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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number: 333-150888
 T3 Motion, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-4987549(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)2990 Airway Ave., Building A 
Costa Mesa, California
    
    92626(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number: (714) 619-3600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
 o þ
 o þ
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  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
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TABLE OF CONTENTS
 TO ANNUAL REPORT ON FORM 10-K
 FOR YEAR ENDED DECEMBER 31, 2010
 PagePART I
    
    
    2Item 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    14Item 2. Properties
    
    
    26Item 3. Legal Proceedings
    
    
    26Item 4. (Removed and Reserved)
    
    
    27PART II
    
    
    28Item 5. Market for Companys Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
    
    
    28Item 6. Selected Financial Data
    
    
    30Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    43Item 8. Financial Statements and Supplementary Data
    
    
    44Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    44Item 9A. Controls and Procedures
    
    
    44Item 9B. Other Information
    
    
    46PART III
    
    
    48Item 10. Directors, Executive Officers and Corporate Governance
    
    
    48Item 11. Executive Compensation
    
    
    51Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    55Item 13. Certain Relationships and Related Transactions, and Director Independence
    
    
    59Item 14. Principal Accounting Fees and Services
    
    
    65PART IV
    
    
    66Item 15. Exhibits, Financial Statement Schedules
    
    
    66Signatures
    
    
    71EX-10.53EX-10.54EX-14.1EX-31.1EX-31.2EX-32.1EX-32.2
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FORWARD-LOOKING STATEMENTS AND CERTAIN TERMINOLOGY
 This annual report on Form 10-K contains certain statements that may be deemed to be
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included in this report are forward-looking statements. When
used in this report, the words may, will, should, would, anticipate, estimate,
possible, expect, plan, project, continuing, ongoing, could, believe, predict,
potential, intend, and similar expressions are intended to identify forward-looking statements.
Forward-looking statements are subject to risks and uncertainties that could cause actual results
to differ materially from those projected. These risks and uncertainties include, but are not
limited to, availability of additional equity or debt financing, changes in sales or industry
trends, competition, retention of senior management and other key personnel, availability of
materials or components, ability to make continued product innovations, casualty or work stoppages
at the Companys facilities, adverse results of lawsuits against the Company and currency exchange
rates. Forward-looking statements are based on assumptions and assessments made by the Companys
management in light of their experience and their perception of historical trends, current
conditions, expected future developments and other factors they believe to be appropriate. Readers
of this report are cautioned not to place undue reliance on these forward-looking statements, as
there can be no assurance that these forward-looking statements will prove to be accurate and speak
only as of the date hereof. Management undertakes no obligation to publicly release any revisions
to these forward-looking statements that may reflect events or circumstances after the date hereof
or to reflect the occurrence of unanticipated events. This cautionary statement is applicable to
all forward-looking statements contained in this report.
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PART I
 
 ITEM 1. BUSINESS
 Overview
     Corporate Information
 www.T3motion.com.
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Proposed Public Offering
   
    
    the conversion of 11,502,563 shares of our outstanding Series A convertible preferred
stock upon completion of the offering into 2,662,072 shares of our common stock;
    
    the conversion of the outstanding $1,121,000 loan plus accrued interest of $23,756 from
Ki Nam, the Companys Chief Executive Officer, into 327,073 shares of our common stock upon
completion of the offering;
    
    the conversion of $3.5 million of the Vision Debentures plus accrued interest of
$350,959 into 1,100,274 shares of our common stock upon completion of the offering;
    
    a one-for-10 reverse stock split of our common stock, which is expected to be completed
immediately prior to the closing of the offering; and
    
    the reclassification of the derivative liabilities (related to anti-dilution features
associated with the conversion of the Vision Debentures, Series A convertible preferred
stock and Class G warrants to additional paid-in capital upon completion of the offering),
and the accretion of the remaining preferred stock discount related to the anti-dilution
feature.
 Our Products and Services
 T3 Series and T3i Series ESVs
  3




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Power Modules
  Accessories
         Camera System
  4




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CT Series Micro Car
  Electric/Hybrid Vehicle
  Future Products
  Research and Development
  Growth Strategies
   Capitalize on broader private security opportunities
  Increase our branding in law enforcement
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 Pursue international expansion
  Expand the T3 Series product line to address broader markets
 Leverage our brand into the consumer market.
 Marketing and Distribution
   
    
    We evaluate the available budget from the customer, building the value of the product
rather than price.
    
    Return on Investment (ROI). Our products have demonstrated significant operational
savings over gas powered vehicles and allow the end user greater mobility and work
efficiencies.
    
    We strive to maintain a manufacturing process that generally holds lead times to
approximately a 4 to 6 week timeframe.
    
    We have an in-field swappable power system that enables our clients to operate vehicles
without downtime for charging. The sustainable engineering and design was specifically
tailored for the professional end user in law enforcement and private security.
    
    Our vehicle has demonstrated that the iconic look and command presence has a crime
deterrent ability.
    
    The T3 Series and T3i Series ESVs allow the user greater mobility to maneuver through
crowds and tight areas than other vehicles such as motorcycles, effectively increasing the
patrol area and granting the user job efficiencies.
 Our Operations
  6




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Sources and Availability of Raw Materials; Principal Suppliers
   Operating and Manufacturing Strategy
  Competition
    7




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
    
    We evaluate the available budget from the customer, building the value of the product
rather than price.
    
    We maintain a manufacturing process that generally requires a four to six week lead
times; although standard lead times may change if orders increase or our supply chain lead
times increase.
    
    We have an in-field swappable power system that enables our clients to operate vehicles
without downtime for charging. The sustainable engineering and design was specifically
tailored for the professional end user in law enforcement and private security.
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Intellectual Property
  Type
    
    Name
    
    Issued by
    
    DescriptionTrademark
    
    (Graphic LOGO)
    
    United State Patent and Trademark Office
    
    Logo, brand name used
on our productsTrademark
    
    (Graphic LOGO)
    
    United State Patent and Trademark Office
    
    Logo, brand name used
on our productsTrademark
    
    ENABLING PERSONAL
MOBILITY
    
    United State Patent and Trademark Office
    
    Logo, brand name used
on our products
        Government Approvals and Regulation
  
    
    The T3i Series product has passed EMC testing for EN6100-6-1 and EN61000-6-3.
    
    Batteries and chargers were found to be technically compliant with the EN55022,
EN61000-3-2, EN61000-3-3, and EN55024 requirements.
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
    
    In 2009,the Electric Vehicle 3-Wheel and Charger has passed EMC testing for
EN60950-1:2006 (Information Technology Equipment Safety Standards) as well as EN6100-6-1
and EN61000-6-3 (European Standards).On July 28, 2009, we received our GSA license number, GS-07F-0403V.
 Customers
  Employees
  Recent Financings
 Vision Opportunity Master Fund, Ltd. Bridge Financing
 December 30, 2008  10% Convertible Debenture
   May 28, 2009  10% Convertible Debenture
  December 30, 2009  10% Convertible Debenture
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December 30, 2009  Exchange Agreement
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Amendment of December 30, 2009 10% Convertible Debenture
  December 31, 2010  Exchange Agreement
  Debt Discounts and Amortization
   Ki Nam Note
 2010 Note
  12




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2009 Note
       Lock-Up Agreement
  Alfonso
Cordero and Mercy Cordero Note
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ITEM 1A. RISK FACTORS
 You should carefully consider the risks described below before making an investment decision
regarding any of our securities. Our business could be harmed by any of these risks. The trading
price of our securities could decline due to any of these risks, and you may lose all or part of
your investment. In assessing these risks, you should also refer to the other information contained
in this report, including our consolidated financial statements and related notes.
 Risks Related to Our Company and Our Industry
 We have a history of losses and we expect to continue to have additional net losses in the near
future, which could cause the value of our securities to decline and may even cause our business
to fail.
  
    
    We may be unable to increase sales sufficiently to recognize economies of scale;
    
    We may be unable to successfully expand into other private security markets or achieve
broad brand recognition for our products;
    
    We may be unable to reduce our costs or experience unanticipated costs or expenses in
connection with our current development, marketing and manufacturing plans;
    
    We may encounter technological challenges in connection with the development,
introduction or manufacturing of enhancements to our existing vehicles or in the addition
of new products; and
    
    We may be unable to obtain sufficient components or materials used in our products due
to capital constraints, which could adversely effect our sales, our reputation and
credibility.
  If we are unable to continue as a going concern, our securities will have little or no value.
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Our business depends substantially on the continuing efforts of our executive officers, and our
ability to maintain a skilled labor force, and our business may be severely disrupted if we lose
their services.
  Our future growth is dependent upon the publics willingness to accept electric vehicles.
  
    
    perceptions about electric vehicle quality, safety (in particular with respect to
lithium-ion battery packs), design, performance and cost, especially if adverse events or
accidents occur that are linked to the quality or safety of electric vehicles;
    
    perceptions about vehicle safety in general, and in particular safety issues that may
be attributed to the use of advanced technology;
    
    the range over which electric vehicles may be driven on a single battery charge;
    
    the decline of an electric vehicles range resulting from deterioration over time in
the batterys ability to hold a charge;
    
    improvements in the fuel economy of the internal combustion engine;
    
    volatility in the cost of oil and gasoline;
    
    access to charging stations, standardization of electric vehicle charging systems and
consumers perceptions about convenience and cost to charge an electric vehicle;
    
    concerns that extreme temperatures, cold or hot, could reduce the performance of the
electric vehicle or life of the batteries included in such vehicles;
    
    the availability of tax and other governmental incentives to purchase and operate
electric vehicles or future regulation requiring increased use of nonpolluting vehicles;
and
    
    macroeconomic factors.
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We may become subject to product liability claims, which could harm our financial condition and
liquidity if we are not able to successfully defend or insure against such claims.
   If our suppliers fail to consistently provide high quality parts and components or fail to comply
with applicable laws and regulations, our brand image could be harmed due to negative publicity.
   If the purchasers of our vehicles customize our vehicles or change the charging infrastructure with
aftermarket products, the vehicle may not operate properly, which could adversely impact our
reputation and harm our business.
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Adverse conditions in the global economy and disruption in financial markets could impair our
revenues.
  Our markets are highly competitive, and if we are unable to compete effectively, or demonstrate a
perceived advantage for our products over traditional means of transportation, our business will
be adversely affected.
  Our failure to further refine our technology and develop and introduce new personal mobility
products could render our products uncompetitive or obsolete, and reduce our sales and market
share.
  We face risks associated with the marketing, distribution and sale of our personal mobility
products internationally, and if we are unable to effectively manage these risks, they could
impair our ability to expand our business abroad.
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
    
    fluctuations in currency exchange rates;
    
    difficulty in engaging and retaining distributors who are knowledgeable about and, can
function effectively in, overseas markets;
    
    increased costs associated with maintaining marketing efforts in various countries;
    
    difficulty and cost relating to compliance with the different commercial and legal
requirements of the overseas markets in which we offer our products; and
    
    inability to obtain, maintain or enforce intellectual property rights.
 Our prospects for sales growth and profitability will be adversely affected if we have product
replacement issues, or if we otherwise fail to maintain product quality and product performance at
an acceptable cost.
  The failure to achieve acceptable manufacturing yields could adversely affect our business.
  From time to time we engage in related party transactions. There are no assurances that these
transactions are fair to our company.
  We are dependent on a few single sourced third party manufacturers. Any interruption in our
relationships with these parties may adversely affect our business.
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Our dependence on third party suppliers for key components of our devices could delay shipment of
our products and reduce our sales.
  Many of our customers have fluctuating budgets, which may cause substantial fluctuations in our
results of operations.
  Our resources may be insufficient to manage the demands imposed by our growth.
  Our success is dependent on protecting our intellectual property rights.
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We may be exposed to liability for infringing intellectual property rights of other companies.
  Our officers and directors own a substantial portion of our outstanding common stock, which
will enable them to influence many significant corporate actions and in certain circumstances may
prevent a change in control that would otherwise be beneficial to our shareholders.
  Risks Relating Ownership of Our Securities
 If a significant public market for our common stock develops, we expect to experience volatility
in the price of our common stock. This may result in substantial losses to investors if they are
unable to sell their shares at or above their purchase price.
  
