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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
September 30, 2007
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934For the transition
periodto
 Commission File Number 001-33744
 TRANS1 INC.
  DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    33-0909022
(I.R.S. employer
identification no.)
 411 LANDMARK DRIVE, WILMINGTON, NC 28412-6303
 (910) 332-1700
 o þ
  o o þ
 o þ




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PART I.
    
    FINANCIAL INFORMATION
    
    
    1Item 1.
    
    Consolidated Financial Statements(unaudited)
    
    
    1Consolidated Statements of Operations
    
    
    1Consolidated Balance Sheets
    
    
    2Consolidated Statements of Cash Flows
    
    
    3Notes to Consolidated Financial Statements
    
    
    4Item 2.
    
    Managements
Discussion and Analysis of Financial Condition and Results of Operations
    
    
    8Item 3.
    
    Quantitative and
Qualitative Disclosures About Market Risk
    
    
    14Item 4T.
    
    Controls and Procedures
    
    
    15PART II.
    
    OTHER INFORMATION
    
    
    15Item 1A.
    
    Risk Factors
    
    
    15Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    37Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    38Item 6.
    
    Exhibits
    
    
    39SIGNATURES
    
    
    40EXHIBIT INDEX
    
    
    41EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2




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PART I. FINANCIAL INFORMATION
 
 Item 1. Consolidated Financial Statements.
 
 TranS1 Inc.
Consolidated Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
 Three Months Ended Sept. 30,
    
    
    Nine Months Ended Sept. 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenue
    
    $
    4,327
    
    
    $
    1,367
    
    
    $
    11,514
    
    
    $
    3,528Cost of revenue
    
    
    754
    
    
    
    334
    
    
    
    2,213
    
    
    
    949Gross profit
    
    
    3,573
    
    
    
    1,033
    
    
    
    9,301
    
    
    
    2,579Operating expenses:Research and development
    
    
    1,320
    
    
    
    1,025
    
    
    
    3,599
    
    
    
    3,118Sales and marketing
    
    
    3,780
    
    
    
    2,368
    
    
    
    10,616
    
    
    
    6,318General and administrative
    
    
    812
    
    
    
    293
    
    
    
    1,895
    
    
    
    917Total operating expenses
    
    
    5,912
    
    
    
    3,686
    
    
    
    16,110
    
    
    
    10,353Operating loss
    
    
    (2,339
    )
    
    
    (2,653
    )
    
    
    (6,809
    )
    
    
    (7,774
    )Interest income
    
    
    125
    
    
    
    248
    
    
    
    468
    
    
    
    776Net loss
    
    $
    (2,214
    )
    
    $
    (2,405
    )
    
    $
    (6,341
    )
    
    $
    (6,998
    )Net loss per
common share  basic and
diluted
    
    $
    (0.87
    )
    
    $
    (0.99
    )
    
    $
    (2.54
    )
    
    $
    (2.89
    )Weighted average common shares
outstanding  basic and diluted
    
    
    2,549
    
    
    
    2,421
    
    
    
    2,495
    
    
    
    2,419
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TranS1 Inc.
Consolidated Balance Sheets
(in thousands)
 September 30,
    
    
    December 31,2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    5,304
    
    
    $
    5,034Short-term investments
    
    
    2,067
    
    
    
    9,928Accounts receivable, net
    
    
    3,822
    
    
    
    1,620Inventory
    
    
    3,703
    
    
    
    2,080Prepaid expenses and other assets
    
    
    386
    
    
    
    230Total current assets
    
    
    15,282
    
    
    
    18,892Property and equipment, net
    
    
    1,115
    
    
    
    1,112Deferred financing costs
    
    
    1,214
    
    
    
    Total assets
    
    $
    17,611
    
    
    $
    20,004Liabilities and Stockholders DeficitCurrent liabilities:Accounts payable
    
    $
    1,842
    
    
    $
    843Accrued expenses
    
    
    1,667
    
    
    
