovember 10, 2008




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September 30,
    
    
    December 31,2008
    
    
    2007(Unaudited)ASSETSCURRENT ASSETS:Cash & cash equivalents
    
    $
    1,397,455
    
    
    $
    7,767,196Marketable securities & Certificates of deposits
    
    
    1,989,491
    
    
    
    8,917,690Assets held for sale
    
    
    4,311,238
    
    
    
    3,949,397Net assets of discontinued operations
    
    $
    7,698,184
    
    
    $
    20,634,283LIABILITIES AND STOCKHOLDERS DEFICITLIABILITIES:Net liabilities of discontinued operations
    
    $
    18,528,079
    
    
    $
    28,612,747COMMITMENTS 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 September 30,
2008
and 272,650,262 shares at December 31, 2007
    
    
    337,816
    
    
    
    272,650Additional paid in capital
    
    
    56,454,595
    
    
    
    50,941,329Accumulated deficit
    
    
    (66,603,019
    )
    
    
    (58,134,208
    )Other comprehensive loss
    
    
    (1,019,288
    )
    
    
    (1,058,236
    )Total stockholders deficit
    
    
    (10,829,895
    )
    
    
    (7,978,465
    )$
    7,698,184
    
    
    $
    20,634,283




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THREE MONTHS
    
    
    THREE MONTHS
    
    
    NINE MONTHS
    
    
    NINE MONTHS2008
    
    
    2007
    
    
    2008
    
    
    2007OTHER INCOME (EXPENSE)Interest Income
    
    
    69,186
    
    
    
    4,926
    
    
    
    376,976
    
    
    
    13,366Interest Expense(1)
    
    
    (605,886
    )
    
    
    (1,633,988
    )
    
    
    (2,344,486
    )
    
    
    (3,817,656
    )Other Income
    
    
    
    
    
    
    
    
    
    
    15,000
    
    
    
    Total other income (expense),net
    
    
    (536,699
    )
    
    
    (1,629,062
    )
    
    
    (1,952,510
    )
    
    
    (3,804,290
    )Loss from discontinued operations
    
    
    (1,806,625
    )
    
    
    (1,942,067
    )
    
    
    (6,516,301
    )
    
    
    (5,504,994
    )NET LOSS
    
    
    (2,343,325
    )
    
    
    (3,571,128
    )
    
    
    (8,468,811
    )
    
    
    (9,309,284
    )OTHER COMPREHENSIVE GAIN (LOSS)Unrealized gain(loss)securities
    
    
    (36,526
    )
    
    
    
    
    
    
    33,507
    
    
    
    Translation adjustment
    
    
    48,852
    
    
    
    (42,442
    )
    
    
    5,441
    
    
    
    (53,212
    )TOTAL COMPREHENSIVE GAIN (LOSS)
    
    
    12,326
    
    
    
    (42,442
    )
    
    
    38,948
    
    
    
    (53,212
    )COMPREHENSIVE (LOSS)
    
    $
    (2,330,999
    )
    
    $
    (3,613,571
    )
    
    $
    (8,429,863
    )
    
    $
    (9,362,496
    )BASIC AND DILUTED NET LOSS PER SHARE
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.03
    )
    
    $
    (0.04
    )BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING*
    
    
    294,292,910
    
    
    
    271,229,807
    
    
    
    315,935,558
    
    
    
    265,214,687*
   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 amortization of beneficial conversion
feature and warrants issued of:
    
    $
    51,596
    
    
    $
    947,458
    
    
    $
    403,091
    
    
    $
    2,098,064




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2008
    
    
    '2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (8,468,811
    )
    
    $
    (9,309,284
    )Adjustments to reconcile net loss to net cash
used in operating activitiesDepreciation and amortization
    
    
    129,707
    
    
    
    174,317Provision for doubtful debts
    
    
    46,636
    
    
    
    Beneficial conversion feature
    
    
    403,091
    
    
    
    2,098,064Stock based
compensation expenses  employees
    
    
    238,853
    
    
    
    247,896Stock based
compensation expenses  non employees
    
    
    126,319
    
    
    
    121,239Interest expenses converted into shares.
    