    
    our status as a company with a limited operating history and limited revenues to date,
which may make risk-averse investors more inclined to sell their shares on the market more
quickly and at greater discounts than would be the case with the shares of a seasoned
issuer in the event of negative news or lack of progress;
    
    announcements of technological innovations or new products by us or our competitors;
    
    the timing and development of our products;
    
    general and industry-specific economic conditions;
    
    actual or anticipated fluctuations in our operating results;
    
    liquidity;
    
    actions by our stockholders;
    
    changes in our cash flow from operations or earning estimates;
    
    changes in market valuations of similar companies;
    
    our capital commitments; and
 
    
    the loss of any of our key management personnel.
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We do not anticipate paying any cash dividends in the foreseeable future, which may reduce your
return on an investment in our common stock.
  Substantial future sales of our common stock in the public market may depress our stock price.
   We may raise additional capital through a securities offering that could dilute your ownership
interest and voting rights.
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Our incorporation documents and Delaware law may inhibit a takeover that stockholders consider
favorable and could also limit the market price of your stock, which may inhibit an attempt by our
stockholders to change our direction or management.
  
    
    authorize our board of directors to determine the rights, preferences, privileges and
restrictions granted to, or imposed upon, the preferred stock and to fix the number of
shares constituting any series and the designation of such series without further action by
our stockholders;
    
    prohibit stockholders holding less than 25% of the outstanding voting shares from
calling special meetings; and
    
    establish advance notice requirements for submitting nominations for election to the
board of directors and for proposing matters that can be acted upon by stockholders at a
meeting.
  The market for our stock is subject to rules relating to low-priced stock (Penny Stock) which
may limit our ability to raise capital.
   We will incur increased costs and compliance risks as a result of becoming a public company.
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Our shares are traded on the OTC Bulletin Board, and may be thinly traded, so you may be unable
to sell at or near ask prices or at all if you need to sell your shares to raise money or
otherwise desire to liquidate your shares.
  There is no guarantee that our securities will be listed on AMEX.
   Our
    liquidity of our common stock and market capitalization could be
    adversely affected by the reverse stock split.
   The market price for our common stock may be particularly volatile given our status as a
relatively unknown company with a small and thinly traded public float, limited operating history
and lack of profits which could lead to wide fluctuations in our share price. The price at which
you purchased the shares may not be indicative of the price of the common stock that will prevail
in the trading market. You may be unable to sell your shares at or above your purchase price,
which may result in substantial losses to you.
   
    
    quarterly variations in our revenues and operating expenses;
    
    announcements of new products or services by us;
    
    fluctuations in interest rates;
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
    
    significant sales of our common stock;
    
    the operating and stock price performance of other companies that investors may deem
comparable to us; and
    
    news reports relating to trends in our markets or general economic conditions.
  Our operating results may fluctuate significantly, and these fluctuations may cause our common
stock price to fall.
  
    
    market acceptance of our products and those of our competitors;
    
    our ability to attract and retain key personnel;
    
    development of new designs and technologies; and
    
    our ability to manage our anticipated growth and expansion.
 Shares eligible for future sale may adversely affect the market.
   Certain prior investors who purchased our securities, consisting of convertible notes, preferred
stock, common stock and warrants to purchase common stock, from December 2007 through March 2010,
have anti-dilution rights with respect to their shares of our common stock (including shares
underlying warrants). If future issuances of our common stock trigger these anti-dilution rights,
holders of our common stock would have their investments diluted.
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We are responsible for the indemnification of our officers and directors, which could result in
substantial expenditures.
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ITEM 2. PROPERTIES
  Location
    
    Principal Activities
    
    Area (Sq. Meters)
    
    Lease Expiration Date2990 Airway
Ave., Costa Mesa,
California 92626
    
    Main office and manufacturing facility
    
    
    33,520
    
    
    August 31, 20122975 Airway Ave.,
Costa Mesa,
California 92626
    
    Research and development, warehouse, and
service facility
    
    
    14,000
    
    
    December 31, 2010(1)
 
 (1)
    
    While the original term of this lease expired in December 2010, the Company is currently
leasing this facility on a month-to-month basis.    Years Ending December 31,
    
    Total2011
    
    $
    305,0002012
    
    
    209,000$
    514,000
 
 ITEM 3. LEGAL PROCEEDINGS
  Preproduction Plastics, Inc. v. T3 Motion., Inc., Ki Nam and Jason Kim
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ITEM 4. (Removed and Reserved)
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PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
 Market Information
  High
    
    
    Low2010Fourth Quarter
    
    $
    0.70
    
    
    $
    0.30Third Quarter
    
    $
    1.01
    
    
    $
    0.27Second Quarter
    
    $
    1.00
    
    
    $
    0.25First Quarter
    
    $
    2.00
    
    
    $
    0.892009Fourth Quarter (from December 6, 2009)
    
    $
    2.00
    
    
    $
    1.25
 Holders
  Dividends
  Securities Authorized for Issuance under Equity Compensation Plans
  Number of SecuritiesWeighted-Average
    
    
    Remaining AvailableExercise Price of
    
    
    for Future IssuanceNumber of Securities to be
    
    
    Outstanding
    
    
    Under EquityIssued Upon Exercise of
    
    
    Options,
    
    
    Compensation PlansOutstanding Options,
    
    
    Warrants and
    
    
    (Excluding SecuritiesWarrants and Rights
    
    
    Rights
    
    
    Reflected in Column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity
compensation plans
approved by
stockholders
    
    
    6,490,895
    
    
    $
    0.57
    
    
    
    3,720,500Equity compensation
plans not approved
by stockholders
    
    
    10,696,143
    
    
    $
    0.73
    
    
    
    Total
    
    
    17,187,038
    
    
    
    
    
    
    
    3,720,500
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Equity Incentive Plans
 2007 Stock Option/Stock Issuance Plan
       2010 Stock Option/Stock Issuance Plan
 The 2010 Stock Option/Stock Issuance Plan (the
2010 Plan) became effective in January 2010,
and was approved by the Companys stockholders in June 2010. The maximum number of shares of
common stock that may be issued over the term of the 2010 Plan is 6,500,000 shares.
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Warrants
  Sales of Unregistered Securities
  
 ITEM 6. SELECTED FINANCIAL DATA
  Years Ended December 31,2010
    
    
    2009Income Statement Data:Net Revenues
    
    $
    4,682,908
    
    
    $
    4,644,022Gross Profit (Loss)
    
    
    170,411
    
    
    
    (344,096
    )Operating Expenses
    
    
    7,009,514
    
    
    
    8,449,934Loss from Operations
    
    
    (6,839,103
    )
    
    
    (8,794,030
    )Net Loss
    
    
    (8,327,887
    )
    
    
    (6,698,893
    )Net Loss per Share  Basic and Diluted
    
    $
    (0.25
    )
    
    $
    (0.15
    )Statement of Cash Flow Data:Net Cash Used in Operating Activities
    
    $
    (5,185,067
    )
    
    $
    (5,356,937
    )Net Cash Used in Investing Activities
    
    
    (48,214
    )
    
    
    (38,450
    )Net Cash Provided by Financing Activities
    
    
    2,776,000
    
    
    
    6,294,076
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Balance Sheet Data:
 2010
    
    
    2009Total Assets
    
    $
    3,579,916
    
    
    $
    6,059,321Related
Party Notes Payable, Net of Debt Discount
    
    
    6,512,121
    
    
    
    1,836,837Total Liabilities
    
    
    19,259,648
    
    
    
    15,703,734Total Stockholders Deficit
    
    
    (15,679,732
    )
    
    
    (9,644,413
    )
 Going Concern
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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of our results of operations and financial condition for
the years ended December 31, 2010 and 2009 should be read in conjunction with our financial
statements and the notes to those financial statements that are included elsewhere in this Annual
Report on Form 10-K . All statements, other than statements of historical facts, included in this
report are forward-looking statements. When used in this report, the words may, will, should,
would, anticipate, estimate, possible, expect, plan, project, continuing,
ongoing, could, believe, predict, potential, intend, and similar expressions are
intended to identify forward-looking statements. Forward-looking statements are subject to risks
and uncertainties that could cause actual results to differ materially from those projected. These
risks and uncertainties include, but are not limited to, availability of additional equity or debt
financing, changes in sales or industry trends, competition, retention of senior management and
other key personnel, availability of materials or components, ability to make continued product
innovations, casualty or work stoppages at the Companys facilities, adverse results of lawsuits
against the Company and currency exchange rates. Forward-looking statements are based on
assumptions and assessments made by the Companys management in light of their experience and their
perception of historical trends, current conditions, expected future developments and other factors
they believe to be appropriate. Readers of this report are cautioned not to place undue reliance on
these forward-looking statements, as there can be no assurance that these forward-looking
statements will prove to be accurate and speak only as of the date hereof. Management undertakes no
obligation to publicly release any revisions to these forward-looking statements that may reflect
events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
This cautionary statement is applicable to all forward-looking statements contained in this report.
 Overview
   Going Concern
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Critical Accounting Policies and Estimates
   Concentrations of Credit Risk
 Cash and Cash Equivalents
   Restricted Cash
  Accounts Receivable
   33




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Accounts Payable
  Inventories
  Property and Equipment
  Deposits
  Impairment of Long-Lived Assets
  Fair Value of Financial Instruments
   34




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Beneficial Conversion Features and Debt Discounts
  Revenue Recognition
      35




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Share-Based Compensation
    Income Taxes
  Derivative Liabilities
     36




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Loss Per Share
  37




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Research and Development
  Advertising
  Commitments and Contingencies
 Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim
   38




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Recent Accounting Pronouncements
  Business Segments
  For the Years Ended December 31,2010
    
    
    2009Net revenues:T3 Series domestic
    
    $
    3,842,030
    
    
    $
    3,654,290T3 Series international
    
    
    840,878
    
    
    
    963,911CT Series domestic
    
    
    
    
    