    601Total current liabilities
    
    
    3,509
    
    
    
    1,444Preferred stock
    
    
    40,089
    
    
    
    40,089CommitmentsStockholders deficit:Common stock
    
    
    
    
    
    
    Additional paid-in capital
    
    
    2,666
    
    
    
    820Notes receivable for common stock
    
    
    
    
    
    
    (38
    )Accumulated deficit
    
    
    (28,653
    )
    
    
    (22,311
    )Total stockholders deficit
    
    
    (25,987
    )
    
    
    (21,529
    )Total liabilities and stockholders deficit
    
    $
    17,611
    
    
    $
    20,004
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TranS1 Inc.
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
 Nine Months Ended Sept. 30,2007
    
    
    2006Cash flows from operating activities:Net loss
    
    $
    (6,341
    )
    
    $
    (6,998
    )Adjustments to reconcile net loss to net cash used in operating
activities:Depreciation
    
    
    410
    
    
    
    151Stock-based compensation
    
    
    1,774
    
    
    
    Changes in operating assets and liabilities:Increase in accounts receivable
    
    
    (2,199
    )
    
    
    (384
    )Increase in inventory
    
    
    (1,623
    )
    
    
    (1,120
    )(Increase) decrease in prepaid expenses
    
    
    (154
    )
    
    
    (71
    )Increase (decrease) in accounts payable
    
    
    1,001
    
    
    
    237Increase in accrued liabilities
    
    
    1,062
    
    
    
    329Net cash used in operating activities
    
    
    (6,070
    )
    
    
    (7,856
    )Cash flows from investing activities:Purchase of property and equipment
    
    
    (414
    )
    
    
    (384
    )Purchases of short-term investments
    
    
    (2,783
    )
    
    
    (10,130
    )Sales of short-term investments
    
    
    10,644
    
    
    
    8,090Net cash provided by (used in) investing activities
    
    
    7,447
    
    
    
    (2,424
    )Cash flows from financing activities:Proceeds from issuance of common stock
    
    
    107
    
    
    
    Deferred financing costs
    
    
    (1,214
    )
    
    
    Net cash used in financing activities
    
    
    (1,107
    )
    
    
    Net increase (decrease) in cash and cash equivalents
    
    
    270
    
    
    
    (10,280
    )Cash and cash equivalents, beginning of period
    
    
    5,034
    
    
    
    20,544Cash and cash equivalents, end of period
    
    $
    5,304
    
    
    $
    10,264
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TranS1 Inc.
 1. Description of Business
 ® TM TM
 ® ® TM TM TM TM TM TM
 2. Basis of presentation
  Impact of Recently Issued Accounting Standards
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3. Subsequent events
    4. Income taxes
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5. Income (loss) per share
   Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,2007
    
    2006
    
    2007
    
    2006Convertible preferred stock
    
    
    10,793,165
    
    
    
    10,793,165
    
    
    
    10,793,165
    
    
    
    10,793,165Weighted average stock options
outstanding
    
    
    2,124,134
    
    
    
    1,106,301
    
    
    
    1,856,215
    
    
    
    1,107,158
 6. Accounts receivable, net
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Gross accounts receivable
    
    $
    3,880
    
    
    $
    1,649Allowance for uncollectible accounts
    
    
    (58
    )
    
    
    (29
    )Total accounts receivable, net
    
    $
    3,822
    
    
    $
    1,620
 7. Inventories
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Finished goods
    
    $
    1,527
    
    
    $
    853Work-in-process
    
    
    1,968
    
    
    
    1,080Raw materials
    
    
    208
    
    
    
    147Total inventories
    
    $
    3,703
    
    
    $
    2,080
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8. Accrued Expenses
  September 30,
    
    
    December 31,2007
    
    
    2006(In thousands)Legal and professional fees
    
    $
    726
    
    
    $
    148Commissions
    
    
    345
    
    
    