    
    200,510
    
    
    
    1,477,387(Increase) decrease in current assets:Accounts receivables
    
    
    (44,835
    )
    
    
    9,593Inventory
    
    
    93,765
    
    
    
    46,942Prepaid expenses
    
    
    167,965
    
    
    
    126,245Increase (decrease) in current liabilities:Accounts payable and accrued liabilities
    
    
    188,853
    
    
    
    (41,074
    )Accrued payroll
    
    
    (1,612,258
    )
    
    
    22,682Customer deposits
    
    
    (78,145
    )
    
    
    (25,625
    )Total Adjustments
    
    
    (139,538
    )
    
    
    4,257,666Net cash used in discontinued operations
    
    
    (8,608,349
    )
    
    
    (5,051,617
    )CASH FLOWS INVESTING ACTIVITIES:Acquisition of property and equipment, net
    
    
    (562,315
    )
    
    
    (41,933
    )Sales of marketable securities
    
    
    6,961,705
    
    
    
    Total cash flow of investing activities of
discontinued operations.
    
    
    6,399,390
    
    
    
    (41,933
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from (payments to) notes payable
    
    
    (4,160,000
    )
    
    
    4,600,000Net cash provided by (used in) financing activities
of discontinued operations.
    
    
    (4,160,000
    )
    
    
    4,600,000Effect of rate changes on cash and cash equivalents
    
    
    (783
    )
    
    
    7,151NET DECREASE IN CASH & CASH EQUIVALENTS
    
    
    (6,369,742
    )
    
    
    (486,399
    )CASH & CASH EQUIVALENTS, BEGINNING BALANCE
    
    
    7,767,196
    
    
    
    1,238,154CASH & CASH EQUIVALENTS, ENDING BALANCE
    
    $
    1,397,455
    
    
    $
    751,756SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Interest paid
    
    $
    1,524,518
    
    
    $
    Income taxes
    
    $
    
    
    
    $
    




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Revenue Recognition




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Three months ended September 30
    
    Nine months ended September 302008
    
    2007
    
    2008
    
    2007Weighted average shares outstanding  basic
    
    
    294,292,910
    
    
    
    271,229,807
    
    
    
    315,935,558
    
    
    
    265,214,687Weighted average shares outstanding  diluted
    
    
    294,292,910
    
    
    
    271,229,807
    
    
    
    315,935,558
    
    
    
    265,214,687




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Nine months ended Sept 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%
   Weightedaverageremaining
    
    
    AggegrateWeighted
    
    
    contractual
    
    
    IntrinsicTotal
    
    
    price
    
    

term (years)
    
    
    ValueOUTSTANDING, DECEMBER 31, 2007
    
    
    45,017,899
    
    
    $
    0.101
    
    
    
    2.9
    
    
    $
    691,890Granted in 2008
    
    
    Cancelled in 2008
    
    
    (2,784,780
    )
    
    $
    0.129
    
    
    
    
    
    
    
    Exercised in 2008
    
    
    OUTSTANDING, SEPTEMBER 30, 2008
    
    
    42,233,119
    
    
    $
    0.099
    
    
    
    2.0
    
    
    $
    691,890Exercisable at September 30,2008
    
    
    38,756,036
    
    
    $
    0.094
    
    
    
        1.5
    
    
    $
    691,890




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Amortized
    
    
    Gross
    
    
    Gross
    
    
    Faircost at
    
    
    unrealized
    
    
    unrealized
    
    
    value atSept 30 2008
    
    
    Gain
    
    
    Loss
    
    
    Sept 30 2008Government bonds
    
    $
    298,408
    
    
    $
    1,533
    
    
    $
    
    
    
    $
    299,941Auction rate securities preferred
    
    
    3,075,120
    
    
    
    
    
    
    
    120
    
    
    
    3,075,000Total marketable securities for
sale
    
    $
    3,373,528
    
    
    $
    1,533
    
    
    $
    120
    
    
    $
    3,374,941
  Amortized
    
    
    Gross
    
    
    Gross
    
    
    Faircost at
    
    
    unrealized
    
    
    unrealized
    
    
    value atSeptember 30 2008
    
    
    Gain
    
    
    Loss
    
    
    September 30 2008Certificates of
deposit  Short
term
    
    $
    1,525,670
    
    
    $
    
    
    
    $
    2,006
    
    
    
    1,523,664Certificates of
deposit  Long term
    
    
    95,943
    
    
    
    
    
    
    
    5,057
    
    
    
    90,886Totals
    
    $
    1,621,613
    
    
    $
    
    
    