    
    25,821Total net revenues
    
    $
    4,682,908
    
    
    $
    4,644,022
 Recent Events
  Date of Advance
    
    Amount AdvancedJanuary 7, 2011
    
    $
    75,000January 25, 2011
    
    
    50,000February 9, 2011
    
    
    45,000February 25, 2011
    
    
    30,000February 28, 2011
    
    
    100,000March 10, 2011
    
    
    25,000March 11, 2011
    
    
    475,000March 23, 2011
    
    
    200,000
  39




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##### Table of Contents



Results of Operations
  Years Ended December 31,2010
    
    
    2009Net revenues
    
    $
    4,682,908
    
    
    $
    4,644,022Cost of net revenues
    
    
    4,512,497
    
    
    
    4,988,118Gross profit (loss)
    
    
    170,411
    
    
    
    (344,096
    )Operating expenses:Sales and marketing
    
    
    1,826,736
    
    
    
    1,927,824Research and development
    
    
    1,602,961
    
    
    
    1,395,309General and administrative
    
    
    3,579,817
    
    
    
    5,126,801Total operating expenses
    
    
    7,009,514
    
    
    
    8,449,934Loss from operations
    
    
    (6,839,103
    )
    
    
    (8,794,030
    )Other income (expense), net:Interest income
    
    
    1,321
    
    
    
    2,510Other income, net
    
    
    2,487,310
    
    
    
    5,565,869Interest expense
    
    
    (3,976,615
    )
    
    
    (3,472,442
    )Total other income (expense), net
    
    
    (1,487,984
    )
    
    
    2,095,937Loss before provision for income taxes
    
    
    (8,327,087
    )
    
    
    (6,698,093
    )Provision for income tax
    
    
    800
    
    
    
    800Net loss
    
    
    (8,327,887
    )
    
    
    (6,698,893
    )Deemed divided to preferred stockholders
    
    
    (3,730,149
    )
    
    
    (6,116
    )Net loss attributable to common stockholders
    
    $
    (12,058,036
    )
    
    $
    (6,705,009
    )Other comprehensive income (loss):Foreign currency translation income (loss)
    
    
    344
    
    
    
    (632
    )Comprehensive loss
    
    $
    (8,327,543
    )
    
    $
    (6,699,525
    )Net loss attributable to common stockholders
per share:Basic and diluted
    
    $
    (0.25
    )
    
    $
    (0.15
    )Weighted average number of common shares
outstanding:Basic and diluted
    
    
    47,689,785
    
    
    
    44,445,042
 Net Revenues.
 Cost of net revenues.
 40




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##### Table of Contents



Gross profit (loss).
 Sales and marketing.
 Research and development.
 General and administrative.
 Other income (expense),net.
 Deemed dividend.
 Net loss attributable to common stockholders.
 LIQUIDITY AND CAPITAL RESOURCES
    41




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##### Table of Contents



Cash Flows
 For the Years Ended December 31, 2010 and 2009
      Contractual Obligations and Off-Balance Sheet Arrangements
 Contractual Obligations
  42




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##### Table of Contents



Less thanContractual Obligation
    
    Total
    
    
    1 Year
    
    
    1-3 YearsRelated party notes payable
    
    $
    6,621,000
    
    
    $
    4,500,000
    
    
    $
    2,121,000Note payable
    
    
    243,468
    
    
    
    243,468
    
    
    
    Operating lease
    
    
    514,000
    
    
    
    305,000
    
    
    
    209,000Total Contractual Obligations
    
    $
    7,378,468
    
    
    $
    5,048,468
    
    
    $
    2,330,000
 Off-Balance Sheet Arrangements
  Warrants
   Warrants Outstanding & Exercisable
    
    Exercise Price
    
    
    Expiration Date120,000
    
    $
    1.54
    
    
    
    3/31/2013274,774
    
    $
    1.65
    
    
    
    12/29/20141,953,730
    
    $
    0.70
    
    
    
    12/29/20144,000,000
    
    $
    0.70
    
    
    
    12/30/20141,600,000
    
    $
    0.70
    
    
    
    2/2/2015947,639
    
    $
    0.70
    
    
    
    3/31/2015710,000
    
    $
    0.70
    
    
    
    3/22/20151,040,000
    
    $
    0.70
    
    
    
    4/30/201550,000
    
    $
    0.70
    
    
    
    8/25/2015
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rates.
 43




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
    Internal Control over Financial Reporting
 (a) Managements annual report on internal control over financial reporting
  
    
    Pertain to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the Company;
 
    
    Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
 44




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##### Table of Contents




    
    Provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the Companys assets that could have a material effect
on the financial statements.
  Internal Control 
Integrated Framework
         45




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##### Table of Contents



(b) Changes in internal control over financial reporting
  
    
    We have standardized our shipping terms to be FOB shipping point and have implemented review and sign off procedures of approval of any deviation from the standard shipping terms.
  
    
    We are in the process of further enhancing our internal finance and accounting
organizational structure, which includes hiring additional resources.
 
    
    We are in the process of further enhancing the supervisory procedures to include
additional levels of analysis and quality control reviews within the accounting and
financial reporting functions.
 
    
    We are in the process of strengthening our internal policies and enhancing our processes
for ensuring consistent treatment and recording of reserve estimates and that validation of
our conclusions regarding significant accounting policies and their application to our
business transactions are carried out by personnel with an appropriate level of accounting
knowledge, experience and training.
  
 ITEM 9B. OTHER INFORMATION
 Item 1. Legal Proceedings.
  Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim
 46




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47




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 Executive Officers and Directors
  Name
    
    Age
    
    Positions Held:Ki Nam
    
    
    51
    
    
    Chief Executive Officer and ChairmanKelly J. Anderson
    
    
    43
    
    
    Executive Vice President, Chief Financial Officer
and PresidentNoel Chewrobrier
    
    
    46
    
    
    Vice President International SalesDave Fusco
    
    
    60
    
    
    Vice President Domestic SalesDavid Snowden
    
    
    66
    
    
    DirectorSteven Healy
    
    
    50
    
    
    DirectorMary S. Schott
    
    
    50
    
    
    DirectorRob Thomson(1)
    
    
    34
    
    
    Director
 
 (1)
    
    Mr. Thomson was appointed to our Board of Directors
in February 2010 pursuant to the Securities Purchase
Agreement entered into on December 30, 2009 between us and Vision Opportunity Master Fund, Ltd. (VOMF).
Pursuant to this agreement, VOMF may designate one nominee to our Board of Directors. Biographical Information
 Ki Nam
 Kelly J. Anderson,
 48




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##### Table of Contents



Noel Chewrobrier
 David Fusco
 David Snowden
 Steven Healy
 Mary S. Schott
 Rob Thomson
 49




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##### Table of Contents



Family Relationships
  Section
16(a) Beneficial Ownership Reporting Compliance
  Code of Conduct and Ethics
  Material
Changes to the Procedures by which Security Holders May Recommend Nominees to the Board of Directors
  Board Committees
  Audit Committee
 
    
    the integrity of our financial statements;
    
    our compliance with legal and regulatory requirements;
    
    the qualification and independence of our independent auditors; and
 50




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##### Table of Contents




    
    the performance of the Companys auditor qualifications and the work of our independent
auditors.
  Compensation Committee
 Nominating Committee
 
 ITEM 11. EXECUTIVE COMPENSATION
  Executive Compensation  Summary Compensation Table
 Stock
    
    
    Option
    
    
    All OtherSalary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    TotalName and Principal Position
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)Ki Nam,
    
    
    2010
    
    
    $
    190,000
    
    
    $
    
    
    
    $
    
    
    
    $
    114,900
    
    
    $
    
    
    
    $
    304,900Chief Executive Officer and Chairman(2)
    
    
    2009
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000Kelly J. Anderson,
    
    
    2010
    
    
    
    187,962
    
    
    
    
    
    
    
    
    
    
    
    229,800
    
    
    
    
    
    
    
    417,762Executive Vice President, President and
    
    
    2009
    
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,000Chief Financial Officer
 
 (1)
    
    The amounts shown in this column represent the dollar amount recognized for financial statement
reporting purposes for the years ended December 31, 2010 and 2009 with respect to stock options
granted, as determined pursuant to the accounting standards. See Note 11 of the notes to our
audited consolidated financial statements for a discussion of valuation assumptions made in
determining the grant date fair value and compensation expense of our stock options.(2)
    
    Pursuant to Mr. Nams employment agreement, his annual salary is $190,000, commencing January
1, 2010. Mr. Nam has elected to defer payment of the $40,000 increase in his base salary in
2010 until the completion of the Companys next round of financing, which may include the
Companys pending public offering. 51




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##### Table of Contents



Employment Agreements
 Ki Nam
       52




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Kelly Anderson
     53




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
  Option
Awards
    
    
    Stock AwardsEquityIncentiveEquity
    
    
    Plan Awards:Incentive
    
    
    Market orMarket
    
    
    Plan Awards:
    
    
    Payout ValueNumber of
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    Number
    
    
    Value of
    
    
    Number of
    
    
    of UnearnedSecurities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    of Shares
    
    
    Shares or
    
    
    Unearned
    
    
    Shares, UnitsUnderlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    or Units of
    
    
    Units of
    
    
    Shares, Units
    
    
    or OtherUnexercised
    
    
    Unexercised
    
    
    Option
    
    
    Option
    
    
    Stock that
    
    
    Stock that
    
    
    or Other
    
    
    Rights thatOptions (#)
    
    
    Options (#)
    
    
    Exercise
    
    
    Expiration
    
    
    Have Not
    
    
    Have Not
    
    
    Rights that
    
    
    Have NotName
    
    Exercisable
    
    
    Unexercisable
    
    
    Price ($)
    
    
    Date
    
    
    Vested (#)
    
    
    Vested ($)
    
    
    Have Not Vested (#)
    
    
    Vested ($)Ki Nam
    
    
    
    
    
    
    300,000
    
    
    
    $0.50
    
    
    
    7/21/2020
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    1,000,000
    
    
    
    
    
    
    
    0.77
    
    
    
    12/10/2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Kelly J. Anderson
    
    
    
    
    
    
    600,000
    
    
    
    0.50
    
    
    
    7/21/2020
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137,500
    
    
    
    62,500
    
    
    
    0.60
    
    
    
    3/17/2018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    104,167
    
    
    
    95,833
    
    
    
    0.50
    
    
    
    11/13/2018
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Each option vests as follows: 25% of the option shares vest on
the first anniversary of the grant date and the balance vest on
36 equal monthly installments thereafter. The option expiration date indicated with respect to each option is the tenth
anniversary of the grant date with respect to such option. 54




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##### Table of Contents



Director Compensation
  Fees Earned orName (1)
    
    Paid in Cash ($)
    
    
    Option Awards($)(2)
    
    
    Total ($)Ki Nam(3)
    
    $
    
    
    
    $
    
    
    
    $
    Steven Healy
    
    
    20,000
    
    
    
    18,390
    
    
    
    38,390David Snowden
    
    
    20,000
    
    
    
    18,390
    
    
    
    38,390Mary S. Schott
    
    
    20,000
    
    
    
    18,390
    
    
    
    38,390Robert Thomson
    
    
    
    (4)
    
    
    18,390
    (5)
    
    
    18,390
 
 (1)
    