    209Bonuses
    
    
    359
    
    
    
    167Other
    
    
    237
    
    
    
    77Total accrued expenses
    
    $
    1,667
    
    
    $
    601
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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 The following discussion of our financial condition and results of operations should be read in
conjunction with our financial statements and the related notes to our financial statements
included in this report. In addition to historical financial information, this report contains
forward-looking statements that have been made pursuant to the provisions of the Private Securities
Litigation Reform Act of 1995 and concern matters that involve risks and uncertainties that could
cause actual results to differ materially from those projected in the forward-looking statements.
All statements other than statements of historical fact contained in this report, including
statements regarding future events, our future financial performance, business strategy and plans
and objectives of management for future operations, are forward-looking statements. We have
attempted to identify forward-looking statements by terminology including anticipates,
believes, can, continue, could, estimates, expects, intends, may, plans,
potential, predicts, should or will or the negative of these terms or other comparable
terminology. Although we do not make forward-looking statements unless we believe we have a
reasonable basis for doing so, we cannot guarantee their accuracy. Such forward-looking statements
are subject to risks, uncertainties and other factors that could cause actual results and the
timing of certain events to differ materially from future results expressed or implied by such
forward-looking statements. Readers are urged to carefully review and consider the various
disclosures made by us, which attempt to advise interested parties of the risks, uncertainties, and
other factors that affect our business, operating results, financial condition and stock price,
including without limitation the disclosures made under the captions Managements Discussion and
Analysis of Financial Condition and Results of Operations and Risk Factors in this report and in
the financial statements and notes thereto included elsewhere in this report, as well as the
disclosures made under the captions Managements Discussion and Analysis of Financial Condition
and Results of Operations, Risk Factors, Financial Statements and Notes to Financial
Statements included in our prospectus filed with the SEC on October 17, 2007 pursuant to Rule
4 24(b)(4) of the Securities Act of 1933, as amended, or the Securities Act, in connection with our
initial public offering of common stock. Furthermore, such forward-looking statements speak only as
of the date of this report. We expressly disclaim any intent or obligation to update any
forward-looking statements after the date hereof to conform such statements to actual results or to
changes in our opinions or expectations.
 Overview
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Financial Operations
 Revenue
  Cost of Revenue
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Research and Development
  Sales and Marketing
  General and Administrative
  Interest Income (Expense)
  Results of Operations
 Comparison of Three Months and Nine Months Ended September 30, 2006 and 2007
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Liquidity and Capital Resources
 Sources of Liquidity
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Cash Flows
    Operating Capital and Capital Expenditure Requirements
  Critical Accounting Policies and Estimates
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New Accounting Standards
    
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
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Item 4T. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
 Investing in our common stock involves a high degree of risk. You should carefully consider the
following risk factors, as well as the other information in this report, before deciding whether to
invest in shares of our common stock. If any of the following risks actually occur, our business,
financial condition, operating results and prospects would suffer. In that case, the trading price
of our common stock would likely decline and you might lose all or part of your investment in our
common stock. The risks described below are not the only ones we face. Additional risks that we
currently do not know about or that we currently believe to be immaterial may also impair our
operations and business results.
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Risks Related to Our Business
 To be commercially successful, spine surgeons must accept that our products are a safe and
effective alternative to existing surgical treatments of certain spine disorders.
  
    
    lack of long-term clinical data supporting additional patient benefits;
    
    lack of experience with our products;
    
    lack of evidence supporting cost savings of our procedure over existing surgical
alternatives;
    
    perceived liability risks generally associated with the use of new products and
procedures;
    
    training time required to use a new product; and
    
    availability of adequate coverage and reimbursement for hospitals and surgeons.
  The efficacy of our products is not yet supported by long-term clinical data and may therefore
prove to be less effective than initially thought.
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Our future growth depends on increasing physician awareness of our TranS1 approach and our related
products for appropriate treatment, intervention and referral.
  We have a limited operating history and have incurred losses since inception and we expect to incur
increasing losses for the foreseeable future. We may never achieve or sustain profitability.
  We are in a highly competitive market segment, which is subject to rapid technological change. If
our competitors are better able to develop and market products that are safer, more effective, less
costly or otherwise more attractive than any products that we may develop, our ability to generate
revenue will be reduced or eliminated.
  
