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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.

(formerly Technology Visions, 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.)

17080 Newhope Street
Fountain Valley, California 92078
(Address of principal executive offices)

Registrant’s telephone number, including area code: (714)437-9801

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. þ Yes o No

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.

At August 15, 2008 337,816,037 shares of common stock were outstanding.

PART I: FINANCIAL INFORMATION

Item 1. Financial Statement

SUTURA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


	At June 30,			At December 31,
	2008			2007
ASSETS

CURRENT ASSETS:
Cash & cash equivalents	$	1,188,821		$	7,767,196
Marketable securities		6,279,554			10,782,372
Certificates of deposit — Short term		1,708,774			754,616
Accounts Receivable, Net		108,330			31,603
Inventory, net		346,298			410,569
Prepaid expenses		57,347			54,558

Total current assets		9,689,124			19,800,914
LONG TERM ASSETS
Property & equipment, net		600,636			251,404
Certificates of deposit — Long term		288,885			380,702
Deposits		265,367			201,263

Total long term assets		1,154,888			833,369

	$	10,844,012		$	20,634,283


LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	1,705,504		$	3,358,047
Loan payable — officers		124,667			119,858
Customer deposits		949,543			1,006,311
Notes payable — related party		188,433			161,823
Convertible notes payable- officers		1,000,519			926,408
Convertible notes payable- net of beneficial conversion		13,270,308			3,811,698

Total current liabilities		17,238,974			9,484,145
LONG TERM LIABILITIES:
Convertible notes payable- net of beneficial conversion		—			16,556,134
Notes payables		1,700,000			1,700,000
Notes payables officers		400,000			400,000

Total long term liabilities		2,100,000			18,656,134
COMMITMENTS AND CONTINGENCIES		—			—
STOCKHOLDERS’ DEFICIT
Series 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			272,650
Additional paid in capital		56,334,831			50,941,329
Accumulated 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

The accompanying notes are an integral part of these consolidated unaudited financial statements.

SUTURA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS PERIODS ENDED JUNE 30, 2008 AND 2007
(Unaudited)


	THREE MONTHS			THREE MONTHS			SIX MONTHS			SIX MONTHS
	2008			2007			2008			2007
NET SALES	$	152,784		$	57,362		$	205,164		$	138,978

COST OF GOODS SOLD(1)		574,993			425,258			1,138,728			907,575


GROSS LOSS		(422,209	)		(367,897	)		(933,565	)		(768,597	)


OPERATING EXPENSES:
Research and development(1)		212,682			114,157			436,105			276,748
General and administrative(1)		1,714,930			991,775			2,906,346			2,183,160
Sales and marketing(1)		282,513			181,163			433,659			334,422

Total operating expenses		2,210,125			1,287,096			3,776,110			2,794,330


OPERATING LOSS		(2,632,334	)		(1,654,992	)		(4,709,674	)		(3,562,927	)


OTHER INCOME (EXPENSE)
Interest Income		139,622			1,504			307,790			8,440
Interest 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	$	30,256
Research and development		14,208		14,208		28,416		28,416
General and administrative		45,373		49,115		92,929		98,230
Sales 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

SUTURA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS PERIOD ENDED JUNE 30, 2008 AND 2007
(Unaudited)


	2008			2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(6,474,257	)	$	(5,738,155	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization		93,268			115,560
Beneficial conversion feature		700,267			1,150,606
Stock based compensation expenses — employees		159,963			165,264
Stock based compensation expenses — non employees		85,444			76,366
Interest expenses converted into shares.		200,510			959,667
(Increase) decrease in current assets:
Accounts receivables		(72,407	)		(20,990	)
Inventory		66,572			28,174
Prepaid expenses		84,255			17,117
Increase (decrease) in current liabilities:
Accounts payable and accrued liabilities		55,704			48,907
Accrued payroll		(1,532,081	)		(4,914	)
Customer deposits		(56,768	)		(23,125	)

Total Adjustments		(215,272	)		2,512,631


Net 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	)		2,050,000
Sales of marketable securities		3,697,046			—

Net cash provided by (used in) financing activities		537,046			2,050,000


Effect of rate changes on cash and cash equivalents		16,109			6,774

NET DECREASE IN CASH & CASH EQUIVALENTS		(6,578,376	)		(1,207,768	)

CASH & CASH EQUIVALENTS, BEGINNING BALANCE		7,767,196			1,238,154


CASH & CASH EQUIVALENTS, ENDING BALANCE	$	1,188,821		$	30,387


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid	$	1,042,150		$	—

Income taxes	$	—		$	—

The accompanying notes are an integral part of these consolidated unaudited financial statements.

On April 2, 2008, the affiliates of Whitebox Advisors, LLC converted $5,012,753 of convertible debt and $200,510 accrued interest held by those entities into an aggregate of 65,165,775 shares of the Company’s Common Stock, par value $0.001 per share.

NOTE 1. DESCRIPTION OF BUSINESS

Sutura(R), Inc. is a medical device company that has developed a line of innovative, minimally invasive vascular suturing devices to suture vascular structures during open surgery and catheter-based procedures. Sutura’s operations, to date, have consisted mainly of raising capital, research, development, and clinical testing of its SuperStitch vessel closure suturing devices, obtaining regulatory clearances and approvals in both the U.S. and Europe and limited manufacturing and sales. Sutura’s objective is to become the leader in medical devices for vascular suturing.

Sutura, Inc. (“Prior Sutura”) was incorporated in Delaware on August 14, 1996, under the name NR Medical, Inc., and changed its name in July 1998 to Sutura, Inc. References to Prior Sutura include Sutura, Inc. and its wholly-owned subsidiary.

On August 19, 2005, Prior Sutura merged with and into Technology Visions Group, Inc. pursuant to the terms of that certain Agreement and Plan of Merger, dated November 22, 2004, by and between Prior Sutura and Technology Visions Group, Inc. (the “Merger Transaction”). Technology Visions Group, Inc. was incorporated in Delaware in 1985 under the name Orbit Technologies, Inc and changed its name to Technology Visions Group, Inc. on December 22, 2000. Pursuant to the Merger Transaction, the separate existence of Prior Sutura ceased and Technology Visions Group, Inc. continued as the surviving corporation under Delaware law. As part of the Merger Transaction, the name of the Company was changed to Sutura, Inc. Further, pursuant to the Merger Transaction, the Company issued 174,948,338 shares of common stock in the aggregate to the former stockholders of Prior Sutura and, as a result, the stockholders of Prior Sutura own approximately 95% of the Company. Accordingly, the merger has been accounted for as a recapitalization of Prior Sutura.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in conformity with accounting principles generally accepted in the United States. However, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted or condensed pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included. The result of operations and cash flows for the three and six month periods presented are not necessarily indicative of the results of operations for a full year. These financial statements should be read in conjunction with the Company’s December 31, 2007 audited financial statements and notes thereto included in the Company’s Annual Report on Form
10KSB.

PRINCIPALS OF CONSOLIDATION

The consolidated financial statements include the accounts of Sutura Inc. and its wholly owned subsidiaries Technology Visions Inc, HeartStitch, Inc., Sutura BV, Sutura SARL and Sutura GMBH. All significant intercompany accounts and transactions have been eliminated.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the combined financial statements and disclosures made in the accompanying notes. Actual results could differ from those estimates.

FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

Assets and liabilities of foreign subsidiaries have been translated at quarter- end exchange rates, while revenues and expenses have been translated at average exchange rates in effect during the quarter. Resulting cumulative translation adjustments have been recorded as other comprehensive income (loss) as a separate component of stockholders’ equity.

During the three and six month periods ended June 30, 2008 comprehensive loss included a net translation gain of $20,524 and a loss of $29,947 respectively. Other comprehensive loss, as presented on the accompanying consolidated balance sheet in the stockholders’ equity section amounted to $1,031,613 as of June 30, 2008.

REVENUE RECOGNITION

We recognize revenue in accordance with generally accepted accounting principles as outlined in the Securities and Exchange Commission’s Staff Accounting Bulletin No. 104, Revenue Recognition (SAB 104), which requires that four basic criteria be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is reasonably assured; and (iv) product delivery has occurred or services have been rendered. We recognize revenue as products are shipped based on FOB shipping point terms when title passes to customers. The Company sells its products in the United States, Germany and France, directly to hospitals and clinics. In all international markets, the Company sells its products to international distributors which subsequently resell the products to hospitals and clinics. We negotiate credit terms on a customer-by-customer basis and products are shipped at an agreed upon price. All product returns must be pre-approved and, if approved, will be credited at original price.

SEGMENT REPORTING

Statement of Financial Accounting Standards No. 131 (“SFAS 131”), “Disclosure About Segments of an Enterprise and Related Information” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. The Company allocates its resources and assesses the performance of its sales activities based upon geographic locations of its subsidiaries. The following is a breakdown of our sales for the three and six month periods ended June 30, 2008


	Three months				Three months				Year to date				Year to date
Total sales	2008				2007				2008				2007
Sales 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


	Three months ended				Three months ended				Six months ended				Six months ended
Sales major countries	June 30, 2008				June 30, 2007				June 30, 2008				June 30, 2007
France	$	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	%

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK.


	Three months ended				Three months ended				Six months ended				Six months ended
Sales major customers	June 30, 2008				June 30, 2007				June 30, 2008				June 30, 2007
Customer 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	%

EARNINGS PER SHARE

Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), “Earnings per share”. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Weighted average number of shares used to compute basic and diluted loss per share is the same in these financial statements since the effect of dilutive securities is anti-dilutive.