    The Company has not granted any stock awards to its non-employee directors and no such awards
were outstanding at fiscal year end. As of December 31, 2010, the non-employee directors held
options for the following number of shares of common stock: Steven Healy  100,000; David
Snowden  100,000; Mary S. Schott  100,000; and Robert Thomson  50,000.(2)
    
    Amounts represent the aggregate grant date fair value of the stock or option award calculated
in accordance with Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC) Topic 718, Stock Compensation, as amended, without regard to estimated
forfeitures, or, with respect to re-priced options. See Note 11 of the notes to our audited
consolidated financial statements for a discussion of valuation assumptions made in
determining the grant date fair value and compensation expense of our stock options.(3)
    
    Mr. Nam does not receive compensation for serving as a director of the Company. His
compensation for serving as an officer of the Company is reflected in the table titled
Summary Compensation Table.(4)
    
    Mr. Thomson has waived his annual cash retainer Board fee for 2010.(5)
    
    Such options are expected to be assigned to Vision Capital Advisors or its affiliates. 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 Securities Authorized for Issuance under Equity Compensation Plans or Individual Compensation
Arrangements
  Security Ownership of Certain Beneficial Owners and Management
   55




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Number of
    
    
    Percentage ofNumber of
    
    
    Percent of
    
    
    Shares of
    
    
    Shares ofShares of
    
    
    Shares of
    
    
    Series A
    
    
    Series ACommon Stock
    
    
    Common Stock
    
    
    Preferred Stock
    
    
    Preferred StockBeneficially
    
    
    Beneficially
    
    
    Beneficially
    
    
    BeneficiallyName of Beneficial Owner and Address
    
    Owned(1)
    
    
    Owned(1)(2)
    
    
    Owned
    
    
    Owned(13)Executive Officers and/or Directors:Ki Nam
    
    
    33,237,464
    
    
    
    59.5
    %(3)
    
    
    976,865
    
    
    
    8.5
    %Kelly Anderson
    
    
    258,333
    
    
    
    *
    (4)
    
    
    
    
    
    
    David Snowden
    
    
    100,000
    
    
    
    *
    (5)
    
    
    
    
    
    
    Steven Healy
    
    
    100,000
    
    
    
    *
    (6)
    
    
    
    
    
    
    Mary S. Schott
    
    
    100,000
    
    
    
    *
    (7)
    
    
    
    
    
    
    Robert Thomson
    
    
    6,033,604
    
    
    
    11.9
    %(8)
    
    
    12,870,698
    
    
    
    85.8
    %(14)5% Stockholders:Immersive Media Corp.
    
    
    4,473,342
    
    
    
    8.4
    %(9)
    
    
    
    
    
    
    Vision Opportunity Master Fund, Ltd.
    
    
    5,147,635
    
    
    
    10.2
    %(10)
    
    
    10,951,765
    
    
    
    73.0
    %Total Force International Limited
    
    
    8,000,000
    
    
    
    14.6
    %(11)
    
    
    
    
    
    
    Vision Capital Advantage Fund
    
    
    2,614,090
    
    
    
    4.9
    %(15)
    
    
    1,918,933
    
    
    
    16.7
    %All Executive Officers and Directors as
a Group (7 persons)
    
    
    39,829,401
    
    
    
    70.6
    %(12)
    
    
    13,847,563
    
    
    
    92.3
    %
 
 *
    
    Holders beneficially own less than 1%.(1)
    
    Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship, or otherwise has
or shares: (i) voting power, which includes the power to vote, or to direct the voting of
shares; or (ii) investment power, which includes the power to dispose or direct the
disposition of shares. Certain shares may be deemed to be beneficially owned by more than one
person (if, for example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a person if the person has
the right to acquire the shares (for example, upon exercise of an option) within 60 days of
the date as of which the information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of shares
beneficially owned by such person (and only such person) by reason of these acquisition
rights. As a result, the percentage of outstanding shares of any person as shown in this table
does not necessarily reflect the persons actual ownership or voting power with respect to the
number of shares of common stock actually outstanding.(2)
    
    As of February 28, 2011, there were 50,658,462 shares of common stock issued and outstanding.(3)
    
    This number includes 27,155,230 shares of common stock, 1,953,730 shares of common stock
issuable upon conversion of the preferred stock held by Mr. Nam, and 2,228,504 shares of
common stock issuable upon exercise of warrants held by The Nam Family Trust Dated 02/17/07,
Ki Nam and Yeong Hee Nam as the Trustees. This number also includes 900,000 shares of common
stock held by Justin Nam, who is the son of this stockholder. Further, this number does not
include 900,000 shares of common stock held by Michelle Nam, who is the adult daughter of this
stockholder and does not reside in the same household as Mr. Nam. This amount includes
1,000,000 shares subject to an option to purchase common stock. Thus, the percentage of common
stock beneficially owned by Mr. Nam is based on a total of 55,840,696 shares of common stock.(4)
    
    This number includes options to purchase 258,333 shares of common stock held by Ms. Anderson.
Thus, the percentage of common stock beneficially owned by Ms. Anderson is based on a total of
50,916,785 shares of common stock.(5)
    
    This number includes options to purchase 100,000 shares of common stock held by Mr. Snowden.
Thus the percentage of common stock beneficially owned by Mr. Snowden is based on a total of
50,758,462 shares of common stock. 56




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##### Table of Contents



(6)
    
    This number includes options to purchase 100,000 shares of common stock held by Mr. Healy.
Thus the percentage of common stock beneficially owned by Mr. Healy is based on a total of
50,758,462 shares of common stock.(7)
    
    This number includes options to purchase 100,000 shares of common stock held by Ms. Schott.
Thus, the percentage of common stock beneficially owned by Ms. Schott is based on a total of
50,758,462 shares of common stock.(8)
    
    Robert Thomson has been designated by Vision Opportunity Master Fund, Ltd. to our board of
directors. The reported securities are owned directly by Vision Opportunity Master Fund, Ltd.
(VOMF) and its affiliate Vision Capital Advantage Fund, L.P. (VCAF), and together with
VOMF, the Vision Entities), and Mr. Thomson has no direct interest in these shares. VOMF and
VCAF are the direct owners of the subject securities. VCAF GP, LLC (the General Partner)
serves as general partner of VCAF; the Managing Member of the General Partner is Adam
Benowitz. Vision Capital Advisors, LLC (the Investment Manager) serves as investment manager
to VOMF and VCAF. Adam Benowitz is the Managing Member of the Investment Manager. Robert
Thomson currently serves as VOMFs and VCAFs representative on our board of directors; VOMF
and VCAF may be deemed a director by virtue of their right to appoint a director. The
5,983,604 shares listed represent the 5,097,635 and 885,969 common shares held by VOMF and
VCAF, respectively, as well as (all figures given in the aggregate) options to purchase up to
50,000 shares of our common stock. This number excludes (a) the 10% Convertible Promissory
Notes (the Notes) currently convertible into 7,000,000 shares of our common stock and
7,000,000 warrants, (b) 7,451,765 shares of Series A convertible preferred stock convertible
into 14,903,530 shares of our common stock held by VOMF, and (c) the 1,918,933 shares of
Series A convertible preferred stock convertible into 3,837,766 shares of our common stock
held by VCAF due to beneficial ownership limitations. The Notes and the Series A convertible
preferred stock owned by VOMF and VCAF are subject to a beneficial ownership limitation such
that at no time may VOMF or VCAF convert all or a portion of such securities if the number of
shares of common stock to be issued pursuant to such conversion when aggregated with all other
shares of common stock owned by VOMF, VCAF and its affiliates at such time, would exceed the
number of shares of common stock which would result in VOMF, VCAF and its affiliates
beneficially owning (as determined in accordance with Section 13(d) of the Exchange Act and
the rules thereunder) more than 4.99% of all of our common stock outstanding at such time;
provided, however, that upon VOMF or VCAF providing us with sixty-one (61) days notice that
VOMF or VCAF can waive the beneficial ownership limitation with regard to any or all shares of
common stock issuable upon conversion of such securities. The Company and the Vision Entities
(as defined below) are in negotiations to amend the Notes and the Companys preferred stock
certificate of designation to remove the beneficial ownership limitation, but we cannot assure
you that such modification will be approved. Each of VOMF, VCAF, the Investment Manager, the
General Partner, Mr. Benowitz and Mr. Thomson and any affiliate (collectively, the Vision
Entities) disclaims beneficial ownership of all securities reported herein, except to the
extent of his or its pecuniary interest therein, if any, and this report shall not be deemed
an admission that such Vision Entities are the beneficial owner of the shares for purposes of
Section 16 of the Exchange Act or for any other purpose. Mr. Thomson disclaims beneficial
ownership of all securities reported herein. Thus, the percentage of common stock beneficially
owned by Robert Thomson is based on a total of 50,708,462 shares of common stock. The
principal business office of VCAF is 20 West 55th Street, 5th Floor, New York, New York 10019.
The principal business office of VOMF is Vision Opportunity Master Fund, Ltd. c/o Ogier
Fiduciary Services (Cayman) Limited, 89 Nexus Way, Camana Bay, Grand Cayman
, Cayman Islands
KY1-9007.(9)
    
    This number includes warrants to purchase 1,987,639 shares of common stock held by Immersive
Media Corp. and 649,351 shares of common stock upon conversion of the convertible note. Thus,
the percentage of common stock beneficially owned by Immersive Media Corp. is based on a total
of 53,295,452 shares of common stock. The address for Immersive Media Corp. is 224  15th
Avenue SW, Calgary, AB T2R 0P7 Canada. The person exercising voting or dispositive control of
shares held by Immersive Media Corp. is David Anderson.(10)
    
    VOMF and VCAF are the direct owners of the subject securities. VCAF GP, LLC (the General
Partner) serves as general partner of VCAF; the Managing Member of the General Partner is
Adam Benowitz. Vision Capital Advisors, LLC (the Investment Manager) serves as investment
manager to VOMF and VCAF. 57




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##### Table of Contents



Adam Benowitz is the Managing Member of the Investment Manager. Robert Thomson currently serves
as VOMFs and VCAFs representative on our board of directors; VOMF and VCAF may be deemed a
director by virtue of their right to appoint a director. The 5,983,604 shares listed represent
the 5,097,635 and 885,969 common shares held by VOMF and VCAF, respectively, as well as (all
figures given in the aggregate) options to purchase up to 50,000 shares of our common stock
held by Robert Thomson. This number excludes (a) the 10% convertible promissory notes (the
Notes) that are currently convertible into 7,000,000 shares of our common stock and 7,000,000
warrants, (b) 7,451,765 shares of Series A convertible preferred stock convertible into
14,903,530 shares of the our common stock held by VOMF, and (c) 1,918,933 shares of Series A
convertible preferred stock convertible into 3,837,766 shares of our common stock held by VCAF
due to beneficial ownership limitations. The Notes, and the Series A convertible preferred
stock owned by VOMF and VCAF are subject to a beneficial ownership limitation such that at no
time may VOMF or VCAF convert all or a portion of such securities if the number of shares of
common stock to be issued pursuant to such conversion would exceed, when aggregated with all
other shares of common stock owned by VOMF, VCAF and its affiliates at such time, the number of
shares of common stock which would result in VOMF, VCAF and its affiliates beneficially owning
(as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder)
more than 4.99% of all of our common stock outstanding at such time; provided, however, that
upon VOMF or VCAF providing us with sixty-one (61) days notice , VOMF or VCAF can waive the
beneficial ownership Limitation with regard to any or all shares of common stock issuable upon
conversion of such securities. The Company and the Vision Entities (as defined below) are in
negotiations to amend the Notes and the Companys preferred stock certificate of designation to
remove the beneficial ownership limitation, but we cannot assure you that such modification
will be approved. VOMF, VCAF, the Investment Manager, the General Partner, Mr. Benowitz and
Mr. Thomson and any affiliate (the Vision Entities) disclaim beneficial ownership of all
securities reported herein, except to the extent of their pecuniary interest therein, if any,
and this report shall not be deemed an admission that such Vision Entities are the beneficial
owner of the shares for purposes of Section 16 of the Exchange Act or for any other purpose.
Thus, the percentage of common stock beneficially owned by VOMF is based on a total of
50,708,462 shares of common stock.(11)
    