    
    greater financial and human resources for product development, sales and marketing and
patent litigation;
    
    significantly greater name recognition;
    
    established relationships with spine surgeons, customers and third-party payors;
    
    additional lines of products, and the ability to offer rebates or bundle products to offer
greater discounts or incentives to gain a competitive advantage;
    
    established sales and marketing, and distribution networks; and
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
    
    greater experience in conducting research and development, manufacturing, clinical trials,
preparing regulatory submissions and obtaining regulatory clearance or approval for products and
marketing approved products.
  Our failure to continue building effective sales and marketing capabilities for our products could
significantly impair our ability to increase sales of our products.
  The demand for our products and the prices which customers and patients are willing to pay for our
products depend upon the ability of our customers to obtain adequate third-party coverage and
reimbursement for their purchases of our products.
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Our future success depends on our ability to timely develop, receive regulatory clearance or
approval, and introduce new products or product enhancements that will be accepted by the market.
  19




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
    
    properly identify and anticipate spine surgeon and patient needs;
    
    develop and introduce new products or product enhancements in a timely manner;
    
    avoid infringing upon the intellectual property rights of third parties;
    
    demonstrate, if required, the safety and efficacy of new products with data from
preclinical studies and clinical trials;
    
    obtain the necessary regulatory clearances or approvals for new products or product
enhancements;
    
    be fully FDA-compliant with marketing of new devices or modified products;
    
    provide adequate training to potential users of our products;
    
    receive adequate coverage and reimbursement for procedures performed with our products;
and
    
    develop an effective and FDA-compliant, dedicated marketing and distribution network.
  If clinical trials of our current or future product candidates do not produce results necessary to
support regulatory clearance or approval in the United States or elsewhere, we will be unable to
commercialize these products.
  
    
    the FDA, institutional review boards or other regulatory authorities do not approve a
clinical study protocol, force us to modify a previously approved protocol, or place a clinical
study on hold;
    
    patients do not enroll in, or enroll at the expected rate, or complete a clinical study;
    
    patients or investigators do not comply with study protocols;
    
    patients do not return for post-treatment follow-up at the expected rate;
    
    patients experience serious or unexpected adverse side effects for a variety of reasons
that may or may not be related to our products such as the advanced stage of co-morbidities that
may exist at the time of treatment, causing a clinical study to be put on hold;
    
    sites participating in an ongoing clinical study may withdraw, requiring us to engage new
sites;
    
    difficulties or delays associated with bringing additional clinical sites on-line;
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
    
    third-party clinical investigators decline to participate in our clinical studies, do not
perform the clinical studies on the anticipated schedule or consistent with the investigator
agreement, clinical study protocol, good clinical practices, and other FDA and Institutional Review
Board requirements;
    
    third-party organizations do not perform data collection and analysis in a timely or
accurate manner;
    
    regulatory inspections of our clinical studies require us to undertake corrective action
or suspend or terminate our clinical studies;
    
    changes in U.S. federal, state, or foreign governmental statutes, regulations or policies;
    
    interim results are inconclusive or unfavorable as to immediate and long-term safety or
efficacy; or
    
    the study design is inadequate to demonstrate safety and efficacy.
  Our international operations subject us to certain operating risks, which could adversely impact
our net sales, results of operations and financial condition.
   