Weighted average common shares outstanding for the three and six months ended June 30, 2008 and 2007 was as follows:


	Three months ended June 30				Six months ended June 30
	2008		2007		2008		2007
Weighted average shares outstanding — basic		305,233,150		268,188,599		304,875,096		262,157,278
Weighted average shares outstanding — diluted		305,233,150		268,188,599		304,875,096		262,157,278

CURRENT ACCOUNTING PRONOUNCEMENTS:

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS 157”), which defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements but rather eliminates inconsistencies in guidance found in various prior accounting pronouncements. SFAS 157 is effective for the Company beginning in the first quarter of 2008. In February 2008, the FASB released a FASB Staff Position (FSP FAS 157-2—Effective Date of FASB Statement No. 157) which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008. Adoption of SFAS No. 157 did not affect Sutura’s consolidated financial condition, results of operations or cash flows.

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”. This Statement replaces SFAS No. 141, Business Combinations. This Statement retains the fundamental requirements in Statement 141 that the acquisition method of accounting (which Statement 141 called the purchase method) be used for all business combinations and for an acquirer to be identified for each business combination. This Statement also establishes principles and requirements for how the acquirer: a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase and c) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) will apply prospectively to business combinations for which the acquisition date is on or after Company’s fiscal year beginning October 1, 2009. While the Company has not yet evaluated this statement for the impact, if any, that SFAS No. 141(R) will have on its consolidated financial statements, the Company will be required to expense costs related to any acquisitions after September 30, 2009.

In December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements”. This Statement amends ARB 51 to establish accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. SFAS No. 160 is effective for the Company’s fiscal year beginning October 1, 2009. Management is currently evaluating the effect of this pronouncement on financial statements.

In March 2008, the FASB issued FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities. The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The new standard also improves transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under Statement 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. Management is currently evaluating the effect of this pronouncement on financial statements.

In May of 2008, FSAB issued SFASB No. 162, The Hierarchy of Generally Accepted Accounting Principles. The pronouncement mandates the GAAP hierarchy reside in the accounting literature as opposed to the audit literature. This has the practical impact of elevating FASB Statements of Financial Accounting Concepts in the GAAP hierarchy. This pronouncement will become effective 60 days following SEC approval. The company does not believe this pronouncement will impact its financial statements.

In May of 2008, FASB issued SFASB No. 163, Accounting for Financial Guarantee Insurance Contracts-an interpretation of FASB Statement No. 60. The scope of the statement is limited to financial guarantee insurance (and reinsurance) contracts. The pronouncement is effective for fiscal years beginning after December 31, 2008. The company does not believe this pronouncement will impact its financial statements.

NOTE 3. STOCK BASED COMPENSATION

Effective January 1, 2006, the Company adopted Statement No. 123R, Share-Based Payment (SFAS 123R), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is being applied on the modified prospective basis.

We have various types of share-based compensation plans. These plans are administered by our Joint Compensation and Options Committee of our Board of Directors. A description of our share-based compensation plans is contained in Item 11 of the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2007. There have been no amendments to these plans in the six months ended June 30, 2008.

Employee option expenses for the three and six month periods ended June 30, 2008 and 2007 amounted to $78,890 and $159,963 and $82,632 and $165,264 respectively.

Non-employee option expenses for the three and six month periods ended June 30, 2008 and 2007 amounted to $40,875 and $85,444 and $41,528 and $76,366 respectively.

We use the Black-Scholes option-pricing model to estimate fair value of stock-based awards with the following weighted average assumptions:


	Six months ended June 30
	2008		2007
Expected life (years)		10		10
Expected stock price volatility		95%-191%		95%-191%
Weighted average stock price volatility		115%		115%
Expected dividend yield		0		0
Risk-free interest rate		4.10%-4.80%		4.10%-4.80%

Expected volatility, weighted average volatility and expected life are based on our historical experience. Expected dividend yield was not considered in the option pricing formula since we do not pay dividends and have no current plans to do so in the future. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

The following table summarizes the outstanding options activity for the six months period ended June 30, 2008 as follows:


						Weighted
						average
						remaining
				Weighted		contractual		Aggregate
	Total			price		term(years)		Intrinsic Value
OUTSTANDING, DECEMBER 31, 2007		45,017,899		$	0.101		3		691,890

Granted in 2008		—
Cancelled in 2008		(2,459,346	)	$	0.115
Exercised in 2008		—
OUTSTANDING, JUNE 30, 2008		42,558,553		$	0.100		2.3	$	1,144,354


Exercisable at June 30, 2008		34,528,553		$	0.105		1.8	$	1,102,489

NOTE 4 MARKETABLE SECURITIES AND CERTIFICATES OF DEPOSIT

The Company’s securities are classified as available-for-sale and, as such, are carried at fair value. Securities classified as available-for-sale may be sold in response to changes in interest rates, liquidity needs, and for other purposes. Unrealized holding gains and losses for available-for-sale securities are excluded from earnings and reported as a separate component of stockholder’s equity. Realized gains and losses for securities classified as available-for-sale are reported in earnings based upon the adjusted cost of the specific security sold.

At June 30, 2008, the Company held investments in taxable auction rate preferred securities with a par value of $3,325,000. Auction rate preferred securities are floating rate debt securities with long-term nominal maturities, the interest rates of which are reset periodically (typically every seven to thirty-five days) through a Dutch auction process. These periodic auctions have historically provided a liquid market for auction rate securities, as this mechanism generally allows existing investors to rollover their holdings and continue to own their respective securities at then existing market rates or to liquidate their holdings by selling their securities at par value. Beginning in February 2008, as part of the ongoing credit market crisis, several auction rate securities from various issuers have failed to receive sufficient order interest from potential investors to clear successfully, resulting in auction failures. Historically, when

investor demand was insufficient, the banks running the auctions would step in and purchase the remaining securities in order to prevent an auction failure. However, as of recently they have been allowing these auctions to fail. The Company liquidated $675,000 of auction rate securities during the three months ended June 30, 2008 at par value and has had confirmation from its bank that all auction rate securities will be liquidated at par within the next 12 months. Sutura does not hold any auction rate securities collateralized by mortgages or collateralized debt obligations. Sutura believes these investments are of high credit quality, as all are investment grade and the majority are rated AAA. None of the securities have been downgraded.

Marketable securities classified as available for sale consisted of the following as of June 30, 2008:


	Amortized		Gross		Gross		Fair
	cost at		unrealized		unrealized		value at
	June 30 2008		Gain		Loss		June 30 2008
Government bonds	$	2,447,130	$	18,224	$	—	$	2,465,354
Corporate bonds		485,645		3,555		—		489,200
Taxable auction rate securities		3,325,197		0		197		3,325,000

Total marketable securities for sale	$	6,257,972	$	21,779	$	197	$	6,279,554

Certificates of deposit consisted of the following as of June 30, 2008:


	Amortized		Gross		Gross		Fair
	cost at		unrealized		unrealized		value at
	June 30 2008		Gain		Loss		June 30 2008
Certificates of deposit — Short term	$	1,710,952	$	—	$	2,178		1,708,774
Certificates of deposit — Long term		290,874		—		1,989		288,885

Totals	$	2,001,826	$	—	$	4,167	$	1,997,659

The proceeds from sales of available-for-sale securities and the gross realized gains and gross realized losses on those sales for the quarter ended June 30, 2008 were as follows:


	Amortized			Fair			Accumulated
Government bonds	cost			value			Gain(Loss)
Totals per March 31, 2008	$	6,323,402		$	6,408,709		$	85,307
Purchases		—			—			—
Sales		3,876,272			3,943,355			67,083
Adjustment to fair value		—			—			—

Totals per the end June 30, 2008	$	2,447,130		$	2,465,354		$	18,224


	Amortized			Fair			Accumulated
Corporate bonds	cost			value			Gain(Loss)
Totals per March 31, 2008	$	481,436		$	489,705		$	8,269
Purchases		—			—			—
Sales		—			—			—
Adjustment to fair value		(4,209	)		505			4,714

Totals per the end June 30, 2008	$	485,645		$	489,200		$	3,555


	Amortized			Fair			Accumulated
Certificate 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			Accumulated
Taxable 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	)

NOTE 5 FAIR VALUE MEASUREMENTS

SFAS No. 157, which the Company adopted in the first quarter of 2008, clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, SFAS No. 157 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

	•		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.

This hierarchy requires the use of observable market data when available and to minimize the use of unobservable inputs when determining fair value. The Company’s cash equivalent and short-term investment instruments are classified using Level 1 or Level 2 inputs within the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Investment instruments valued using Level 1 inputs include money market securities and U.S. government agency securities. Investment

instruments valued using Level 2 inputs include investment-grade corporate debts, such as bonds and commercial paper.

As of June 30, 2008, the total fair value of Sutura’s investments was valued as follows


	Fair
	value at		Fair value measurement at reporting date using
	June 30 2008		Level 1		Level 2		Level 3
Government 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	$	—	$	—

NOTE 6. ACCOUNTS RECEIVABLE

The company maintains an allowance for uncollectible accounts receivable to estimate the risk of extending credit to customers and distributors. The allowance is estimated based on the customer or distributor’s compliance with our credit terms, the financial condition of the customer or distributor and collection history where applicable. Additional allowances could be required if the financial condition of our customers or distributors were to be impaired beyond our estimates. At the period ended June 30, 2008 the company has provided allowance for bad debts in amounts of $56,512 of which $51,000 is for a note receivable on a company which is involved in litigation against Sutura.

