Form 8-K/A for SUTURA, INC.
23-Dec-2008
Non-Reliance on Previous Financials, Audits or Interim Review, Financial Statement
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a
Related Audit Report or Completed Interim Review.
On July 1, 2007, Registrant and the Whitebox affiliated parties amended the Whitebox I, Whitebox II and Whitebox III convertible notes. Included in the amendments was an extension of the maturity dates of each of the notes until July 1, 2009, payment of a 3% consent fee, and a reduction to the conversion rate to $.08 per share. At the time of the amendment of the Notes, Registrant determined that there was no intrinsic value resulting from the reduction of the conversion price to $.08 and did not treat the amendments as new loans as the notes were amended and new notes were not issued.
However, in response to a comment letter received from the United States Securities and Exchange Commission ("SEC") and discussions with the SEC Staff, Registrant determined that the July 1st, 2007 extension and changes in the terms of the Whitebox Notes I, II and III should have been accounted for as new notes rather than extensions of existing notes per FASB EITF 96-17. Accordingly, certain balance sheet entries, loss figures and expense figures in the Registrant's Quarterly Reports for the periods ended September 30, 2007, March 31, 2008 and June 30, 2008 should not be relied upon as indicated below. Further, the accumulated deficit amounts contained in Registrant's Annual Report for the year-ended December 31, 2007 should not be relied upon as indicated below.
The difference is the immediate amortization of the $634,996 beneficial conversion feature on our books as of July 1st, 2007 rather than amortization per our original schedule. For purposes of Registrant's Quarterly Report for the period ending September 30, 2008, and for periods thereafter, the September 30, 2007 outstanding notes payables will be increased by $634,996 and third quarter 2007 interest expenses also by $634,996. The effect of these corrections on the third quarter of 2007 was an increase in interest expenses from $998,992 to $1,633,988. The net loss from operations increased from $2,936,132 to $3,571,128. For the year to date end of September 2007, interest expenses increased from $3,182,660 to $ $3,817,656 and the net loss increased from $8,674,288 till $9,309,284. In the balance sheet for Registrant's Annual Report for the year ended December 31, 2007 accumulated deficit was increased by $472,467 from $57,661,739 to $58,134,208.
Accordingly, on or about November 18, 2008, for the reasons stated above, we concluded that the (i) Unaudited Consolidated Balance Sheets on September 30, 2007, March 31, 2008 and June 30, 2008; (ii) Unaudited Consolidated Statements for Operations for the periods ended September 30, 2007, March 31, 2008 and June 30, 2008, and (iii) Audited Consolidated Balance Sheet as of December 31, 2007 should no longer be relied upon because of errors in those financial statements as indicated in this Current Report.
Authorized officers discussed with the Registrant's independent accountant the matters disclosed in this Current Report.