    
    the imposition of additional U.S. and foreign governmental controls or regulations;
    
    the imposition of costly and lengthy new export licensing requirements;
    
    the imposition of U.S. or international sanctions against a country, company, person or
entity with whom we do business that would restrict or prohibit continued business with the
sanctioned country, company, person or entity;
    
    economic instability;
    
    a shortage of high-quality sales people and distributors;
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
    
    changes in third-party reimbursement policies that may require some of the patients who
receive our products to directly absorb medical costs or that may necessitate the reduction of the
selling prices of our products;
    
    changes in duties and tariffs, license obligations and other non-tariff barriers to trade;
    
    the imposition of new trade restrictions;
    
    the imposition of restrictions on the activities of foreign agents, representatives and
distributors;
    
    scrutiny of foreign tax authorities which could result in significant fines, penalties and
additional taxes being imposed on us;
    
    pricing pressure that we may experience internationally;
    
    laws and business practices favoring local companies;
    
    longer payment cycles;
    
    difficulties in maintaining consistency with our internal guidelines;
    
    difficulties in enforcing agreements and collecting receivables through certain foreign
legal systems; and
    
    difficulties in enforcing or defending intellectual property rights.
  The use, misuse or off-label use of our products may harm our image in the marketplace or result in
injuries that lead to product liability suits, which could be costly to our business or result in
FDA sanctions if we are deemed to have engaged in such promotion.
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We purchase some of the key components of our products from single suppliers. The loss of these
suppliers could prevent or delay shipments of our products or delay our clinical trials or
otherwise adversely affect our business.
   We depend on our officers and other key employees, and if we are not able to retain and motivate
them or recruit additional qualified personnel, our business will suffer.
  If we fail to properly manage our anticipated growth, our business could suffer.
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We may
need substantial additional funding beyond the proceeds from our
initial public offering and may be unable
to raise capital when needed, which would force us to delay, reduce, eliminate or abandon our
commercialization efforts or product development programs.
  
    
    expand the commercialization of our products;
    
    fund our operations and clinical trials;
    
    continue our research and development;
    
    defend, in litigation or otherwise, any claims that we infringe third-party patents or
other intellectual property rights;
    
    address FDA or other governmental, legal/enforcement actions and remediate underlying
problems
    
    commercialize our new products, if any such products receive regulatory clearance or
approval for commercial sale; and
    
    acquire companies and in-license products or intellectual property.
  
    
    market acceptance of our products;
    
    the scope, rate of progress and cost of our clinical trials;
    
    the cost of our research and development activities;
    
    the cost of filing and prosecuting patent applications and defending and enforcing our
patent and other intellectual property rights;
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
    
    the cost of defending, in litigation or otherwise, any claims that we infringe third-party
patent or other intellectual property rights;
    
    the cost and timing of additional regulatory clearances or approvals;
    
    the cost and timing of establishing additional sales, marketing and distribution
capabilities;
    
    the effect of competing technological and market developments; and
    
    the extent to which we acquire or invest in businesses, products and technologies, although
we currently have no commitments or agreements relating to any of these types of transactions.
   If we choose to acquire new businesses, products or technologies, we may experience difficulty in
the identification or integration of any such acquisition, and our business may suffer.
  Consolidation in the healthcare industry could lead to demands for price concessions or to the
exclusion of some suppliers from certain of our markets, which could have an adverse effect on our
business, financial condition or results of operations.
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We face the risk of product liability or other claims and may not be able to obtain sufficient
insurance coverage, if at all.
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If our independent contract manufacturers fail to timely deliver to us sufficient quantities of
some of our products and components in a timely manner, our operations may be harmed.
  