    $
    7,063
    
    
    $
    1,614,550
  Amortized
    
    
    Fair
    
    
    AccumulatedGovernment bonds
    
    cost
    
    
    value
    
    
    Gain(Loss)Totals per December 31,
2007
    
    $
    6,339,587
    
    
    $
    6,303,767
    
    
    $
    (35,820
    )Purchases
    
    
    
    
    
    
    
    
    
    
    Sales
    
    
    6,041,179
    
    
    
    6,003,826
    
    
    
    (37,353
    )Adjustment to fair value
    
    
    
    
    
    
    
    
    
    
    Totals per September 30,2008
    
    $
    298,408
    
    
    $
    299,941
    
    
    $
    1,533
 Amortized
    
    
    Fair
    
    
    AccumulatedTaxable auction rate securities preferred
    
    cost
    
    
    value
    
    
    Gain(Loss)Totals per December
31, 2007
    
    $
    4,000,232
    
    
    $
    4,000,000
    
    
    $
    (232
    )Purchases
    
    
    
    
    
    
    
    
    
    
    Sales
    
    
    925,112
    
    
    
    925,000
    
    
    
    (112
    )Adjustment to fair value
    
    
    
    
    
    
    
    
    
    
    Totals per September
30, 2008
    
    $
    3,075,120
    
    
    $
    3,075,000
    
    
    $
    (120
    )
 Amortized
    
    
    Fair
    
    
    AccumulatedCertificate of deposits
    
    cost
    
    
    value
    
    
    Gain(Loss)Totals per December
31, 2007
    
    $
    1,145,141
    
    
    $
    1,135,318
    
    
    $
    (9,823
    )Purchases
    
    
    940,224
    
    
    
    940,224
    
    
    
    Sales
    
    
    463,752
    
    
    
    460,992
    
    
    
    (2,760
    )Adjustment to fair value
    
    
    
    
    
    
    
    
    
    
    Totals per September
30, 2008
    
    $
    1,621,613
    
    
    $
    1,614,550
    
    
    $
    (7,063
    )




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
    
    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.
   Fairvalue at
    
    
    Fair value measurement at reporting date usingSept 30 2008
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Government bonds
    
    $
    299,941
    
    
    $
    
    
    
    $
    299,941
    
    
    $
    Auction rate securities
    
    
    3,075,000
    
    
    
    
    
    
    
    3,075,000
    
    
    
    Certificates of deposit
    
    
    1,614,550
    
    
    
    
    
    
    
    1,614,550
    
    
    
    $
    4,989,491
    
    
    $
    
    
    
    $
    4,989,491
    
    
    $
    
  st
  September 30
    
    
    December 312008
    
    
    2007Total accounts receivables
    
    $
    131,250
    
    
    $
    87,714Allowance for bad debts
    
    
    (102,255
    )
    
    
    (56,111
    )Net accounts receivables
    
    $
    28,996
    
    
    $
    89,187




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September 30
    
    
    December 312008
    
    
    2007Raw material/WIP
    
    $
    302,939
    
    
    $
    367,473Work in process
    
    
    231,980
    
    
    
    279,721Finished goods
    
    
    91,892
    
    
    
    113,375626,811
    
    
    
    760,569Less: Reserve for obsolescence
    
    
    (310,000
    )
    
    
    (350,000
    )$
    316,811
    
    
    $
    410,569
   September 30
    
    
    December 312008
    
    
    2007Computers
    
    $
    395,552
    
    
    $
    357,406Office furniture and fixtures
    
    
    587,402
    
    
    
    583,740Machinery and equipment
    
    
    3,041,949
    
    
    
    2,652,7884,024,905
    
    
    
    3,593,933Less: Accumulated depreciation
    
    
    (3,340,850
    )
    
    
    (3,342,530
    )$
    684,055
    
    
    $
    251,404
    September 30
    
    
    December 312008
    
    
    2007Accounts payable
    
    $
    139,713
    
    
    $
    281,275Accrued expenses
    
    
    253,516
    
    
    
    155,110Accrued compensation
    
    
    485,991
    
    
    
    2,080,446Accrued interest payable
    
    
    783,528
    
    
    
    841,215$
    1,662,748
    
    
    $
    3,358,046




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Ending balance per December 31st, 2007
    
    $
    1,006,311
    
    
    $
    1,139,975Applied against shipments
    
    
    78,145
    
    
    