    This number includes 4,000,000 shares of common stock, and warrants to purchase 4,000,000
shares of common stock held by Total Force International Limited. Thus, the percentage of
common stock beneficially owned by Total Force International Limited is based on a total of
54,658,462 shares of common stock. The address for Total Force International Limited is Rm
1604 West Tower, Shun Tak Center, Hong Kong. The person exercising voting or dispositive
control of shares held by Total Force International Limited is Sam Lee.(12)
    
    This number includes 34,038,834 shares of common stock, 1,953,730 shares of common stock
issuable upon conversion of preferred stock, warrants to purchase 2,228,504 shares of common
stock and options to purchase 1,608,333 shares of common stock held by the executive
officers and directors. Thus, the percentage of common stock beneficially owned by the
executive officers and directors is based on a total of 56,449,029 shares of common stock.(13)
    
    As of February 28, 2011, there were 11,502,563 shares of Series A convertible preferred stock
outstanding.(14)
    
    The reported shares of Series A convertible preferred stock are owned directly by the Vision
Entities; such shares are convertible at any time, at the holders election, into 18,741,396
shares of our common stock (the quotient of the liquidation preference amount of $0.70 per
share divided by the current conversion price of $0.35 per share times the number of shares of
Series A convertible preferred stock. The Notes convert into 3,500,000 shares of our preferred
stock. The Vision Entities may not acquire shares of common stock upon conversion of the
convertible preferred stock to the extent that, upon conversion, the number of shares of
common stock beneficially owned by the Vision Entities and its affiliates would exceed 4.99%
of the issued and outstanding shares of our common stock; provided, that this restriction on
conversion can be waived at any time by the funds on 61 days notice. Mr. Thomson disclaims
beneficial ownership of all securities reported herein.(15)
    
    The reported securities are owned directly by VCAF and include 885,969 shares of common
stock, as well as (all figures given in the aggregate) 864,061 shares of Series A convertible
preferred stock, which are 58




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##### Table of Contents



convertible into 1,728,121 shares of our common stock within 60 days. It does not include the
remaining preferred stock, which shares are not convertible within 60 days due to the following
beneficial ownership limitation. The Series A convertible preferred stock are subject to a
beneficial ownership limitation such that VCAF may not convert or exercise such securities to
the extent that the conversion or exercise would cause VCAF common stock holdings to exceed
4.99% of our total common shares outstanding, provided that this restriction on conversion can
be waived at any time by the funds on 61 days notice. Thus, the percentage of common stock
beneficially owned by VCAF is based on a total of 52,386,583 shares of common stock. The
address for VCAF is 20 West 55th Street, Fifth Floor, New York, New York, 10019. 
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 Director Independence
  Transactions with Related Parties
  Accounts Receivable
   Fixed Assets
  Related Party Payables
  59




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Accrued Salary
  Intangible Assets
   Notes Payable
 Immersive Note
   First Amendment to Immersive Note
   60




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##### Table of Contents



Second Amendment to Immersive Note
   Vision Opportunity Master Fund, Ltd. Bridge Financing
 December 30, 2008  10% Convertible Debenture
  61




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##### Table of Contents



May 28, 2009  10% Convertible Debenture
  December 30, 2009  10% Convertible Debenture
     62




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##### Table of Contents



December 30, 2009  Exchange Agreement
    Amendment of December 30, 2009 10% Convertible Debenture
  December 31, 2010  Exchange Agreement
  63




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##### Table of Contents



Debt Discounts and Amortization
   Ki Nam Note
 2010 Note
  2009 Note
     64




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##### Table of Contents



Lock-Up Agreement
  Alfonso Cordero and Mercy Cordero Note
   
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  Years Ended December 31,2010
    
    
    2009Audit Fees
    
    $
    176,880
    
    
    $
    171,270Audit Related Fees
    
    
    3,640
    
    
    
    Tax Fees
    
    
    
    
    
    
    3,525All Other Fees
    
    
    
    
    
    
    Total
    
    $
    180,520
    
    
    $
    174,795
 65




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##### Table of Contents



(1)
    
    Audit Fees This category includes the audit of our annual financial statements,
review of our registration statement on Form S-1, review of financial statements
included in our Quarterly Reports on Form 10-Q, and services that are normally
provided by independent auditors in connection with the engagement for fiscal years.(2)
    
    Audit-Related Fees This category consists of fees reasonably related to the
performance of the audit or review of our financial statements that are not reported
as Audit Fees. Such fees included fees for review of the
Companys responses to SEC comment letters in 2010(3)
    
    Tax Fees This category consists of tax compliance, tax advice and tax planning work.(4)
    
    All Other Fees This category consists of fees for other miscellaneous items, Pre-Approval Policies and Procedures of the Audit Committee
   
 PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 Financial Statements
  66




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##### Table of Contents



Exhibits
 ExhibitExhibit
    
    
    
    No. WhereNumber
    
    Description
    
    Filed3.1
    
    Amended and Restated Certificate of Incorporation, as filed with the Delaware
Secretary of State on March 15, 2006(1)
    
    
    3.13.2
    
    Bylaws adopted April 1, 2006(1)
    
    
    3.23.3
    
    Amendment to Bylaws, dated January 16, 2009(5)
    
    
    3.13.4
    
    Amendment to Certificate of Incorporation dated November 12, 2009(9)
    
    
    3.43.5
    
    Certificate of Designation of Preferences, Rights and Limitations of Series A
Convertible Preferred Stock dated November 12, 2009(9)
    
    
    3.510.1
    
    Standard Industrial/Commercial Multi-Tenant Lease between Land Associates
Trust, E.C. Alsenz, Trustee and T3 Motion, Inc., for 2990 Airway Avenue, Costa
Mesa, CA 92626, dated February 14, 2007(1)
    
    
    10.210.2
    
    Rent Adjustment, Standard Lease Addendum between Land Associates Trust, E.C.
Alsenz, Trustee and T3 Motion, Inc., for 2990 Airway Avenue, Costa Mesa, CA
92626, dated February 14, 2007(1)
    
    
    10.310.3
    
    Option to Extend, Standard Lease Addendum between Land Associates Trust, E.C.
Alsenz, Trustee and T3 Motion, Inc., for 2990 Airway Avenue, Costa Mesa, CA
92626, dated February 14, 2007(1)
    
    
    10.410.4
    
    Addendum to the Air Standard Industrial/Commercial Multi-Tenant Lease between
Land Associates Trust, E.C. Alsenz, Trustee and T3 Motion, Inc., for 2990
Airway Avenue, Costa Mesa, CA 92626, dated February 14, 2007(1)
    
    
    10.510.5
    
    Standard Sublease Agreement between Delta Motors, LLC and T3 Motion, Inc. for
2975 Airway Avenue, Costa Mesa, CA 92626, dated November 1, 2006(1)
    
    
    10.610.6
    
    Form of Distribution Agreement(1)
    
    
    10.710.7+
    
    Director Agreement between David L. Snowden and T3 Motion, Inc., dated
February 28, 2007(1)
    
    
    10.810.8+
    
    Director Agreement between Steven J. Healy and T3 Motion, Inc., dated July 1,
2007(1)
    
    
    10.910.9+
    
    Director Indemnification Agreement between Steven J. Healy and T3 Motion,
Inc., dated July 1, 2007(1)
    
    
    10.1010.10
    
    Securities Purchase Agreement between T3 Motion, Inc. and Immersive Media
Corp., dated December 31, 2007(1)
    
    
    10.1110.11
    
    Promissory Note issued by T3 Motion, Inc. to Immersive Media Corp., dated
December 31, 2007 in the original principal amount of $2,000,000(1)
    
    
    10.1210.12
    
    Common Stock Purchase Warrant issued by T3 Motion, Inc. to Immersive Media
Corp., dated December 31, 2007(1)
    
    
    10.13
 67




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##### Table of Contents



ExhibitExhibit
    
    
    
    No. WhereNumber
    
    Description
    
    Filed10.13
    
    Investor Rights Agreement between T3 Motion, Inc. and Immersive Media Corp.,
dated December 31, 2007(1)
    
    
    10.1410.14
    
    Securities Purchase Agreement between T3 Motion, Inc. and certain Purchasers,
dated March 28, 2008(1)
    
    
    10.1510.15
    
    Registration Rights Agreement between T3 Motion, Inc. and certain Purchasers,
dated March 28, 2008(1)
    
    
    10.1610.16
    
    GeoImmersive Image Data & Software Licensing Agreement between the Company and
Immersive Media Company, dated July 9, 2008(2)
    
    
    10.2010.17
    
    Amendment to Promissory Note issued by the Company in favor of Immersive Media
Corp., dated as of December 19, 2008(3)
    
    
    10.110.18
    
    Securities Purchase Agreement between the Company and Vision Opportunity
Master Fund., Ltd. (Vision),
dated December 30, 2008(4)
    
    
    10.110.19
    
    Form of 10% Secured Convertible
Debenture Due December 30, 2008(4)
    
    
    10.210.20
    
    Subsidiary Guarantee, dated December 30, 2008(4)
    
    
    10.410.21
    
    Security Agreement, dated December 30, 2008 between the Company and the
holders of the Companys 10% Secured Convertible Debentures(4)
    
    
    10.510.22
    
    Form of Lock-up Agreement, dated December 30, 2008(4)
    
    
    10.610.23
    
    Director Offer Letter to Mary S. Schott from Company, dated January 16, 2009(5)
    
    
    10.110.24
    
    Distribution Agreement, dated November 24, 2008 by and between the Company and
CT&T(7)
    
    
    10.2810.25
    
    Settlement Agreement dated as of February 20, 2009 by and between the Company
on the one hand, and Sooner Cap, Albert Lin and Maddog Executive Services on
the other(7)
    
    
    10.2910.26
    
    Distribution Agreement dated as of March 20, 2009 by and between the Company
and Spear International, Ltd.(6)
    
    
    10.110.27
    
    Amendment to GeoImmersive Image Data and Software License Agreement by and
between the Company and Immersive Media Company dated as of March 16, 2009(7)
    
    
    10.3110.28
    
    Securities Purchase Agreement dated as of February 23, 2009 between the
Company and Ki Nam(7)
    