    
    inadequate capacity of the manufacturers facilities;
    
    interruptions in access to certain process technologies; and
    
    reduced control over product availability, quality, delivery schedules, manufacturing
yields and costs.
    We operate at a single location. Any disruption in this facility or any inability to ship a
sufficient number of our products to meet demand could adversely affect our business and results of
operations.
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We have minimal experience operating as a public company. Compliance with public company
requirements will increase our costs and require additional management resources, and we still may
fail to comply.
  Changes to existing accounting pronouncements regarding stock-based compensation may affect how we
conduct our business and affect our reported results of operations.
  Risks Related to Regulatory Environment
 If we fail to maintain regulatory approvals and clearances, or are unable to obtain, or experience
significant delays in obtaining, FDA clearances or approvals for our future products or product
modifications, our ability to commercially distribute and market these products could suffer.
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Modifications to our marketed products may require new 510(k) clearances or PMA approvals, or may
require us to cease marketing or recall the modified products until clearances or approvals are
obtained.
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Clinical trials necessary to support a PMA application will be expensive and will require the
enrollment of large numbers of patients, and suitable patients may be difficult to identify and
recruit. Delays or failures in our clinical trials will prevent us from commercializing any
modified or new products and will adversely affect our business, operating results and prospects.
    If the third parties on which we rely to conduct our clinical trials and to assist us with
pre-clinical development do not perform as contractually required or expected, we may not be able
to obtain regulatory clearance or approval for or commercialize our products.
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Even if our products are approved by regulatory authorities, if we or our suppliers fail to comply
with ongoing FDA or other foreign regulatory authority requirements, or if we experience
unanticipated problems with our products, these products could be subject to restrictions or
withdrawal from the market.
  
    
    warning letters or untitled letters;
    
    fines and civil penalties;
    
    unanticipated expenditures to address or defend such actions;
    
    delays in clearing or approving, or refusal to clear or approve, our products;
    
    withdrawal or suspension of approval of our products or those of our third-party suppliers
by the FDA or other regulatory bodies;
    
    product recall or seizure;
    
    orders for physician notification or device repair, replacement or refund;
    
    interruption of production;
    
    operating restrictions;
    
    injunctions; and
    
    criminal prosecution.
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We may be subject to or otherwise affected by federal and state healthcare laws, including fraud
and abuse and health information privacy and security laws, and could face substantial penalties if
we are unable to fully comply with such laws.
  
    
    the federal Anti-Kickback Law, which constrains our marketing practices and those of our
independent sales agents and distributors, educational programs, pricing policies, and
relationships with healthcare providers, by prohibiting, among other things, soliciting, receiving,
offering or providing remuneration, intended to induce the purchase or recommendation of an item or
service reimbursable under a federal healthcare program (such as the Medicare or Medicaid
programs);
    
    federal false claims laws which prohibit, among other things, knowingly presenting, or
causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors
that are false or fraudulent;
    
    the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, and its
implementing regulations, which created federal criminal laws that prohibit executing a scheme to
defraud any healthcare benefit program or making false statements relating to healthcare matters
and which also imposes certain regulatory and contractual requirements regarding the privacy,
security and transmission of individually identifiable health information; and
    
    state laws analogous to each of the above federal laws, such as anti-kickback and false
claims laws that may apply to items or services reimbursed by any third-party payor, including
commercial insurers, and state laws governing the privacy of certain health information, many of
which differ from each other in significant ways and often are not preempted by HIPAA, thus
complicating compliance efforts.
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Risks Related to Our Intellectual Property
 Our ability to protect our intellectual property and proprietary technology through patents and
other means is uncertain.
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Any lawsuit, whether initiated by us to enforce our intellectual property rights or by a third
party against us alleging infringement, may cause us to expend significant financial and other
resources, and may divert our attention from our business and adversely affect our business,
operating results and prospects.
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
    
    pay damages, including, but not limited to, treble damages and attorneys fees, which may
be substantial;
    
    cease the development, manufacture, use and sale of products that infringe the patent
rights of others, through a court-imposed sanction called an injunction;
    
    expend significant resources to redesign our technology so that it does not infringe
others patent rights, or develop or acquire non-infringing intellectual property, which may not be
possible;
    
    discontinue manufacturing or other processes incorporating infringing technology; or
    