    133,664Ending balance per September 30, 2008
    
    $
    928,166
    
    
    $
    1,006,311
  st
  September 30
    
    
    December 312008
    
    
    2007Notes payable with interest at 8%
due and demandable on December 31, 2008
    
    $
    168,486
    
    
    $
    161,823




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September 30
    
    
    December 312008
    
    
    2007Convertible notes payable to officer
bearing interest rate of 10%, unsecured
    
    $
    1,000,519
    
    
    $
    926,408
  Intrinsic
    
    IntrinsicConversion
    
    Conversion
    
    value per
    
    value pershares
    
    price
    
    December
    
    Sept 30Officer
    
    
    12,506,488
    
    
    $
    0.0800
    
    
    $
    
    
    
    $
    




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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.




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September 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$
    12,891,467
    
    
    $
    21,964,220Debt issue costs
    
    
    
    
    
    
    (193,664
    )Loan consent fees
    
    
    (186,185
    )
    
    
    (372,374
    )Beneficial conversion feature
    
    
    (154,787
    )
    
    
    (1,030,350
    )$
    12,550,494
    
    
    $
    20,367,833Classified as current liability
    
    $
    12,550,494
    
    
    
    3,811,698Classified as long term liabilty
    
    $
    (0
    )
    
    $
    16,556,134




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Conversion
    
    
    
    
    
    
    Intrinsic
    
    
    Conversion
    
    
    Intrinsicshares per
    
    
    Conversion
    
    
    value per
    
    
    shares per
    
    
    value perDec 31 2007
    
    
    price
    
    
    December
    
    
    Sept 30 2008
    
    
    Sept 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
    
    
    
    
    
    
    
    Whitebox Va
    
    
    666,667
    
    
    
    0.0450
    
    
    
    10,000
    
    
    
    
    
    
    
    Whitebox VI
    
    
    33,333,333
    
    
    
    0.0450
    
    
    
    500,000
    
    
    
    
    
    
    
    Whitebox VIa
    
    
    666,667
    
    
    
    0.0450
    
    
    
    10,000
    
    
    
    
    
    
    
    Synapse settlement
note
    
    
    2,666,667
    
    
    
    0.1500
    
    
    
    
    
    
    
    2,666,667
    
    
    
    Whitebox VIII
    
    
    14,285,714
    
    
    
    0.0700
    
    
    
    
    
    
    
    
    
    
    
    303,755,131
    
    
    
    
    
    
    $
    1,020,000
    
    
    
    158,810,010
    
    
    $
    0
    plus
 plus
  September 30
    
    December 312008
    
    2007Whitebox VII
    
    $
    1,700,000
    
    
    $
    1,700,000




---



##### Table of Contents



plus
  September 30
    
    
    December 312008
    
    
    2007GrootKasteel
    
    $
    200,000
    
    
    $
    200,000Teckman
    
    
    100,000
    
    
    
    100,000Bjorkman
    
    
    100,000
    
    
    
    100,000$
    400,000
    
    
    $
    400,000
    THREE MONTHS
    
    
    THREE MONTHS
    
    
    NINE MONTHS
    
    
    NINE MONTHS2008
    
    
    2007
    
    
    2008
    
    
    2007Unrealized
gain (loss securities)
    
    $
    (36,526
    )
    
    $
    
    
    
    $
    33,507
    
    
    $
    Translation
adjustment
    
    
    48,852
    
    
    
    (42,442
    )
    
    
    5,441
    
    
    
    (53,212
    )Total comprehensive gain (loss)
    
    
    12,326
    
    
    
    (42,442
    )
    
    
    38,948
    
    
    
    (53,212
    )




---



##### Table of Contents



Weigted
    
    
    Remaining
    
    
    AggegrateAverage
    
    
    Life in
    
    
    IntrinsicTotal
    
    
    Price
    
    
    years
    
    
    ValueOUTSTANDING, DECEMBER 2007
    
    
    35,631,891
    
    
    $
    0.3780
    
    
    
    2.4
    
    
    $
    Granted in 2008
    
    
    
    
    
    
    
    
    
    
    Cancelled in 2008
    
    
    (433,912
    )
    
    
    
    
    
    
    Exercised in 2008
    
    
    
    
    
    
    
    
    
    
    OUTSTANDING, SEPTEMBER
2008
    
    
    35,197,979
    
    
    $
    0.3749
    
    
    
    1.6
    
    
    $
    
  Millenium Litigation
  Pham v. Nobles, et al.