NOTE 7. INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or market. Appropriate consideration is given to deterioration, obsolescence and other factors in evaluating net realizable value. The Company had established a reserve of $350,000 for potential obsolescence of components. As a result of higher sales than expected of certain models of our SuperStitch we have been able to reduce the amount required for obsolescence by $40,000 this quarter.

Inventories are comprised of the following as of:


	June 30			December 31
	2008			2007
Raw material	$	311,064		$	367,473
Work in process		251,883			279,721
Finished goods		93,351			113,375

		656,298			760,569
Less: Reserve for obsolescence		(310,000	)		(350,000	)

	$	346,298		$	410,569

NOTE 8. PROPERTY & EQUIPMENT

Property & equipment consisted of the following as of:

Property Plant & equipment


	June 30			December 31
	2008			2007
Computers	$	399,320		$	357,406
Office furniture and fixtures		590,162			583,740
Machinery and equipment		2,921,636			2,652,788

		3,911,119			3,593,933
Less: Accumulated depreciation		(3,310,483	)		(3,342,530	)

	$	600,636		$	251,404

Depreciation expenses for the three and six month periods ended June 30, 2008 and 2007 amounted to $54,484 and $90,656 and $58,188 and $115,560 respectively.

NOTE 9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES.

Accounts payable and accrued expenses consist of the following as of:

Accounts payables


	June 30		December 31
	2008		2007
Accounts payable	$	176,899	$	281,275
Accrued expenses		162,470		155,110
Accrued compensation		591,537		2,080,446
Accrued interest payable		774,597		841,215

	$	1,705,504	$	3,358,046

NOTE 10. LOAN PAYABLE-OFFICERS

The Company owes the officers $124,667 as of June 30, 2008. This amount is unsecured, interest free and due on demand.

NOTE 11. CUSTOMER DEPOSITS

In 2002, the Company entered into an option and distribution agreement with a distributor. Under the agreement, the Company received $1,250,000 as an advance payment which will be applied against distributor’s future purchases of products.

Deposits


Ending balance per December 31st, 2007	$	1,006,311
Applied against shipments		56,768

Ending balance per June 30, 2008	$	949,543

NOTE 12. NOTES PAYABLE- RELATED PARTY

The Company has one note payable to Gauss N.V. for the principal amount of $188,433 pursuant to a promissory note bearing simple interest at 8% and becoming due and payable on December 31, 2008. Gauss N.V. is jointly owned by Mr. Ratering and Mr. Nobles, each of whom is an officer and director of Sutura. On January 1^st 2008 $12,910 outstanding but unpaid interest was added to the principal sum of the note.

The total amount of the note is as follows as of:

Notes payables related party


	June 30		December 31
	2008		2007
Notes payable with interest at 8% due and demandable on December 31, 2008	$	188,433	$	161,823

Interest expense for the three and six month periods ended June 30, 2008 and June 30, 2007 for this note amounted to $3,875 and $7,483 and $3,052 and $5,972 respectively.

NOTE 13. CONVERTIBLE NOTES PAYABLE-OFFICERS

The Company, as successor to Prior Sutura, currently owes Mr. Ratering, an officer and director of Registrant, the principal amounts of $557,378 and $443,142 pursuant to two promissory notes. In 2007, each of the notes bore simple interest at 8% and were to be due and payable on December 31, 2007. The accrued interest on such notes as of December 31, 2007 was $41,287 and $32,825 respectively. On January, 17, 2008 each of the notes were amended to extend the maturity date of each of the notes to July 1, 2009, to increase the interest rate to 10% (effective as of January 1, 2008), to provide that each of the notes were to be convertible at the election of Mr. Ratering into shares of the Company’s Common Stock at a conversion rate of $0.08 per share and the outstanding accrued interest as of December 31, 2007 was added to the principal balance of such notes.

The total amount of the notes is as follows as of:

Notes payables-officers


	June 30		December 31
	2008		2007
Convertible notes payable to officer bearing interest rate of 10%, unsecured	$	1,000,519	$	926,408

Interest expense for the three and six month periods ended June 30, 2008 and June 30, 2007 for these notes amounted to $25,013 and $50,026 and $18,528 and $37,056 respectively.

Intrinsic

Conversion

value per

price

December

end June

end Sept

end Dec

Ratering

12,506,488

0.0800

—

NOTE 14. CONVERTIBLE NOTES PAYABLE

WHITEBOX I

On September 17, 2004, the Company arranged a debt financing of $6,550,000 from Whitebox Advisors and affiliated parties in exchange for the issuance of eighteen-month 12% convertible promissory notes and warrants (“Whitebox I”). The performance of the notes is secured by all of the assets of the company.

The notes had conversion rights based on a company valuation of $100 million and if all converted would increase the number of outstanding shares by 14,464,644. The number of shares issuable upon exercise of the Whitebox I warrant and the warrant exercise price were based on a Company valuation of $100 million divided by the number of fully diluted shares of Common Stock outstanding on February 28, 2005. The Whitebox I warrant has a term of 5 years which expires on September 17, 2009. The total numbers of shares issuable upon exercise of the Whitebox I warrant were 14,423,512 at an exercise price of $ 0.4541. The relative fair value of the warrants using the Black Scholes method assuming a volatility of the stock of 89%, term of five years and a discount of 3.52% was determined to be $ 2,928,362. The Company allocated the investment proceeds to the debt and warrants based on their relative fair values. The beneficial conversion feature of the notes was

determined to be $ 3,621,636 and together with the value of the warrants recorded as a debt discount, a reduction of the carrying amount of the debt.

Using the effective interest method the total debt discount of the Whitebox I notes has been amortized over the term of the notes and charged to interest expense. In the three and six month periods ending June 30, 2008 and 2007 $0 and $0 and $291,377 and $582,754 respectively was expensed.

On June 30, 2006, the Company and the Whitebox affiliated parties entered into an agreement amending the notes issued in connection with Whitebox I by extending the maturity dates until July 1, 2007.

On August 25, 2006, the Company and the Whitebox affiliated parties entered into a further agreement amending the notes issued in connection with Whitebox I by lowering the conversion rate to $0.15 per share. If all of the Whitebox I notes are converted the company would have issued to the Whitebox affiliates 43,666,667 shares in the aggregate at a conversion rate of $0.15.

On July 1, 2007, the Company and the Whitebox affiliated parties entered into a further agreement amending the notes issued in connection with Whitebox I by extending the maturity dates until July 1, 2009 in exchange for a 3% consent fee to be added to the note and a new conversion rate of $0.08 per share. The amount of the consent fee of $196,500 will be charged to interest expenses over the 2 year term of the note. In the three and six months period ended June 30, 2008 $24,563 and $49,126 was amortized and charged to interest. The fair value of the conversion rights of the consent fee using the Black Scholes method assuming a volatility of the stock of 184%, term of two years and a discount of 4.80% was determined to be $163,361 and will be charged to interest expenses over the term of the loan. In the three and six months period ended June 30, 2008 $20,420 and $40,840 was amortized and charged to interest.

On April 2, 2008, Whitebox affiliated partners have converted $5,012,752 of the note and $200,510 of the interest due on it into 65,165,775 into shares of common stock at $0.08 per share leaving the balance of the note at $1,733,748. If also the remaining Whitebox I notes are converted the company will currently issue to the Whitebox affiliates 21,671,844 shares in the aggregate at a conversion rate of $0.08.

Interest expense for Whitebox I for the three and six month periods ended June 30, 2008 and 2007 amounted to $52,012 and $254,407 and $196,500 and $393,000 respectively.

WHITEBOX Ia

As part of the July 1, 2007 agreement the interest expenses of Whitebox I payable at the end of each quarter may be converted in a new note at the same terms as the original note. The company elected to issue a new note (Whitebox Ia) of $202,395 per September 30, 2007 with 12% interest and convertible at $0.08 per share. If all of the Whitebox Ia notes are converted the company will currently issue to the Whitebox affiliates 2,529,938 shares in the aggregate at a conversion rate of $0.08.

Interest expense for Whitebox Ia for the three and six month periods ended June 30, 2008 amounted to $6,072 and $12,144 respectively.

WHITEBOX II

On March 24, 2005, the Company arranged a debt financing of $3,000,000 from Whitebox and affiliated parties in exchange for the issuance of eighteen-month 8% secured convertible promissory notes and 1,666,667 warrants at an exercise price of $ 0.88. (“Whitebox II”). The performance of the notes is secured by all of the assets of the company.

The notes, or any portion thereof, were convertible at the election of Whitebox based upon a conversion rate that is equal to the greater of (i)

$150,000,000 divided by the total number of outstanding shares of the Company (on a fully diluted, as converted basis, but excluding any shares issuable pursuant to the Whitebox II notes or warrants) or (ii) the average closing bid price for the Company’s common stock for the 20 trading days preceding the conversion notice.

The Company allocated the investment proceeds to the debt and warrants based on their relative fair values. The relative fair value of the warrants using the Black Scholes method assuming a volatility of the stock of 89%, term of five years and a discount of 3.52% was determined to be $ 325,479 which was recorded as debt discount, a reduction of the carrying amount of the debt. There was no beneficial conversion feature on the notes. Using the effective interest method the fair value of the warrants will be amortized over the term of the note and charged to interest expense. In the three and six month periods ended June 30, 2008 and 2007 $0 and $0 and $33,938 and 67,876 respectively was expensed. The Company further incurred financial consulting fees of $ 240,000 which it also recorded as a debt discount, a reduction of the carrying amount of the debt and which will be amortized over the terms of the loan. In the three and six month periods ended June 30, 2008 and 2007 $0 and $0 and $20,000 and $40,000 respectively were expensed as a general expense.