    
    10.3210.29
    
    10% Convertible Note issued by the Company to Ki Nam in the original principal
amount of up to $1,000,000(7)
    
    
    10.3310.30
    
    Series E Common Stock Purchase Warrant issued by the Company to Ki Nam(7)
    
    
    10.3410.31
    
    Amendment to Debenture, Warrant and
Securities Purchase Agreement between the
Company and Vision(7)
    
    
    10.3510.32
    
    Securities Purchase Agreement dated
as of May 28, 2009 between the Company
and Vision, dated May 28, 2009(8)
    
    
    10.110.33
    
    Form of 10% Secured Convertible Debenture issued by the Company to Vision,
dated May 28, 2009(8)
    
    
    10.210.34
    
    Subsidiary Guarantee, dated as of May
28, 2009(8)
    
    
    10.410.35
    
    Security Agreement between the Company and
Vision dated as of May 28, 2009(8)
    
    
    10.510.36
    
    Securities Purchase Agreement
between the Company and Vision, dated as of
December 30, 2009(10)
    
    
    10.110.37
    
    Form of 10% Secured Convertible Debenture issued by the Company to Vision, dated
as of December 30, 2009 in the original principal amount of $3,500,000(10)
    
    
    10.210.38
    
    Form of Series G Common Stock Purchase Warrant issued by the Company dated as of December 30, 2009(10)
    
    
    10.310.39
    
    Subsidiary Guarantee dated as of December 30, 2009, issued by T3 Motion, Ltd.(10)
    
    
    10.4
 68




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##### Table of Contents



ExhibitExhibit
    
    
    
    No. WhereNumber
    
    Description
    
    Filed10.40
    
    Security Agreement dated as of December 30, 2009, among the Company, T3
Motion, Ltd. and Vision(10)
    
    
    10.510.41
    
    Securities Exchange Agreement dated as of December 30, 2009, among the
Company, Vision and Vision Capital Advantage
Fund, L.P. (VCAF)(10)
    
    
    10.610.42
    
    Lock-Up Agreement dated as of December 30, 2009 between the Company and Ki
Nam(10)
    
    
    10.710.43
    
    Stockholders Agreement dated as of December 30, 2009, among the Company, Ki
Nam, Vision and VCAF(10)
    
    
    10.810.44
    
    Amendment No. 2 dated as of March 31, 2010 to Immersive Media Promissory Note
(11)
    
    
    10.110.45
    
    Employment Agreement dated as of January 1, 2010 between the Company and Kelly
Anderson (11)
    
    
    10.210.46
    
    2010 Stock Option/Stock Issuance Plan (12)
    
    
    10.110.47
    
    Employment Agreement dated as of August 13, 2010 between the Company and Ki
Nam (14)
    
    
    10.110.48
    
    Settlement Agreement dated as of July 29, 2010 and executed on August 3, 2010
by and among the Company, Ki Nam, Jason Kim and Preproduction Plastics, Inc. (13)
    
    
    10.210.49
    
    Amendment No. 1 to 10% Senior Secured Convertible Debenture dated as of
December 31, 2010 between the Company and Vision (15)
    
    
    10.110.50
    
    Securities Exchange Agreement dated December 31, 2010 between the Company and Vision (15)
    
    
    10.210.51
    
    Unsecured Promissory Note dated September 30, 2010 in the original principal amount of $1.0 million
issued by the Company to Alfonso G. Cordero and Mercy B. Cordero, Trustees of the Cordero Charitable Remainder Trust (16)
    
    
    10.110.52
    
    2007 Stock Option/Stock Issuance
Plan (1)
    
    
    10.110.53*
    
    Form of Stock Option Agreement for use with 2007 Stock Option/Stock Issuance
Plan10.54*
    
    Form of Stock Option Agreement for use with 2010 Stock Option/Stock Issuance Plan10.55
    
    10% Promissory Note dated as of
February 24, 2011 in the original principal amount of up to $2.5 million issued to Ki Nam(17)
    
    
    10.114.1*
    
    Code of Conduct and Ethics21.1
    
    List of Subsidiaries(1)31.1*
    
    Section 302 Certificate of Chief Executive Officer31.2*
    
    Section 302 Certificate of Chief Financial Officer32.1*
    
    Section 906 Certificate of Chief Executive Officer32.2*
    
    Section 906 Certificate of Chief Financial Officer
 
 *
    
    Filed herewith.
    
    A contract, compensatory plan or arrangement in which directors or executive
officers are eligible to participate.
    
    Confidential treatment has previously been granted by the SEC for certain
portions of the referenced exhibit pursuant to Rule 406 under the Securities Act.(1)
    
    Filed with the Companys Registration Statement on Form S-1 filed on May 13, 2008.(2)
    
    Filed with the Companys Amendment No. 1 to the Registration Statement on Form
S-1 filed on July 14, 2008.(3)
    
    Filed with the Companys Current Report on Form 8-K filed on December 31, 2008.(4)
    
    Filed with the Companys Current Report on Form 8-K filed on January 12, 2009. 69




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##### Table of Contents



(5)
    
    Filed with the Companys Current Report on Form 8-K filed on January 20, 2009.(6)
    
    Filed with the Companys Current Report on Form 8-K filed on March 26, 2009.(7)
    
    Filed with the Companys Annual Report on Form 10-K filed on March 31, 2009.(8)
    
    Filed with the Companys Current Report on Form 8-K filed on June 5, 2009.(9)
    
    Filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2009 and filed on November 16, 2009.(10)
    
    Filed with the Companys Current Report on Form 8-K filed on January 6, 2010.(11)
    
    Filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
March 31, 2010 and filed on May 17, 2010.(12)
    
    Filed with the Companys Current Report on Form 8-K
filed on July 7, 2010.(13)
    
    Filed with the Companys Current Report on Form 8-K filed on August 9, 2010.(14)
    
    Filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2010 filed on August 16, 2010.(15)
    
    Filed with the Companys Current Report on Form 8-K filed on January 6, 2011.(16)
    
    Filed with the Companys Current Report on Form 8-K filed on January 21, 2011.(17)
    
    Filed with the Companys Current Report on Form 8-K
filed on March 1, 2011. 70




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##### Table of Contents



T3 MOTION, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageCONSOLIDATED FINANCIAL STATEMENTSReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets as of December 31, 2010 and 2009
    
    F-3Consolidated Statements of Operations and Comprehensive Loss for the years ended
December 31, 2010 and 2009
    
    F-4Consolidated Statements of Stockholders Equity (Deficit) for the years ended
December 31, 2010 and 2009
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009
    
    F-6Notes to Consolidated Financial Statements
    
    F-8
 F-1




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
       
 F-2




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##### Table of Contents



T3 MOTION, INC.
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2010
    
    
    2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    123,861
    
    
    $
    2,580,798Restricted cash
    
    
    10,000
    
    
    
    Accounts receivable, net of reserves of $50,000 and
$37,000 at December 31, 2010 and 2009, respectively
    
    
    595,261
    
    
    
    747,661Related party receivables
    
    
    35,722
    
    
    
    35,658Inventories
    
    
    1,064,546
    
    
    
    1,169,216Prepaid expenses and other current assets
    
    
    251,467
    
    
    
    161,997Total current assets
    
    
    2,080,857
    
    
    
    4,695,330Property and equipment, net
    
    
    564,700
    
    
    
    868,343Deposits
    
    
    934,359
    
    
    
    495,648Total assets
    
    $
    3,579,916
    
    
    $
    6,059,321LIABILITIES
AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable
    
    $
    1,335,761
    
    
    $
    872,783Accrued expenses
    
    
    1,483,220
    
    
    
    1,064,707Related party payables
    
    
    51,973
    
    
    
    104,931Note payable
    
    
    243,468
    
    
    
    Derivative liabilities
    
    
    9,633,105
    
    
    
    11,824,476Related party notes payable, net of debt discounts
    
    
    4,391,121
    
    
    
    1,836,837Total current liabilities
    
    
    17,138,648
    
    
    
    15,703,734Long-term liabilities:Related party notes payable
    
    
    2,121,000
    
    
    
    Total liabilities
    
    
    19,259,648
    
    
    
    15,703,734Commitments and contingenciesStockholders equity (deficit):Series A convertible preferred stock, $0.001 par
value; 20,000,000 shares authorized; 11,502,563 and
12,347,563 shares issued and outstanding at December
31, 2010 and 2009, respectively
    
    
    11,503
    
    
    
    12,348Common stock, $0.001 par value; 150,000,000 shares
authorized; 50,658,462 and 44,663,462 shares issued
and outstanding at December 31, 2010 and 2009,
respectively
    
    
    50,659
    
    
    
    44,664Additional paid-in capital
    
    
    29,373,947
    
    
    
    23,356,724Accumulated deficit
    
    
    (45,120,210
    )
    
    
    (33,062,174
    )Accumulated other comprehensive income
    
    
    4,369
    
    
    
    4,025Total stockholders equity (deficit)
    
    
    (15,679,732
    )
    
    
    (9,644,413
    )Total liabilities and stockholders equity (deficit)
    
    $
    3,579,916
    
    
    $
    6,059,321
  F-3




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##### Table of Contents



T3 MOTION, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 Years Ended December 31,2010
    
    
    2009Net revenues
    
    $
    4,682,908
    
    
    $
    4,644,022Cost of net revenues
    
    
    4,512,497
    
    
    
    4,988,118Gross profit (loss)
    
    
    170,411
    
    
    
    (344,096
    )Operating expenses:Sales and marketing
    
    
    1,826,736
    
    
    
    1,927,824Research and development
    
    
    1,602,961
    
    
    
    1,395,309General and administrative
    
    
    3,579,817
    
    
    
    5,126,801Total operating expenses
    
    
    7,009,514
    
    
    
    8,449,934Loss from operations
    
    
    (6,839,103
    )
    
    
    (8,794,030
    )Other income (expense), net:Interest income
    
    
    1,321
    
    
    
    2,510Other income, net
    
    
    2,487,310
    
    
    
    5,565,869Interest expense
    
    
    (3,976,615
    )
    
    
    (3,472,442
    )Total other income (expense), net
    
    
    (1,487,984
    )
    
    
    2,095,937Loss before provision for income taxes
    
    
    (8,327,087
    )
    
    
    (6,698,093
    )Provision for income taxes
    
    
    800
    
    
    
    800Net loss
    
    
    (8,327,887
    )
    
    
    (6,698,893
    )Deemed dividend to preferred stockholders
    
    
    (3,730,149
    )
    
    
    (6,116
    )Net loss attributable to common stockholders
    
    $
    (12,058,036
    )
    
    $
    (6,705,009
    )Other comprehensive income (loss):Foreign currency translation income (loss)
    
    
    344
    
    
    
    (632
    )Comprehensive loss
    
    $
    (8,327,543
    )
    
    $
    (6,699,525
    )Net loss per share:Basic and diluted
    
    $
    (0.25
    )
    
    $
    (0.15
    )Weighted average number of common shares
outstanding:Basic and diluted
    
    
    47,689,785
    
    
    