---



##### Table of Contents



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
    
 REPORTED
    
    
    RESTATED
    
    
    REPORTED
    
    
    RESTATEDTHREE MONTHS
    
    
    THREE MONTHS
    
    
    NINE MONTHS
    
    
    NINE MONTHS2007
    
    
    2007
    
    
    2007
    
    
    2007Interest Expense
    
    
    (998,992
    )
    
    
    (1,633,988
    )
    
    
    (3,182,660
    )
    
    
    (3,817,656
    )NET LOSS
    
    
    (2,936,132
    )
    
    
    (3,571,128
    )
    
    
    (8,674,288
    )
    
    
    (9,309,284
    )
 
 Reported
    
    
    RestatedAt December 31,
    
    
    At December 31,2007
    
    
    2007Convertible notes payable- net of beneficial conversion
    
    
    16,556,134
    
    
    
    17,028,603Accumulated deficit
    
    
    (57,661,739
    )
    
    
    (58,134,208
    )




---



##### Table of Contents



Item 2.




---



##### Table of Contents








---



##### Table of Contents



Revenue Recognition
   Three months ended
    
    Three months ended
    
    Nine months ended
    
    Nine months endedSept 30, 2008
    
    Sept 30, 2007
    
    Sept 30, 2008
    
    Sept 30, 2007Sales in USA
    
    $
    1,370
    
    
    
    1
    %
    
    $
    4,107
    
    
    
    12
    %
    
    $
    5,405
    
    
    
    2
    %
    
    $
    19,953
    
    
    
    11
    %Sales in Europe
    
    
    121,497
    
    
    
    84
    %
    
    
    25,727
    
    
    
    74
    %
    
    
    270,575
    
    
    
    78
    %
    
    
    102,858
    
    
    
    59
    %Sales Far East
    
    
    21,000
    
    
    
    15
    %
    
    
    5,000
    
    
    
    14
    %
    
    
    73,050
    
    
    
    21
    %
    
    
    51,000
    
    
    
    29
    %Total sales
    
    $
    143,867
    
    
    
    100
    %
    
    $
    34,833
    
    
    
    100
    %
    
    $
    349,030
    
    
    
    100
    %
    
    $
    173,811
    
    
    
    100
    %Long lived assets Europe
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,354
    
    
    
    
    
    
    $
    7,205Long lived assets USA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680,700
    
    
    
    
    
    
    
    244,199Total long lived assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    684,055
    
    
    
    
    
    
    $
    251,404
 Sales major countries
    
    Three months ended
    
    Three months ended
    
    Six months ended
    
    Six months endedSept 30, 2008
    
    Sept 30, 2007
    
    Sept 30, 2008
    
    Sept 30, 2007France
    
    $
    32,004
    
    
    
    22
    %
    
    $
    17,356
    
    
    
    50
    %
    
    $
    93,370
    
    
    
    27
    %
    
    $
    50,944
    
    
    
    29
    %Russia
    
    
    89,493
    
    
    
    62
    %
    
    
    
    
    
    
    0
    %
    
    
    149,362
    
    
    
    43
    %
    
    
    
    
    
    
    0
    %Hong Kong
    
    $
    21,000
    
    
    
    15
    %
    
    $
    5,000
    
    
    
    14
    %
    
    $
    73,050
    
    
    
    21
    %
    
    $
    51,000
    
    
    
    29
    %
  Sales major customers
    
    Three months ended
    
    Three months ended
    
    Nine months ended
    
    Nine months endedSept 30, 2008
    
    Sept 30, 2007
    
    Sept 30, 2008
    
    Sept 30, 2007Customer 1
    
    $
    89,493
    
    
    
    62
    %
    
    $
    
    
    
    
    0
    %
    
    $
    149,362
    
    
    
    43
    %
    
    $
    
    
    
    
    0
    %Customer 2
    
    
    21,000
    
    
    
    15
    %
    
    
    5,000
    
    
    
    14
    %
    
    
    73,050
    
    
    
    21
    %
    
    
    51,000
    
    
    
    29
    %Customer 3
    
    
    14,224
    
    
    
    10
    %
    
    
    12,016
    
    
    
    34
    %
    
    
    45,770
    
    
    
    13
    %
    
    
    34,771
    
    
    
    20
    %Customer 4
    
    
    17,780
    
    
    
    12
    %
    
    
    5,340
    
    
    