On June 30, 2006, the Company and the Whitebox affiliated parties entered into an agreement amending the Whitebox II notes and warrants by extending the maturity dates until July 1, 2007 and increasing the interest to 12% as per September 18, 2006. The exercise price of the warrants was reduced to $0.45.

On August 25, 2006, the Company and Whitebox entered into a further amendment by lowering the conversion rate of the note to $0.15 per share. If all of the Whitebox II notes are converted the company would currently issue to the Whitebox affiliates 20,000,000 shares. Before the amendment the Whitebox I notes were convertible into an aggregate of 5,425,433 shares based on a conversion rate of $0.553.

On July 1, 2007, the Company and the Whitebox affiliated parties entered into a further agreement amending the notes issued in connection with Whitebox II by extending the maturity dates until July 1, 2009 in exchange for a 3% consent fee to be added to the note and a new conversion rate of $0.08 per share. The amount of the consent fee of $90,000 will be charged to interest expenses over the 2 year term of the note. In the three and six month periods ended June 30, 2008 $11,250 and $22,500 respectively was amortized and charged to interest. The fair value of the conversion rights of the consent fee using the Black Scholes method assuming a volatility of the stock of 184%, term of two years and a discount of 4.80% was determined to be $74,822 and will be charged to interest expenses over the term of the loan. In the three and six month periods ended June 30, 2008 $18,706 and $9,353 respectively was amortized and charged to interest. If all of the Whitebox II notes are converted the company would currently issue to the Whitebox affiliates 38,625,000 shares in the aggregate at a conversion rate of $0.08.

Interest expense for Whitebox II for the three and six month periods ended June 30, 2008 and 2007 amounted to $92,700 and $185,400 and $90,000 and $180,000 respectively.

WHITEBOX IIa

As part of the July 1, 2007 agreement the interest expenses of Whitebox II payable at the end of each quarter may be converted in a new note at the same terms as the original note. The company elected to issue a new note (Whitebox IIa) of $92,700 per September 30, 2007 with 12% interest and convertible at $0.08 per share. If all of the Whitebox IIa notes are converted the company would currently issue to the Whitebox affiliates 1,158,750 shares in the aggregate at a conversion rate of $0.08. Interest expense for Whitebox IIa

for the three and six month periods ended June 30, 2008 amounted to $2,781 and $5,562 respectively.

WHITEBOX III

On September 7, 2005, the Company arranged a debt financing of $7,000,000 from Whitebox and affiliated parties in exchange for the issuance of 36 month secured convertible promissory notes and warrants. (“Whitebox III”). The notes are secured by all of the assets of the Company, bear interest at an annual rate of 8% and require interest payments to be made on a quarterly basis. Beginning on April 30, 2007, and on the last day of each month thereafter, through and including August 2008, the Company is required to make aggregate principal payments of $250,000 on the Whitebox III notes.

The notes were convertible into common stock determined by a company valuation of $250,000,000 divided by the total number of fully diluted shares outstanding on the conversion date. On September 30, 2006, based on the then outstanding shares of the Company, the Whitebox III notes were convertible into an aggregate of 7,595,606 shares resulting in a conversion rate of $0.8848. The total numbers of warrants issued with a term of 5 years are 1,609,197 at an exercise price of $0.87. The relative fair value of the warrants using the Black Scholes method assuming a volatility of the stock of 85%, term of five years and a discount of 3.89% was determined to be $ 891,404 and was recorded as debt discount, a reduction of the carrying amount of the debt. The beneficial conversion feature of the notes was determined to be $ 839,234 and also recorded as a debt discount. Using the effective interest method the beneficial conversion feature and the value of the warrants will be amortized over the 36 months term of the note and charged to interest expense. In the three and six month periods ended June 30, 2008 and 2007 $178,463 and $348,772 and $148,015 and $289,267 respectively was expensed. The Company further incurred financial consulting fees of $ 560,000 which is also recorded as a debt discount, a reduction of the carrying amount of the debt and which will be amortized over the terms of the loan. In the three and six month periods ended June 30, 2008 and 2007 $46,667 and $93,334 and $46,667 and $93,334 respectively was expensed as a general expense.

On June 30, 2006, the Company and the Whitebox affiliated parties entered into an agreement amending the notes and warrants issued in connection with Whitebox III by extending the commencement date of payments of principal due under the Whitebox III notes from April 30, 2007 until July 1, 2007 and by increasing the interest rate under this note to twelve percent (12%) as of September 7, 2007. The per share exercise price of the warrants was reduced to $ 0.45.

On August 25, 2006, the Company and Whitebox entered into a further amendment by lowering the conversion rate of the note to $ 0.15 per share. If all of the Whitebox III notes are converted the company would currently issue to the Whitebox affiliates 46,666,667 shares. Before the amendment the Whitebox III notes were convertible into an aggregate of 7,595,606 shares based on a conversion rate of $0.8848.

On July 1, 2007, the Company and the Whitebox affiliated parties entered into a further agreement amending the notes issued in connection with Whitebox III by extending the maturity dates until July 1, 2009 in exchange for a 3% consent fee to be added to the note and a new conversion rate of $0.08 per share. The amount of the consent fee of $210,000 will be charged to interest expenses over the 2 year term of the note. In the three and six month periods ended June 30, 2008 $26,250 and $52,500 respectively was amortized and charged to interest. The fair value of the conversion rights of the consent fee using the Black Scholes method assuming a volatility of the stock of 184%, term of two years and a discount of 4.80% was determined to be $174,584 and will be charged to interest expenses over the term of the loan. In the three and six month periods ended June 30, 2008 $21,823 and $43,646 was amortized and charged to interest. If all of the Whitebox III notes are

converted the company would currently issue to the Whitebox affiliates 90,125,000 shares in the aggregate at a conversion rate of $0.08. Interest expense for Whitebox III notes for the three and six month periods ended June 30, 2008 and 2007 amounted to $216,300 and $432,600 and $140,000 and $280,000 respectively.

WHITEBOX IIIa

As part of the July 1, 2007 agreement the interest expenses of Whitebox III payable at the end of each quarter may be converted in a new note at the same terms as the original note. The company elected to issue a new note (Whitebox IIIa) of $162,625 per September 30, 2007 with 12% interest and convertible at $0.08 per share. If all of the Whitebox IIIa notes are converted the company would currently issue to the Whitebox affiliates 2,032,813 shares in the aggregate at a conversion rate of $0.08. Interest expense for Whitebox IIIa for the three and six month periods ended June 30, 2008 amounted to $4,879 and $9,758.

WHITEBOX V

On December 13, 2006, the Company arranged a debt financing of $1,500,000 from Whitebox and affiliated parties in exchange for the issuance of 18 month secured convertible promissory notes. (“Whitebox V”). The notes are secured by all of the assets of the Company, bear interest at an annual rate of 8% and require interest payments to be made on a quarterly basis.

The notes are convertible, at the option of Whitebox, into common stock, par value $0.001, at a conversion rate of $0.045 per share. If all of the Whitebox V notes are converted the company would currently issue to the Whitebox affiliates 33,333,333 shares.

The company and Whitebox further agreed that Whitebox had the right to invest a further $1,500,000 on or before March 31, 2007 (collectively, the “New Loan”) at the same terms as the current loan. The relative fair value of this option, using the Black Scholes method assuming a volatility of the stock of 226%, term of 3.5 months and a discount of 4.1% was $ 414,548. The Company allocated the investment proceeds to the debt and warrants based on their relative fair values. The fair value of the beneficial conversion feature of the notes was determined to be $ 247,882 using the Black Scholes method assuming a volatility of the stock of 226%, term of 18 months and a discount of 4.1%. The beneficial conversion feature and the value of the option are recorded as a debt discount, a reduction of the carrying amount of the debt. Using the effective interest method this debt discount will be amortized over the 18 months term of the note and charged to interest expense. In the three and six month periods ended June 30, 2008 and 2007 $112,792 and $248,302 and $93,438 and $175,987 respectively were expensed. The Company further incurred financial consulting fees of $ 90,000 which it also recorded as a debt discount, a reduction of the carrying amount of the debt and which will also be amortized over the term of the loan. In the three and six month periods ended June 30, 2008 and 2007 $12,500 and $27,500 and $15,000 and $30,000 respectively were expensed as a general expense. Interest expense for the three and six month periods ended June 31, 2008 and 2007 amounted to $30,000 and $60,000 and $30,000 and $60,000 respectively.
At June 30, 2008 the WHITEBOX V notes were reimbursed by the company.

WHITEBOX Va

On July 1, 2007, the Company and the Whitebox affiliated parties entered into a further agreement amending the notes issued in connection with Whitebox V. As part of the July 1, 2007 agreement the interest expenses of Whitebox V payable at the end of each quarter may be converted in a new note at the same terms of the original note. The company elected to issue a new note (Whitebox Va) of $30,000 per September 30, 2007 with 8% interest and convertible at $0.045 per share. If all of the Whitebox Va notes are converted the company

will currently issue to the Whitebox affiliates 666,666 shares in the aggregate at a conversion rate of $0.045.

Interest expense for Whitebox Va for the three and six month periods ended June 30, 2008 amounted to $900 and $1,800.