    44,445,042
  F-4




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##### Table of Contents



T3 MOTION, INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 Other
    
    
    TotalPreferred
    
    
    
    
    
    
    Common
    
    
    Additional
    
    
    
    
    
    
    Comprehensive
    
    
    StockholdersPreferred
    
    
    Stock
    
    
    Common
    
    
    Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Income
    
    
    (Deficit)Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    (Loss)
    
    
    EquityBalance, January 1, 2009
    
    
    
    
    
    $
    
    
    
    
    43,592,428
    
    
    $
    43,593
    
    
    $
    25,043,452
    
    
    $
    (24,375,827
    )
    
    $
    4,657
    
    
    $
    715,875Issuance of preferred stock for cash, net of issuance costs of $21,058
    
    
    2,000,000
    
    
    
    2,000
    
    
    
    
    
    
    
    
    
    
    
    1,976,942
    
    
    
    
    
    
    
    
    
    
    
    1,978,942Conversion of notes payable and accrued interest to equity
    
    
    4,031,865
    
    
    
    4,032
    
    
    
    
    
    
    
    
    
    
    
    4,691,600
    
    
    
    
    
    
    
    
    
    
    
    4,695,632Issuance of preferred stock for anti-dilution
    
    
    4,051,948
    
    
    
    4,052
    
    
    
    
    
    
    
    
    
    
    
    (4,052
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of preferred stock for exchange of warrants
    
    
    2,263,750
    
    
    
    2,264
    
    
    
    
    
    
    
    
    
    
    
    1,153,126
    
    
    
    
    
    
    
    
    
    
    
    1,155,390Amortization of preferred stock discount related to conversion
feature and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,116
    
    
    
    (6,116
    )
    
    
    
    
    
    
    Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,013,085
    )
    
    
    (1,981,338
    )
    
    
    
    
    
    
    (5,994,423
    )Preferred stock discount related to conversion feature and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,054,851
    )
    
    
    
    
    
    
    
    
    
    
    (9,054,851
    )Reclassification of derivative liability to equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    208,857
    
    
    
    
    
    
    
    
    
    
    
    208,857Issuance of common stock for outside services
    
    
    
    
    
    
    
    
    
    
    1,071,034
    
    
    
    1,071
    
    
    
    1,665,135
    
    
    
    
    
    
    
    
    
    
    
    1,666,206Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,683,484
    
    
    
    
    
    
    
    
    
    
    
    1,683,484Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (632
    )
    
    
    (632
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,698,893
    )
    
    
    
    
    
    
    (6,698,893
    )Balance, December 31, 2009
    
    
    12,347,563
    
    
    
    12,348
    
    
    
    44,663,462
    
    
    
    44,664
    
    
    
    23,356,724
    
    
    
    (33,062,174
    )
    
    
    4,025
    
    
    
    (9,644,413
    )Recission of common stock for cash
    
    
    
    
    
    
    
    
    
    
    (125,000
    )
    
    
    (125
    )
    
    
    (249,875
    )
    
    
    
    
    
    
    
    
    
    
    (250,000
    )Conversion of preferred to common stock
    
    
    (2,000,000
    )
    
    
    (2,000
    )
    
    
    4,000,000
    
    
    
    4,000
    
    
    
    (2,000
    )
    
    
    
    
    
    
    
    
    
    
    Issuance of preferred stock for cash
    
    
    1,155,000
    
    
    
    1,155
    
    
    
    
    
    
    
    
    
    
    
    1,153,845
    
    
    
    
    
    
    
    
    
    
    
    1,155,000Issuance of common stock for exchange of warrants
    
    
    
    
    
    
    
    
    
    
    2,100,000
    
    
    
    2,100
    
    
    
    837,900
    
    
    
    
    
    
    
    
    
    
    
    840,000Amortization of preferred stock discount related to conversion
feature and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,730,149
    
    
    
    (3,730,149
    )
    
    
    
    
    
    
    Preferred stock discount related to conversion feature and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,401,360
    )
    
    
    
    
    
    
    
    
    
    
    (1,401,360
    )Reclassification of derivative liability to equity due to conversion
of preferred stock to common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,121,965
    
    
    
    
    
    
    
    
    
    
    
    1,121,965Issuance of common stock for outside services
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    20
    
    
    
    9,980
    
    
    
    
    
    
    
    
    
    
    
    10,000Share-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    816,619
    
    
    
    
    
    
    
    
    
    
    
    816,619Foreign currency translation loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    344
    
    
    
    344Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,327,887
    )
    
    
    
    
    
    
    (8,327,887
    )Balance, December 31, 2010
    
    
    11,502,563
    
    
    $
    11,503
    
    
    
    50,658,462
    
    
    $
    50,659
    
    
    $
    29,373,947
    
    
    $
    (45,120,210
    )
    
    $
    4,369
    
    
    $
    (15,679,732
    )
  F-5




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##### Table of Contents



T3 MOTION, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (8,327,887
    )
    
    $
    (6,698,893
    )Adjustments to reconcile net loss to net cash used in operating activities:Bad debt expense
    
    
    13,000
    
    
    
    10,000Depreciation and amortization
    
    
    359,292
    
    
    
    989,867Warranty expense
    
    
    130,916
    
    
    
    129,183Share-based compensation expense
    
    
    816,619
    
    
    
    1,683,484Gain on exchange of warrants for common stock
    
    
    (368,478
    )
    
    
    Gain on sale of property and equipment
    
    
    (7,500
    )
    
    
    Loss on conversion of debt to preferred stock, net
    
    
    
    
    
    
    617,932Change in fair value of derivative liabilities
    
    
    (2,101,067
    )
    
    
    (6,184,151
    )Investor relations expense
    
    
    10,000
    
    
    
    130,000Amortization of debt discounts
    
    
    3,393,063
    
    
    
    2,919,673Changes in operating assets and liabilities:Accounts receivable
    
    
    139,400
    
    
    
    689,343Inventories
    
    
    104,670
    
    
    
    645,254Prepaid expenses and other current assets
    
    
    (89,470
    )
    
    
    450,798Deposits
    
    
    31,888
    
    
    
    (3,887
    )Restricted cash
    
    
    (10,000
    )
    
    
    Accounts payable and accrued expenses
    
    
    773,445
    
    
    
    (719,720
    )Related party payables
    
    
    (52,958
    )
    
    
    (15,818
    )Net cash used in operating activities
    
    
    (5,185,067
    )
    
    
    (5,356,937
    )CASH FLOWS FROM INVESTING ACTIVITIES:Loans/advances to related parties
    
    
    (32,741
    )
    
    
    (6,756
    )Repayment of loans/advances to related parties
    
    
    39,496
    
    
    
    4,346Purchases of property and equipment
    
    
    (62,469
    )
    
    
    (36,040
    )Proceeds from sale of property and equipment
    
    
    7,500
    
    
    
    Net cash used in investing activities
    
    
    (48,214
    )
    
    
    (38,450
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from notes payable from related parties
    
    
    
    
    
    
    4,514,963Proceeds from notes payable to related parties
    
    
    2,511,000
    
    
    
    Recission of common stock
    
    
    (250,000
    )
    
    
    Repayment of notes payable to related parties
    
    
    (390,000
    )
    
    
    Repayment of note payable
    
    
    (250,000
    )
    
    
    (199,829
    )Proceeds from the sale of preferred stock, net of issuance costs
    
    
    1,155,000
    
    
    
    1,978,942Net cash provided by financing activities
    
    
    2,776,000
    
    
    
    6,294,076Effect of exchange rates on cash
    
    
    344
    
    
    
    (632
    )Net increase (decrease) in cash and cash equivalents
    
    
    (2,456,937
    )
    
    
    898,057Cash and cash equivalents, beginning of year
    
    
    2,580,798
    
    
    
    1,682,741Cash and cash equivalents, end of year
    
    $
    123,861
    
    
    $
    2,580,798SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest
    
    $
    41,877
    
    
    $
    127,116Income taxes
    
    $
    800
    
    
    $
    800
 F-6




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##### Table of Contents



T3 MOTION, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (Continued)
 Years Ended December 31,2010
    
    
    2009Supplemental disclosure of non-cash activities:Issuance of common stock for related party payables
    
    $
    
    
    
    $
    1,536,206Conversion of related party payable to related party notes payable
    
    $
    
    
    
    $
    498,528Conversion of accounts payable to note payable
    
    $
    
    
    
    $
    199,829Cumulative effect to retained earnings due to adoption of accounting standard
    
    $
    
    
    
    $
    1,981,338Cumulative effect to additional paid-in capital due to adoption of accounting standard
    
    $
    
    
    
    $
    4,013,085Cumulative effect to debt discount due to adoption of accounting standard
    
    $
    
    
    
    $
    859,955Conversion option of preferred stock and warrants issued with preferred stock
recorded as derivative liabilities
    
    $
    1,401,360
    
    
    $
    9,054,851Conversion of debt and accrued interest to equity
    
    $
    
    
    
    $
    4,031,865Reclassification of derivative liability to equity
    
    $
    1,121,965
    
    
    $
    208,857Issuance of preferred stock for exchange of warrants
    
    $
    
    
    
    $
    1,155,390Issuance of common stock for exchange of warrants
    
    $
    840,000
    
    
    $
    Debt discount and warrant liability recorded upon issuance of warrants
    
    $
    838,779
    
    
    $
    3,510,751Amortization of preferred stock discount related to conversion feature and warrants
    
    $
    3,730,149
    
    
    $
    6,116Issuance of preferred stock for anti-dilution
    
    $
    
    
    
    $
    4,052Conversion of preferred stock to common stock
    
    $
    4,000
    
    
    $
    Deposits for equipment recorded as note payable due to settlement agreement
    
    $
    470,599
    
    
    $
    Sale of property and equipment to related party for a related party receivable
    
    $
    6,820
    
    
    $
    
  F-7




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED
DECEMBER 31, 2010 and 2009
 NOTE 1  DESCRIPTION OF BUSINESS
 Organization
   Going Concern
    F-8




---



##### Table of Contents



NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Principles of Consolidation
  Reclassifications
  Use of Estimates
  Foreign Currency Translation
  Concentrations of Credit Risk
 Cash and Cash Equivalents
   Restricted Cash
  F-9




---



##### Table of Contents



Accounts Receivable
   Accounts Payable
  Inventories
  Property and Equipment
  Deposits
  Impairment of Long-Lived Assets
  F-10




---



##### Table of Contents



Fair Value of Financial Instruments
       Beneficial Conversion Features and Debt Discounts
  Revenue Recognition
   F-11




---



##### Table of Contents



Share-Based Compensation
    Income Taxes
  Loss Per Share
  F-12




---



##### Table of Contents



Years Ended December 31,2010
    
    
    2009Net loss
    
    $
    (8,327,887
    )
    
    $
    (6,698,893
    )Deemed dividend to preferred stockholders
    
    
    (3,730,149
    )
    
    
    (6,116
    )Net loss attributable to common stockholders
    
    $
    (12,058,036
    )
    
    $
    (6,705,009
    )Weighted average number of common shares outstanding:Basic and diluted
    
    
    47,689,785
    
    
    
    44,445,042Net loss per share:Basic and diluted
    
    $
    (0.25
    )
    