    obtain licenses to the infringed intellectual property, which may not be available to us
on acceptable terms, or at all.
  Risks Related to our Common Stock
 A sale of a substantial number of shares of our common stock may cause the price of our common
stock to decline.
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Our directors, officers and principal stockholders have significant voting power and may take
actions that may not be in the best interests of our other stockholders.
  If securities or industry analysts do not publish research or reports about our business, if they
change their recommendations regarding our stock adversely or if our operating results do not meet
their expectations, our stock price and trading volume could decline.
  Volatility in the stock price of other companies may contribute to volatility in our stock price.
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Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law
contain provisions that could discourage a takeover.
  
    
    a classified board so that only one of the three classes of directors on our board of
directors is elected each year;
    
    procedures for advance notification of stockholder director nominations and proposals;
    
    the ability of our board of directors to amend our bylaws without stockholder approval;
    
    a supermajority stockholder vote requirement for amending certain provisions of our
amended and restated certificate of incorporation and our amended and restated bylaws; and
    
    the ability of our board of directors to issue up to 5,000,000 shares of preferred stock
without stockholder approval upon the terms and conditions and with the rights, privileges and
preferences as our board of directors may determine.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a) Unregistered Sales of Equity Securities
  (b) Uses of Proceeds from Sale of Registered Securities
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Item 4. Submission of Matters to a Vote of Security Holders
  
    
    approval of an amendment to our Fourth Amended and Restated Certificate of Incorporation
in order to (i) amend the automatic conversion provisions of the preferred stock with
respect to an initial public offering, and (ii) amend the definition of Additional Stock
for purposes of determining a conversion price adjustment for the preferred stock;
    
    approval of an amendment to our Third Amended and Restated Investors Rights Agreement
to revise the definition of Qualified Public Offering;
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
    
    approval of an amendment to our Third Amended and Restated Right of First Refusal and
Co-Sale Agreement to amend the termination provisions thereof;
    
    adoption of our Amended and Restated Certificate of Incorporation and our Amended and
Restated Bylaws, each to be effective upon completion of our initial public offering;
    
    approval of an amendment to our Amended and Restated 2000 Stock Incentive Plan
increasing the number of shares reserved for issuance thereunder; and
    
    approval of our 2007 Stock Incentive Plan and 2007 Employee Stock Purchase Plan.
  
 Item 6. Exhibits
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SIGNATURES
  TranS1 Inc.Date: November 30, 2007
    By:
    /s/ Richard RandallRichard RandallPresident and Chief Executive OfficerDate: November 30, 2007
    By:
    /s/ Michael LuetkemeyerMichael LuetkemeyerChief Financial Officer 40




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TranS1 Inc.
Exhibit Index
 ExhibitNo.
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of TranS1 Inc. (incorporated by reference
to Exhibit 3.2 to the Registration Statement on Form S-1, as amended (File No. 333-144802),
and as declared effective on October 16, 2007).3.2
    
    Amended and Restated Bylaws of TranS1 Inc. (incorporated by reference to Exhibit 3.4 to the
Registration Statement on Form S-1, as amended (File No. 333-144802), and as declared
effective on October 16, 2007).4.1
    
    Specimen common stock certificate (incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-1, as amended (File No. 333-144802), and as declared
effective on October 16, 2007).10.1
    
    2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registration
Statement on Form S-1, as amended (File No. 333-144802), and as declared effective on October
16, 2007).10.2
    
    2007 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.5 to the
Registration Statement on Form S-1, as amended (File No. 333-144802), and as declared
effective on October 16, 2007).31.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the
Securities Exchange Act of 1934.31.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) / 15d-14(a) of the
Securities Exchange Act of 1934.32.1
    
    Certification of Chief Executive Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.32.2
    
    Certification of Chief Financial Officer Pursuant to Rule 13a-14(b) / 15d-14(b) of the
Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
 41