At June 30, 2008 the WHITEBOX Va notes were reimbursed by the company.

WHITEBOX VI

On March 5, 2007, Whitebox exercised the above mentioned option and the Company arranged a debt financing of $1,500,000 from Whitebox affiliated parties in exchange for the issuance of 18 month secured convertible promissory notes. (“Whitebox VI”). The notes are secured by all of the assets of the Company, bear interest at an annual rate of 8% and require interest payments to be made on a quarterly basis. The notes are convertible, at the option of Whitebox, into common stock, par value $0.001, at a conversion rate of $0.045 per share. If all of the Whitebox VI notes are converted the company would currently issue to the Whitebox affiliates 33,333,333 shares.

The Company incurred financial consulting fees of $ 90,000 which it recorded as a debt discount, a reduction of the carrying amount of the debt and which will be amortized over the term of the loan. In the three and six month periods ended June 30, 2008 and 2007 $15,000 and $30,000 and $15,000 and $17,500 respectively were expensed as a general expense.

Interest expense for the three and six month periods ended June 30, 2008 and 2007 amounted to $30,000 and $60,000 and $30,000 and $38,333 respectively. At June 30, 2008 the WHITEBOX VI notes were reimbursed by the company.

WHITEBOX VIa

On July 1, 2007, the Company and the Whitebox affiliated parties entered into a further agreement amending the notes issued in connection with Whitebox VI. As part of the July 1, 2007 agreement the interest expenses payable at the end of each quarter may be converted in a new note at the same terms of the original note. The company elected to issue a new note of $30,000 (Whitebox VIa) per September 30, 2007 at 8% interest and convertible at $0.045 per share. If all of the Whitebox VIa notes are converted the company would currently issue to the Whitebox affiliates 666,666 shares in the aggregate at a conversion rate of $0.045. Interest expense for Whitebox VIa for the three and six month periods ending June 30, 2008 amounted to $900 and $1,800.

At June 30, 2008 the WHITEBOX VIa notes were reimbursed by the company.

SYNAPSE SETTLEMENT NOTE

In connection with the settlement of certain shareholder litigation proceedings, effective as of June 1, 2007, the Company issued and delivered to Synapse Capital, LLC, for itself and as agent for the benefit of certain other parties to the settlement, a convertible secured promissory note in the principal amount of $400,000. The convertible secured promissory note bears interest at 8% per annum. The interest is payable quarterly in arrears, and may be paid in capital stock at an interest conversion rate of $0.08 per share. The principal amount of the note, together with any accrued but unpaid interest will be due and payable in eighteen (18) months or may be converted pursuant to the terms of the note at the rate of $0.15 per share, subject to certain adjustments. Lastly, in connection with the settlement, the Company, the plaintiff parties and the Whitebox parties have entered into a Fifth Amended and Restated Registration Rights Agreement which provides the Whitebox parties and the plaintiff parties with, among other things, certain rights to request a registration of shares for resale pursuant to the Securities Act of 1933 relating to:

	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; and

	4.		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.

Interest expense for the three and month periods ended June 30, 2008 and 2007 amounted to $8,000 and $16,000 and $2,667 and $2,667 respectively.

WHITEBOX VIII

On September 21, 2007, the Company arranged a debt financing of $1,000,000 from Whitebox affiliated parties in exchange for the issuance of 12-month secured convertible promissory notes. (“Whitebox VIII”). The notes are secured by all of the assets of the Company, bear interest at an annual rate of 8% and require interest payments to be made on a quarterly basis.

The notes are convertible, at the option of Whitebox, into common stock, par value $0.001, at a conversion rate of $0.07 per share. If all of the Whitebox VIII notes are converted the company would currently issue to the Whitebox affiliates 14,258,714 shares. Interest only is payable in cash or in the form of a newly issued convertible promissory note, at the same terms and conditions as the original note, quarterly in arrears on the last day of each calendar quarter, beginning December 31, 2007.

Interest expense for Whitebox VIII for the three and six month periods ended June 30, 2008 amounted to $20,000 and $40,000 respectively.

The following is a summary of all notes payable at:

Convertible notes payables


	June 30			December 31
	2008			2007
Whitebox I	$	1,733,747		$	6,746,500
Whitebox Ia		202,395			202,395
Whitebox II		3,090,000			3,090,000
Whitebox IIa		92,700			92,700
Whitebox III		7,210,000			7,210,000
Whitebox IIIa		162,625			162,625
Whitebox V		—			1,500,000
Whitebox Va		—			30,000
Whitebox VI		—			1,500,000
Whitebox VIa		—			30,000
Synapse settlement note		400,000			400,000
Whitebox VIII		1,000,000			1,000,000

	$	13,891,467		$	21,964,220
Debt issue costs		(42,830	)		(193,664	)
Loan consent fees		(248,248	)		(372,374	)
Beneficial conversion feature		(330,080	)		(1,030,350	)

	$	13,270,308		$	20,367,833

Classified as current liability	$	0			3,811,698
Classified as long term liability	$	13,270,308		$	16,556,134

Summary of convertible notes conversion rights:


	Conversion				Intrinsic		Conversion		Intrinsic
	shares per		Conversion		value per		shares per		value per
	Dec 31 2007		price		December		June 30 2008		June 30
Whitebox 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		142,857

		303,755,131			$	1,020,000		173,095,725	$	142,857

NOTE 15. NOTES PAYABLES

WHITEBOX VII

On May 18, 2007, and on June 13, 2007, the Company borrowed an aggregate principal amount of $350,000 and $200,000, respectively, evidenced by unsecured promissory notes (“Whitebox VII”) issued to certain affiliates of Whitebox. On July 2, 2007, the Company borrowed an aggregate principal amount of $1,150,000 evidenced by unsecured promissory notes (“Whitebox VIII”) delivered to certain affiliates of Whitebox Advisors, LLC.

The Whitebox VII notes bear interest from the date issued at the rate of twelve percent (12%) per annum. All accrued interest and principal is due and payable in a balloon payment upon the sixtieth (60th) anniversary of the applicable Whitebox VII notes. The Company may prepay the Whitebox VII notes, in whole or in part, upon five (5) days prior written notice to the payee at a cost equal to accrued interest plus the present value of the notes discounted at a rate equal to (x) the then U.S. Treasury rate for 5-year notes as reported by Bloomberg on the date of such prepayment notice, plus (y) 100 basis points.

If the Company or its controlling stockholders enter into a definitive agreement relating to the sale or transfer of all or substantially all of the Company’s business or assets, the Company must give the note payees at least fifteen (15) days prior written notice of the proposed date for consummation of the transaction and, the entire principal balance of the notes, and all accrued but unpaid interest, shall be due and payable immediately prior to (and as a condition of) the closing on the transaction. In addition to the payment of outstanding principal and any accrued but unpaid interest, the Company must also pay to the payees a prepayment penalty amount equal to the present value of the remaining unpaid coupons that would otherwise by paid through maturity but for the transaction, and discounted at a rate equal to (x) the then U.S. Treasury rate for 5-year Notes as reported by Bloomberg on the date of such prepayment notice, plus (y) 100 basis points.

Interest expense for the three and six month periods ended June 30, 2008 amounted to $51,000 and $102,000 and $6,034 and $6,034 respectively.

Notes payables


	June 30		December 31
	2008		2007
Whitebox VII	$	1,700,000	$	1,700,000

NOTE 16. NOTES PAYABLES OFFICERS

On July 16, 2007 the Company has borrowed an aggregate principal amount of $400,000 evidenced by Promissory Notes (the “Officer Notes”), dated and delivered to certain officers and directors of the Company, or their affiliates. The Notes were issued to GrootKasteel, B.V., the Lynne D. Teckman Trust, and The Bjorkman Family Trust, dated November 2, 2000. The Officer Notes are unsecured and are in substantially the same form as the promissory notes issued under Whitebox VII. Issuance of the Officer Notes was approved by a disinterested majority of the Company’s board of Directors.

The Officer Notes bear interest from the date of issuance at the rate of twelve percent (12%) per annum. All accrued interest and principal is due and payable in a balloon payment upon the sixtieth (60th) month anniversary of the Officer Notes. The Company may prepay the Officer Notes, in whole or in part, upon five (5) days prior written notice to the payee at a cost equal to accrued interest plus the present value of the Officer Notes discounted at a rate equal to (x) the then U.S. Treasury rate for 5-year Notes as reported by Bloomberg on the date of such prepayment notice, plus (y) 100 basis points. Interest expense for the three and six month periods ended June 30, 2008 amounted to $12,000 and $24,000 respectively.

Notes payables officers


	June 30		December 31
	2008		2007
GrootKasteel	$	200,000	$	200,000
Teckman		100,000		100,000
Bjorkman		100,000		100,000

	$	400,000	$	400,000

NOTE 17. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

SFAS 130 requires unrealized gains and losses on the Company’s available for sale securities, currency translation adjustments, and minimum pension liability, which prior to adoption were reported separately in stockholders’ equity, to be included in other comprehensive income.

Comprehensive gain (loss) per the three and six month periods ended June 30, 2008 and 2007 were as follows:


	THREE MONTHS			THREE MONTHS			SIX MONTHS			SIX MONTHS
	2008			2007			2008			2007
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	)

As of June 30, 2008, other comprehensive loss, as presented on the accompanying consolidated balance sheet in the stockholders’ equity section consists of accumulative foreign currency translation loss of $1,049,026 and an unrealized gain on marketable securities of $17,413.