    15
    %
    
    
    47,600
    
    
    
    14
    %
    
    
    16,173
    
    
    
    9
    %




---



##### Table of Contents








---



##### Table of Contents



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




---



##### Table of Contents



nd




---



##### Table of Contents



Three months
    
    
    Three months
    
    
    Year to date
    
    
    Year to dateInterest expenses.
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Note payable related
party in Euros
    
    $
    3,470
    
    
    $
    2,984
    
    
    $
    10,953
    
    
    $
    8,956Note payable officer
    
    
    25,013
    
    
    
    18,528
    
    
    
    75,039
    
    
    
    55,584Whitebox I
    
    
    52,012
    
    
    
    202,395
    
    
    
    306,419
    
    
    
    595,395Whitebox I Consent fee
    
    
    24,563
    
    
    
    24,563
    
    
    
    73,689
    
    
    
    24,563Whitebox I Interest note
    
    
    6,072
    
    
    
    
    
    
    
    18,216
    
    
    
    WhiteboxII
    
    
    92,700
    
    
    
    92,700
    
    
    
    278,100
    
    
    
    272,700WhiteboxII consent fee
    
    
    11,250
    
    
    
    11,250
    
    
    
    33,750
    
    
    
    11,250Whitebox II Interest note
    
    
    2,781
    
    
    
    
    
    
    
    8,343
    
    
    
    Whitebox III
    
    
    216,300
    
    
    
    162,625
    
    
    
    648,900
    
    
    
    442,625WhiteboxII consent fee
    
    
    26,250
    
    
    
    26,250
    
    
    
    78,750
    
    
    
    26,250Whitebox III Interest note
    
    
    4,879
    
    
    
    
    
    
    
    14,637
    
    
    
    Idylwood Partners L.P.
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    45,000Whitebox V
    
    
    
    
    
    
    30,000
    
    
    
    60,000
    
    
    
    90,000Whitebox V Interest note
    
    
    
    
    
    
    
    
    
    
    1,800
    
    
    
    Whitebox VI
    
    
    
    
    
    
    30,000
    
    
    
    60,000
    
    
    
    68,333Whitebox VI Interest note
    
    
    
    
    
    
    
    
    
    
    1,800
    
    
    
    Synapse
    
    
    8,000
    
    
    
    8,000
    
    
    
    24,000
    
    
    
    10,667Whitebox VII
    
    
    51,000
    
    
    
    50,233
    
    
    
    153,000
    
    
    
    56,267Officers
    
    
    12,000
    
    
    
    10,000
    
    
    
    36,000
    
    
    
    10,000Whitebox VIII
    
    
    18,000
    
    
    
    2,000
    
    
    
    58,000
    
    
    
    2,000$
    554,290
    
    
    $
    686,530
    
    
    $
    1,941,396
    
    
    $
    1,719,592Beneficial conversion amortizationWhitebox I
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    582,754Whitebox I BCF consent fee
    
    
    20,420
    
    
    
    20,420
    
    
    
    61,260
    
    
    
    20,420Whitebox II
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,876Whitebox II BCF consent fee
    
    
    9,353
    
    
    
    9,353
    
    
    
    28,059
    
    
    
    9,353Whitebox III
    
    
    
    
    
    
    790,098
    
    
    
    
    
    
    
    1,079,365Whitebox III BCF consent fee
    
    
    21,823
    
    
    
    21,823
    
    
    
    65,469
    
    
    
    21,823Idylwood Partners L.P.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,722Whitebox V
    
    
    
    
    
    
    105,764
    
    
    
    248,302
    
    
    
    281,751Total conversion feature expense
    
    $
    51,596
    
    
    $
    947,458
    
    
    $
    403,090
    
    
    $
    2,098,064Total interest and conversion
expenses
    
    $
    605,885
    
    
    $
    1,633,988
    
    
    $
    2,344,485
    
    
    $
    3,817,656




---



##### Table of Contents








---



##### Table of Contents



ITEM 3
  
 ITEM 4T
    
 PART II: OTHER INFORMATION
 
 ITEM 1




---



##### Table of Contents



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




---



##### Table of Contents



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
    
    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




---



##### 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:
November 19, 2008
    
    By:
    
    /s/ Brian AbrahamBrian Abraham, Chief Executive OfficerDate: November 19, 2008
    
    By:
    
    /s/ Richard BjorkmanRichard Bjorkman, Chief Financial Officer