NOTE 18. WARRANTS

Summary of outstanding warrants as of June 30, 2008:


					Remaining Life in		Aggregate Intrinsic
	Total		Price		years		Value
Warrants issued in 2004		6,311,951	$	0.6259		0.8	$
Warrants Fusion		1,220,565		0.4464		1.8
Warrants Whitebox I		14,423,512		0.4541		1.2
Warrants Whitebox II		1,666,667		0.4500		1.7
Warrants Whitebox III		1,609,197		0.4500		2.2
Warrants Whitebox IV		10,400,000		0.0913		3.5
Cancelled in 2008		—		—		—
Exercised in 2008		—		—		—

Outstanding June 30, 2008		35,631,891	$	0.3780		1.9	$	—

NOTE 19. GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of business.

The Company ended the quarter with a cash balance of $1,188,821. For the six month period ending June 30, 2008 the company incurred a net loss of $6,474,257. For the years ended December 31, 2007 and 2006, the company had a net profit of $10,972,948 and a net loss of $11,997,615, respectively. The profit of 2007 was the result of a legal settlement of $23,000,000 received in December of 2007. Corrected for this one time income the company would have incurred a loss of $12,027,052 in 2007. As of June 30, 2008, we had an accumulated deficit of $64,135,996. Also, all the assets of the company have been pledged against the Whitebox Notes.

At June 30, 2008, we had cash, cash equivalents, restricted cash equivalents and marketable securities available for sale of $9,466,034. We believe that current cash and cash equivalents and marketable securities, together with cash receipts generated from sales of the SuperStitch products, will be sufficient to meet anticipated cash needs for operating and capital expenditures through at least December 31, 2008. Nevertheless, we expect to continue to incur substantial costs and cash outlays in 2008 and beyond to support SuperStitch research and development. In 2009 we will require additional funding to continue our operations and will attempt to raise the required capital through either debt or equity arrangements. We cannot provide any assurance that the required capital would be available on acceptable terms, if at all, or that any financing activity would not be dilutive to our current stockholders. If we are not able to raise additional funds, we may be required to significantly curtail our operations and this would have an adverse effect on our financial position, results of operations and cash flows.

NOTE 20. LEGAL PROCEEDINGS

Millenium Litigation

On February 14, 2005, Millenium Holding Group, Inc. (“Millenium”) filed a complaint against the Company in District Court for Clark County, Nevada. The case was subsequently removed to the United States District Court for the District of Nevada. In its complaint, Millenium asserted claims of breach of contract and breach of the covenant of good faith and fair dealing against the Company. Each of Millenium’s claims arose from a purported merger agreement that was not closed. On August 2, 2007, the Court entered an order dismissing all claims against the Company, with prejudice. On May 15, 2008, Millenium filed a notice of appeal, commencing an appeal from the order

dismissing its claims with the Ninth Circuit Court of Appeals. Millenium’s opening brief is due August 29, 2008; and the Company’s opposing brief is due September 29, 2008.

Pham v. Nobles, et al. (Orange County (California) Superior Court Case No. 07CC07644) was filed on July 5, 2007. This case arises out of plaintiff Loni Pham’s investment in Sutura, Inc. In July 2004, Plaintiff executed a Subscription Agreement, accepted by Sutura, under which she purchased 9,805 shares of Sutura’s common stock in exchange for $250,000. Plaintiff has asserted causes of action for breach of contract, fraud and negligent misrepresentation against Sutura and its former Chief Executive Officer and current board member Anthony Nobles. Plaintiff seeks damages in an amount no less than $250,000, plus interest, costs and punitive damages in an unspecified amount.

Defendants filed an answer to Plaintiff’s complaint on October 31, 2007. The Parties then agreed that Plaintiff’s claims against Defendants are subject to a written arbitration agreement and have therefore agreed that the case be stayed and submitted to binding arbitration. On January 31, 2008, the court stayed this case pending binding arbitration. In early August, 2008, the parties agreed to dismiss the entire action without prejudice and enter into a tolling agreement, tolling the running of any statute of limitations until January 30, 2009.

On March 18, 2007, David R. Teckman filed a lawsuit against The Company and Dr Anthony A. Nobles in the District Court, Fourth Judicial District, County of Hennepin, Minnesota, alleging breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment and similar allegations pertaining seeking damages and compensation relating to the recent termination of his employment relationship with the Company. On April 14, 2007, Mr. Teckman dismissed the lawsuit without prejudice.

NOTE 21. RELATED PARTY TRANSACTIONS

The Company, as successor to Prior Sutura, currently owes Mr. Ratering, an officer and director of Registrant, the principal amounts of $553,378 and $443,142 pursuant to two promissory notes. In 2007, each of the notes bore simple interest at 8% and were to be due and payable on December 31, 2007. The accrued interest on such notes as of December 31, 2007 was $41,287 and $32,825 respectively. On January, 17, 2008 each of the notes were amended to extend the maturity date of each of the notes to July 1, 2009, to increase the interest rate to 10% (effective as of January 1, 2008), to provide that each of the notes were to be convertible at the election of Mr. Ratering into shares of the Company’s Common Stock at a conversion rate of $0.08 per share and the outstanding accrued interest as of December 31, 2007 was added to the principal balance of such notes.

NOTE 22. EQUITY

Recent Conversions of Debt-to-Equity by Whitebox Affiliates

Effective April 2, 2008, the following affiliates of Whitebox Advisors, LLC converted $5,012,753 of convertible debt and $200,510 accrued interest held by those entities into an aggregate of 65,165,775 shares of the Company’s Common Stock, par value $0.001 per share, as indicated below:


Whitebox Convertible Arbitrage Partners, L.P. -			25,859,437
Whitebox Hedged High yield Partners, L.P. -			20,687,550
Whitebox Intermarket Partners, L.P. -			8,275,012
Pandora Select Partners, L.P. -			10,343,775

Effective immediately after the conversion, there are 337,816,037 shares of Registrant’s Common Stock outstanding, and Whitebox Advisors, LLC is the beneficial owner of 149,712,197 shares Registrant’s Common Stock and has rights to acquire within the next sixty days up to an additional 264,026,064 shares of Registrant’s Common Stock upon exercise of warrants and rights to convert debt. The notice for conversion of shares has been provided to the Stock transfer agent but the same have not been issued by the agent as of June 30, 2008.

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The following discussion of Sutura’s results of operations and financial condition should be read together with the Company’s December 31, 2007 audited financial statements and notes thereto included in the Company’s Annual Report on Form 10KSB. This discussion may contain forward-looking statements that involve risks and uncertainties. The risks and uncertainties include, without limitation, risks associated with the need for adoption of our new products, limited working capital, lack of profitability, exposure to intellectual property claims, dependence on key vendors, exposure to possible product liability claims, the development of new products by others, doing business in international markets, limited manufacturing experience, the availability of third party reimbursement, and actions by the FDA. Our actual results could differ materially from those anticipated in these forward-looking statements.

General

Inc. was incorporated in Delaware in 1985 under the name Orbit Technologies, Inc and changed its name to Technology Visions Group, Inc. on December 22, 2000. Pursuant to the Merger Transaction, the separate existence of Prior Sutura ceased and Technology Visions Group, Inc. continued as the surviving corporation under Delaware law. As part of the Merger Transaction, the name of the Company was changed to Sutura, Inc. Further, pursuant to the Merger Transaction, the Company issued 174,948,338 shares of common stock in the aggregate to the former stockholders of Prior Sutura and, as a result, the stockholders of Prior Sutura own approximately 95% of the Company. Accordingly, the merger has been accounted for as a recapitalization of Prior Sutura.

Sutura is a medical device company that designs, develops, and manufactures a family of patented suture mediated stitching devices for vascular tissue approximation. Sutura’s operations, to date, have consisted mainly of raising capital, research, development, and clinical testing of its SuperStitch vascular suturing devices, obtaining regulatory clearances and approvals in the U.S., Asia and Europe and limited manufacturing and sales.

Sutura has not generated any pre-tax income to date and therefore has not paid any federal income taxes since inception. No provision or benefit for federal and state income taxes has been recorded for net operating losses incurred in any period since our inception.

Sutura meets the definition of a “Small Business Issuer” as such term is defined in Item 10(a) of Regulation S-B under the Securities Exchange Act of 1934, as amended. Sutura currently has 34 employees, and maintains its headquarters in Fountain Valley, California, in a 20,000 square foot facility. This facility is a QSR (Food and Drug Administration — Quality Systems Regulations) and ISO (International Standards Organization) certified freestanding facility with 2,000 square feet of cleanroom space and an additional 3,200 square feet convertible to cleanroom, if required. Sales offices (with warehouse space) of approximately 1,000 square feet each are leased in Amsterdam, the Netherlands and La Gaude, France to support sales and marketing efforts in Europe. “Sutura(R)” and “SuperStitch(R)” are registered trademarks.

Sutura has incurred substantial losses since its inception, and has relied on investment capital and loans to fund its operations. Sutura will need to raise additional funds through issuance of debt and equity to support its planned operations and expansion. There can be no assurance that Sutura will be successful in raising any such funds or, even if successful, raising any such funds on conditions and terms favorable to Sutura. Further, failure to raise such funds on favorable terms could have a material adverse affect on the operations and financial condition of Sutura.

Critical Accounting Policies and Estimates

Sutura’s unaudited consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, and management is required to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies which Sutura believes are the most critical to aid in fully understanding and evaluating its reported financial results include the following:

Principles of consolidation

The consolidated financial statements include the accounts of Sutura Inc. and its wholly owned subsidiaries Technology Visions, Inc., Sutura BV, Sutura

SARL and Sutura GMBH. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates

Foreign Currency Translation and Transactions

Foreign assets and liabilities are translated using the period-end exchange rates. Results of operations are translated using the average exchange rates throughout the year. Translation gains or losses are accumulated as a separate component of shareholders’ equity.

Revenue Recognition

Valuation of Accounts Receivable

We maintain an allowance for uncollectible accounts receivable to estimate the risk of extending credit to customers and distributors. The allowance is estimated based on the customer or distributor’s compliance with our credit terms, the financial condition of the customer or distributor and collection history where applicable. Additional allowances could be required if the financial condition of our customers or distributors were to be impaired beyond our estimates.

Inventories

Inventories are valued at the lower of the actual cost or market (using “first-in, first-out” method). Cost includes materials, labor and production overhead. We periodically evaluate the carrying value of inventories and maintain an allowance for obsolescence to adjust the carrying value as necessary to the lower of cost or market.

Valuation of Long-Lived Assets

Property, plant and equipment, intangible and certain other long-lived assets are amortized over their useful lives. Useful lives are based on our estimate of the period that the assets will generate revenue or otherwise productively

support our business goals. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through future business operations. In our estimate, no provision for impairment is currently required on any of our long-lived assets.

Research and Development Costs

All research and development costs are charged to operations as incurred.

Stock-Based Compensation

Sutura accounts for equity instruments issued to non-employees in accordance with the provisions of Financial Accounting Standards No 123, accounting for Stock-Based Compensation, and as amended by SFAS 148, and Emerging Issues Task Force Issue No 96-18, accounting for Equity Instruments ,that are issued to Other than Employees for Acquiring, or in conjunction with Selling, Goods or Services.

Debt with Detachable Stock Purchase Warrants and Beneficial Conversion Features

The proceeds received from debt issued with detachable stock purchase warrants is allocated between the notes and the warrants, based upon the relative fair values of the two securities. The difference between the proceeds allocated to the notes and the face value of the notes is recognized as beneficial conversion feature and reflected as a discount from the convertible notes with a corresponding credit to additional paid-in capital. This beneficial conversion feature together with the value of the warrants is amortized to interest expense over the term of the debt instrument, using the effective interest method.

Reclassification of expenses

Certain prior period expenses have been reclassified to conform to current period presentation.

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

In the fourth quarter of 2006 the Company disbanded its direct US sales force for the SuperStitch devices and scaled down its international expansion. The Company has instead decided to focus its resources on the development of larger and multiple suture placement devices that address opportunities in the fast growing market of interventions with large catheter based devices in Cardiology and Radiology. In addition it is developing longer versions of its stitching devices that allow the placement of sutures inside the Vascular and cardio-vascular structures and allow physicians to address the fast growing market in PFO and other structural heart procedures. Sutura believes that in both markets its unique suture based approach will have major advantages over currently used techniques. Total headcount for the Company increased to 34 per the end of June 2008 compared to 32 per the end of December 2007.

Net Sales

Net sales increased to $152,784 and $205,164 for the three and six month periods ended June 30, 2008, compared to $57,362 and $138,978 for the three

and six month periods ended June 30, 2007. The increase in sales over last year was mainly the result of large shipments to our distributor in Russia with whom we started doing business in 2008 and new customers in France.

Cost of Sales

Cost of sales is comprised of all costs to manufacture our existing SuperStitch products, as well as start up costs for the newer versions, including materials, labor and related overhead costs including warranty and service costs. Cost of sales was $574,993 for the three months and $1,138,728 for the six month period ended June 30, 2008 compared to $425,258 and $907,575 for the same periods last year. The increase of $231,153 or 25% in spending for the 6 month period was mainly payroll related overhead expenses which increased by $118,000 as well as direct labor which increased by $55,000 and $65,000 higher component expenses in manufacturing for the high startup manufacturing activity for both the 12Fr SuperStitch and the long EL version.

Manufacturing headcount increased from 13 per the end of December 2007 to 15 per the end of June 2008.

Research and Development

Research and development expenses consist of engineering personnel salaries and benefits, prototype supplies, contract services and consulting fees related to product development. Research and development expenses increased by 86% to $212,682 in the quarter and by 57% to $436,105 for the six month period ended June, 30 2008 from $114,157 and $276,748 in the quarter and six month periods ended June 30, 2007. The increase of $159,359 for the six months period consisted mainly of $155,000 in higher expenses for clinical trials including consultants.

General and Administrative

General and administrative expenses consist of salaries and benefits of administrative personnel as well as insurance, professional and regulatory fees and provisions for doubtful accounts. General and administrative expenses were $723,155 or 73% higher at $1,714,930 in the quarter ended June 30, 2008 compared to $991,775 in the quarter ended June 2007. In the quarter we recorded $476,000 higher payroll expenses mainly due to a settlement with our former CEO, $105,000 higher travel expenses mainly for clinical trials in Europe, $80,000 higher board compensation and liability insurance, $40,000 higher financial consultant expenses and $25,000 higher building maintenance expenses. For the six month period our G&A expenses were 33% higher at $2,906,346 compared to $2,183,160 the same period a year ago. For the six months we recorded $565,0000 higher payroll expenses, 95,000 consulting expenses, $160,000 higher travel and car expenses, $80,000 higher board compensation and liability insurance,$38,000 higher general and $55,000 higher building maintenance. These higher expenses were offset in part by a reduction in legal expenses of $328,000.

Sales and Marketing

Sales and marketing expenses consist of salaries and benefits, commissions, and other costs related to our support staff, advertising costs and expenses related to trade shows, distributor support and seminars.

Headcount in Sales and Marketing was 4 per the end of June 30, 2008. Total expenses were 282,513 in the quarter ended June 30, 2008 up 55% from $181,163 in the quarter ended June 2007. The company participated in the European cardiology meeting in Barcelona as well as in a smaller meeting in Frankfurt,

Germany and incurred higher travel and entertainment as well as exhibition expenses than last year.

Interest income/expense

Interest income for the three and six month periods ended June 30, 2008 was $139,622 and $ 307,790 respectively compared to $1,504 and $8,440 respectively in the three and six month periods ended June 30, 2007. Most of the cash received from the patent settlement in December has been invested in notes and Certificates of Deposits.

Interest expenses for the three month period ended June 30, 2008 increased by 16% to $618,495 compared to $531,785 in the three months period ended June 30, 2007. For the six month period interest expenses increased by 34% to $1,387,106 compared to $1,033,062 last year. The increase in interest is a direct consequence of additional borrowing, higher interest rates on most of the Whitebox notes as well as the expense of extending the term on most notes. The lower increase in the second quarter is the result of conversion of $5,012,752 notes at 12% interest into shares on April 2^nd 2008. In addition to the interest the company amortizes the fair value of the warrants and the beneficial conversion feature of the notes over the term of the notes. In the three and six month periods ended June 30, 2008 $342,851 and $700,266 was expensed compared to $580,657 and $1,150,606 in the same periods last year.

Interest expenses.


	Three months		Three months		Year to date		Year to date
	2008		2007		2008		2007

Note payable related party in Euros	$	3,875	$	3,057	$	7,483	$	5,972
Note payable officer		25,013		18,528		50,026		37,056
Whitebox I		52,012		196,500		254,407		393,000
Whitebox I Consent fee		24,563				49,126
Whitebox I Interest note		6,072				12,144		—
WhiteboxII		92,700		90,000		185,400		180,000
WhiteboxII consent fee		11,250				22,500
Whitebox II Interest note		2,781				5,562		—
Whitebox III		216,300		140,000		432,600		280,000
WhiteboxII consent fee		26,250				52,500
Whitebox III Interest note		4,879				9,758		—
Idylwood Partners L. P.		—		15,000		—		30,000
Whitebox V		30,000		30,000		60,000		60,000
Whitebox V Interest note		900		—		1,800		—
Whitebox VI		30,000		30,000		60,000		38,333
Whitebox VI Interest note		900		—		1,800		—
Synapse		8,000		2,667		16,000		2,667
Whitebox VII		51,000		6,034		102,000		6,034
Officers		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	$	—	$	582,754
Whitebox I BCF consent fee		20,420				40,840
Whitebox II		—		33,938		c		67,876
Whitebox II BCF consent fee		9,353		—		18,706		—
Whitebox III		178,463		148,015		348,772		289,267
Whitebox III BCF consent fee		21,823		—		43,646		—
Idylwood Partners L. P.		—		13,889		—		34,722
Whitebox V		112,792		93,438		248,302		175,987

Total conversion feature expense	$	342,851	$	580,657	$	700,266	$	1,150,606

Total interest and conversion expenses	$	961,345	$	1,112,442	$	2,087,371	$	2,183,668

Liquidity and Capital Resources

During the six month period ended June 30, 2008 the Company used $6,689,531 of cash in operating activities. Most of this amount was to finance the operating loss but in addition there was an amount of $1,532,000 to pay back owed salaries accrued on the company books in prior periods. At June 30, 2008 we used $3,060,000 to pay back on their due date two notes issued to Whitebox in 2006 and 2007.

At June 30, 2008, we had cash, cash equivalents, restricted cash equivalents and marketable securities available for sale of $9,466,034. We believe that current cash and cash equivalents and marketable securities, together with cash receipts generated from sales of the SuperStitch products, will be sufficient to meet anticipated cash needs for operating and capital expenditures through at least December 31, 2008. Nevertheless, we expect to continue to incur substantial costs and cash outlays in 2008 and beyond to support SuperStitch research and development. In 2009 we will require additional funding to continue our operations and will attempt to raise the required capital through either debt or equity arrangements. We cannot provide any assurance that the required capital will be available on acceptable terms, if at all, or that any financing activity would not be dilutive to our current stockholders. If we are not able to raise additional funds, we would likely be required to significantly curtail or halt our operations and this would have a material adverse effect on our financial position, results of There can be no assurance that any of these funding will be consummated in the timeframes needed for continuing operations or on terms favorable to us. If adequate funds are not available, we will be required to significantly curtail our operating plans and/or possibly cease operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a “smaller reporting company”, we are not required to provide the information required by this Item.

ITEM 4T. CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer, Brian Abrahams, Chief Financial Officer, Richard Bjorkman, and Chief Operations Officer, Anthony Nobles, we have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that review, our Chief Executive Officer, Chief Financial Officer and Chief Operations Officer concluded that, as of the evaluation date, our controls and procedures are effective to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all

control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

There have been no changes in internal control financial reporting that occurred during the fiscal period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On June 30, 2005, certain stockholders of Prior Sutura filed two separate, but related, complaints in the Superior Court of the State of California, County of Orange-Central Justice Center. The Company and the primary plaintiffs in the two actions (Synapse Fund I, Synapse Fund II and Go Industries, Inc.) held settlement discussions to resolve the disputes raised in these two complaints, and reached an agreement in principal to settle the litigation between the parties. The settlement agreement was approved by the Superior Court on June 1, 2007. Among other terms, as part of the settlement agreement the Company delivered to Synapse Fund I, LLC, for the benefit of all plaintiffs, a convertible secured promissory note in the principal amount of $400,000. The settlement agreement also contained certain covenants of Messrs. Nobles and Ratering and mutual releases between the parties. The convertible secured promissory note bears interest at 8% per annum, payable quarterly in arrears, and may be paid in capital stock at a conversion rate of $0.08 per share. The principal amount of the note, together with any accrued but unpaid interest will be due and payable in eighteen (18) months or may be converted pursuant to the terms of the note at the rate of $0.15 per share. Lastly, in connection with the settlement agreement, the Company has agreed to provide the plaintiffs with rights to have the shares issuable upon conversion of principal or interest due under the note to be registered for resale pursuant to the Securities Act of 1933 if at any time any Whitebox affiliate exercises its rights to require shares of the Company to be registered.

October 31, 2007. The Parties then agreed that Plaintiff’s claims against Defendants are subject to a written arbitration agreement and have therefore agreed that the case be stayed and submitted to binding arbitration. On January 31, 2008, the court stayed this case pending binding arbitration. In early August, 2008, the parties agreed to dismiss the entire action without prejudice and enter into a tolling agreement, tolling the running of any statute of limitations until January 30, 2009.

ITEM 2. CHANGES IN SECURITIES

Effective April 2, 2008, the following affiliates of Whitebox Advisors, LLC converted $5,012,752.50 of convertible debt and $200,510 accrued interest held by those entities into an aggregate of 65,165,775 shares of the Company’s Common Stock, par value $0.001 per share, as indicated below:


Whitebox Convertible Arbitrage Partners, L.P. -			25,859,437
Whitebox Hedged High yield Partners, L.P. -			20,687,550
Whitebox Intermarket Partners, L.P. -			8,275,012
Pandora Select Partners, L.P. -			10,343,775

The 65,165,775 shares of restricted common stock issued to the affiliates of Whitebox Advisors, LLC are exempt from registration requirements pursuant to Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

(a) Exhibits


3.1		Certificate of Incorporation¹

3.2		Certificate of Amendment to Certificate of Incorporation²

3.3		Certificate of Amendment to Certificate of Incorporation⁷

3.4		Certificate of Merger⁷

3.5		Bylaws⁷


10.9		Option and Distribution Agreement with Getz Bros. & Co., Inc., dated September 20, 2002⁷

10.10		Convertible Promissory Note in Favor of Getz Bros. & Co., Inc., dated September 20, 2002⁷

10.11		Purchase Agreement, dated as of September 17, 2004 by and between Sutura, Inc. and certain other parties thereto.³

10.12		Purchase Agreement, dated as of March 24, 2005 by and between Sutura, Inc. and certain other parties thereto.³

10.13		Form of Secured Convertible Promissory Note, dated September 17, 2004.³

10.14		Form of Secured Convertible Promissory Note dated March 24, 2005.³

10.15		Form of Warrant, dated September 17, 2004.³

10.16		Form of Warrant dated, March 24, 2005.³

10.17		Purchase Agreement, dated September 9, 2005 by and between Sutura, Inc. and certain other parties thereto.³

10.18		Second Amended Security Agreement, dated September 9, 2005 by and between Sutura, Inc. and certain other parties thereto.³

10.19		Second Amended Patent and Trademark Security Agreement, dated September 7, 2005 by and between Sutura, Inc. and certain other parties thereto.³

10.20		Second Amended Registration Rights Agreement, dated September 7, 2005 by and between Sutura, Inc. and certain other parties thereto.³

10.21		Form of Secured Convertible Promissory Note, dated September 7, 2005.³

10.22		Form of Warrant dated September 7, 2004.³


10.23		Amendment to Secured Convertible Promissory Notes and Warrants, dated September 7, 2005 by and between Sutura, Inc. and certain other parties thereto.³

10.24		Amendment to Secured Convertible Promissory Notes and Warrants, dated June 30, 2006 by and between Sutura, Inc. and certain other parties thereto.⁴

10.25		Agreement and Plan of Merger dated November 22, 2004.⁵

10.26		Distributor Agreement with Getz Bros & Co., Inc. dated September 20, 2002. ⁷

10.27		Distribution Agreement with The Lifemed Group, Inc. dated January 16, 2006.⁷

10.28		Form of Secured Convertible Promissory Note, dated June 7, 2006.⁸

10.29		Third Amended Security Agreement, dated June 7, 2006, by and between Sutura, Inc., and certain other parties thereto.⁸

10.30		Third Amended Patent and Trademark Security Agreement, dated June 7, 2006, by and between Sutura, Inc., and certain other parties thereto.⁸

10.31		Form of Secured Convertible Promissory Note, dated June 28, 2006.⁹

10.32		Fourth Amended Security Agreement, dated June 28, 2006, by and between Sutura, Inc., and certain other parties thereto.⁹

10.33		Fourth Amended Patent and Trademark Security Agreement, dated June 28, 2006, by and between Sutura, Inc., and certain other parties thereto.⁹

10.34		Securities Purchase Agreement dated, August 25, 2006, by and between Sutura, Inc., and certain other parties thereto.¹⁰

10.35		Third Amended Registration Rights Agreement, dated August 25, 2006, by and between Sutura, Inc., and certain other parties thereto.¹⁰

10.36		Side Agreement, dated August 25, 2006, by and between Sutura, Inc., and certain parties thereto.¹⁰

10.37		Form of Warrant, dated August 25, 2006.¹⁰

10.38		Purchase Agreement, dated December 13, 2006.¹¹

10.39		Form of Secured Convertible Promissory Note, dated December 13, 2006.¹¹

10.40		Fourth Amended Security Agreement, dated December 13, 2006, by and between Sutura, Inc. and certain other parties thereto.¹¹

10.41		Fourth Amended Patent and Trademark Security Agreement, dated December 13, 2006, by and between Sutura, Inc., and certain other parties thereto.¹¹

10.42		Fourth Amended Registration Rights Agreement, dated December 13, 2006, by and between Sutura, Inc., and certain other parties thereto.¹¹

10.43		Form of Unsecured Promissory Note, dated May 18, 2006.₁₂

10.44		Form of Unsecured Promissory Note, dated June 13, 2006.₁₃

10.45		Settlement Agreement and Release.

10.46		Secured Convertible Promissory Note, dated June 1, 2007.



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 thereto

14.1		Code of ethics for the Board of Directors.⁶

14.2		Code of ethics for Executive Officers.⁶

31.1		Certification of the Chief Executive Officer of Sutura, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of the Chief Financial Officer of Sutura, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of the Chief Executive Officer of Sutura, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


PART I

Item 1. Financial Statements

Consolidated Balance Sheet on June 30, 2008 (Unaudited) and December 31, 2007

Consolidated 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 Operations

Item 3. Qualitative and Quantitative Disclosures About Market Risk

Item 4T. Controls and Procedures

PART II

Item 1. Legal Proceedings

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 3. Defaults Upon Senior Securities

Item 4. Submission of Matters to a Vote of Security Holders

Item 5. Other Information

Item 6. Exhibits

Signatures
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2


4.1		Form of Common Stock Certificate¹

10.1		Sutura Inc. 2001 Stock Option Plan⁷

10.2		Sutura Inc. 1999 Stock Option Plan⁷

10.3		Employment Agreement with Egbert Ratering⁷

10.4		Employment Agreement with Anthony Nobles⁷

10.5		Sutura Inc. 2006 Stock Option Plan⁷

10.6		Lease for Fountain Valley Location⁷

10.7		Sucor License Agreement⁷

10.8		Sterilis License Agreement⁷


	SUTURA, INC.
	Registrant

Date: August 19, 2008	By:	/s/ Brian Abraham
		Brian Abraham, Chief Executive Officer

Date: August 19, 2008	By:	/s/ Richard Bjorkman

		Richard Bjorkman, Chief Financial Officer

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