    $
    (0.15
    )
 Research and Development
  Advertising
  Business Segments
  Years Ended December 31,2010
    
    
    2009Net revenues:T3 Series domestic
    
    $
    3,842,030
    
    
    $
    3,654,290T3 Series international
    
    
    840,878
    
    
    
    963,911CT Series domestic
    
    
    
    
    
    
    25,821Total net revenues
    
    $
    4,682,908
    
    
    $
    4,644,022
 Recent Accounting Pronouncements
  F-13




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##### Table of Contents



NOTE 3  INVENTORIES
  2010
    
    
    2009Raw materials
    
    $
    788,496
    
    
    $
    959,909Work-in-process
    
    
    212,723
    
    
    
    91,013Finished goods
    
    
    63,327
    
    
    
    118,294$
    1,064,546
    
    
    $
    1,169,216
 NOTE 4  PREPAID EXPENSES AND OTHER CURRENT ASSETS
  2010
    
    
    2009Prepaid inventory
    
    $
    148,410
    
    
    $
    71,370Prepaid expenses and other current assets
    
    
    103,057
    
    
    
    90,627$
    251,467
    
    
    $
    161,997
 NOTE 5  PROPERTY AND EQUIPMENT
  2010
    
    
    2009Office and computer equipment
    
    $
    316,718
    
    
    $
    291,874Demonstration vehicles
    
    
    390,220
    
    
    
    370,456Manufacturing equipment
    
    
    952,361
    
    
    
    1,015,320Leasehold improvements
    
    
    108,336
    
    
    
    108,3361,767,635
    
    
    
    1,785,986Less accumulated depreciation and amortization
    
    
    (1,202,935
    )
    
    
    (917,643
    )$
    564,700
    
    
    $
    868,343
  2010
    
    
    2009Cost of revenues
    
    $
    197,799
    
    
    $
    200,151Sales and marketing
    
    
    79,795
    
    
    
    75,480General and administrative
    
    
    81,698
    
    
    
    89,236$
    359,292
    
    
    $
    364,867
 NOTE 6  INCOME TAXES
  2010
    
    
    2009Current:Federal
    
    $
    
    
    
    $
    State
    
    
    800
    
    
    
    800Foreign
    
    
    
    
    
    
    $
    800
    
    
    $
    800Deferred:Federal
    
    $
    (2,290,997
    )
    
    $
    (2,580,732
    )State
    
    
    (605,504
    )
    
    
    (702,405
    )Foreign
    
    
    (3,006
    )
    
    
    (30,563
    )(2,899,507
    )
    
    
    (3,313,700
    )Less change in allowance
    
    
    2,899,507
    
    
    
    3,313,700Provision for income taxes
    
    $
    800
    
    
    $
    800
 F-14




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##### Table of Contents



2010
    
    
    2009Taxes calculated at federal rate
    
    $
    (2,816,761
    )
    
    $
    (2,277,629
    )State tax, net of federal benefit
    
    
    800
    
    
    
    528Exclusion of certain meals and entertainment
    
    
    3,842
    
    
    
    4,678Foreign losses  not benefitted
    
    
    3,406
    
    
    
    34,638Incentive stock options
    
    
    277,651
    
    
    
    572,385(Gain) loss on debt conversion
    
    
    (125,283
    )
    
    
    225,686Research credits
    
    
    (55,183
    )
    
    
    (36,723
    )Other, net
    
    
    13,915
    
    
    
    35,575Valuation allowance
    
    
    2,698,414
    
    
    
    1,441,662Provision for income taxes
    
    $
    800
    
    
    $
    800
  2010
    
    
    2009Accruals and reserves
    
    $
    920,716
    
    
    $
    240,483Basis difference in fixed assets
    
    
    (51,454
    )
    
    
    (70,771
    )Stock options
    
    
    21,109
    
    
    
    21,109Tax credits
    
    
    420,608
    
    
    
    353,808Net operating loss carryforward
    
    
    14,208,405
    
    
    
    12,075,24915,519,384
    
    
    
    12,619,878Valuation allowance
    
    
    (15,519,384
    )
    
    
    (12,619,878
    )Net deferred tax asset
    
    $
    
    
    
    $
    
     F-15




---



##### Table of Contents



NOTE 7  NOTE PAYABLE
  2010
    
    
    2009Note payable to Preproduction Plastics, Inc.,
interest payable monthly at 6% per annum, monthly
payments of $50,000 plus interest, due May 2011
    
    $
    243,468
    
    
    $
    
  NOTE 8  RELATED PARTY NOTES PAYABLE
  2010
    
    
    2009Note payable to Immersive Media Corp., 15% interest rate per
annum, net of discount of $108,879 and $41,265, respectively, due
March 31, 2011
    
    $
    891,121
    
    
    $
    958,735Note payable to Vision Opportunity Master Fund, Ltd., 10% interest
rate per annum, net of discount of $0 and $2,621,898, respectively,
due March 31, 2011
    
    
    3,500,000
    
    
    
    878,102Note payable to Ki Nam, 10% interest rate per annum, due March 31, 2012
    
    
    1,121,000
    
    
    
    Note payable to Alfonso and Mercy Cordero, 10% interest rate per
annum, due October 1, 2013
    
    
    1,000,000
    
    
    
    $
    6,512,121
    
    
    $
    1,836,837Less: current portion
    
    
    (4,391,121
    )
    
    
    (1,836,837
    )$
    2,121,000
    
    
    $
    
 F-16




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##### Table of Contents



Year Ending December 31,
    
    Related Party 
Notes Payable2011
    
    $
    4,500,0002012
    
    $
    1,121,0002013
    
    $
    1,000,000
 Immersive Note
   First Amendment to Immersive Note
    F-17




---



##### Table of Contents



Second Amendment to Immersive Note
   Vision Opportunity Master Fund, Ltd. Bridge Financing
 December 30, 2008  10% Convertible Debenture
   May 28, 2009  10% Convertible Debenture
  F-18




---



##### Table of Contents



December 30, 2009  10% Convertible Debenture
       December 30, 2009  Exchange Agreement
  F-19




---



##### Table of Contents



Amendment of December 30, 2009 10% Convertible Debenture
  December 31, 2010  Exchange Agreement
  Debt Discounts and Amortization
   Ki Nam Note
 2010 Note
  F-20




---



##### Table of Contents



2009 Note
       F-21




---



##### Table of Contents



Lock-Up Agreement
  Alfonso Cordero and Mercy Cordero Note
   NOTE 9  DERIVATIVE LIABILITIES
     F-22




---



##### Table of Contents



2010
    
    2009Annual dividend yield
    
    
    
    Expected life (years)
    
    0.25-5
    
    0.25-5.00Risk-free interest rate
    
    0.12%-2.55%
        0.40%-2.69
%Expected volatility
    
    79%-162
    %

    84%-159
%
  F-23




---



##### Table of Contents



Level 3 Carrying Value2010
    
    
    2009Embedded conversion options
    
    $
    5,991,957
    
    
    $
    8,853,893Warrants
    
    
    3,641,148
    
    
    
    2,970,583$
    9,633,105
    
    
    $
    11,824,476Decrease in fair value
    
    $
    2,101,067
    
    
    $
    6,184,151
  2010
    
    
    2009Balance at December 31,
    
    $
    11,824,476
    
    
    $
    Cumulative effect of adoption
    
    
    
    
    
    
    6,853,108Issuance of warrants and conversion option
    
    
    2,240,139
    
    
    
    12,565,601Conversion of debt
    
    
    
    
    
    
    (1,410,082
    )Conversion of preferred stock to common stock
    
    
    (1,121,965
    )
    
    
    Exchange of warrants for common stock
    
    
    (1,208,478
    )
    
    
    Change in fair value
    
    
    (2,101,067
    )
    
    
    (6,184,151
    )Balance at December 31,
    
    $
    9,633,105
    
    
    $
    11,824,476
 NOTE 10  EQUITY
 Series A Convertible Preferred Stock
    F-24




---



##### Table of Contents



Common Stock
    F-25




---



##### Table of Contents



NOTE 11  STOCK OPTIONS AND WARRANTS
 Stock Option/Stock Issuance Plans
     Years Ended December 31,2010
    
    
    2009Stock compensation expense  cost of net revenues
    
    $
    57,466
    
    
    $
    124,373Stock compensation expense  sales and marketing
    
    
    148,649
    
    
    
    347,556Stock compensation expense  research and development
    
    
    125,527
    
    
    
    202,507Stock compensation expense  general and administrative
    
    
    484,977
    
    
    
    1,009,048Total stock compensation expense
    
    $
    816,619
    
    
    $
    1,683,484
 F-26




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##### Table of Contents



Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOptions outstanding  January 1, 2010
    
    
    6,033,188
    
    
    $
    0.64Options granted
    
    
    2,960,500
    
    
    
    0.50Options exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (2,502,793
    )
    
    
    0.65Options cancelled
    
    
    
    
    
    
    Total options outstanding  December 31, 2010
    
    
    6,490,895
    
    
    $
    0.57
    
    
    
    8.22
    
    
    $
    Options exercisable  December 31, 2010
    
    
    3,248,371
    
    
    $
    0.64
    
    
    
    7.10
    
    
    $
    Options vested and expected to vest  December 31, 2010
    
    
    6,352,288
    
    
    $
    0.57
    
    
    
    8.18
    
    
    $
    Options available for grant under the 2010 Plan at December 31, 2010
    
    
    3,720,500Weighted average fair value of options granted
    
    $
    0.38
  Options Outstanding
    
    
    Options ExercisableWeighted Average
    
    
    WeightedRemaining
    
    
    AverageExercise
    
    
    
    
    
    Contractual
    
    
    Exercise
    
    
    
    
    
    
    Weighted AveragePrices
    
    Number of Shares
    
    
    Life
    
    
    Price
    
    
    Number of Shares
    
    
    Exercise Price(In years)$0.50
    
    
    3,545,583
    
    
    
    9.23
    
    
    $
    0.50
    
    
    
    458,228
    
    
    $
    0.50$0.60
    
    
    1,945,312
    
    
    
    7.03
    
    
    $
    0.60
    
    
    
    1,790,143
    
    
    $
    0.60$0.77
    
    
    1,000,000
    
    
    
    6.95
    
    
    $
    0.77
    
    
    
    1,000,000
    
    
    $
    0.776,490,895
    
    
    
    8.20
    
    
    $
    0.57
    
    
    
    3,248,371
    
    
    $
    0.64
 Summary of Assumptions and Activity
   Years Ended December 31,2010
    
    
    2009Expected term (in years)
    
    
    6.1
    
    
    
    5.5Expected volatility
    
    
    93
    %
    
    
    94%  100
    %Risk-free interest rate
    
    
    1.8
    %
    
    
    2.0
    %Expected dividends
    
    
    
    
    
    
    Forfeiture rate
    
    
    2.8
    %
    
    
    2.8
    %Weighted-average grant date fair value per share
    
    $
    0.38
    
    
    $
    1.03
   F-27




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##### Table of Contents



Warrants
  Weighted-
    
    
    Weighted-AverageExercise
    
    
    Contractual
    
    
    Aggregate IntrinsicNumber of Shares
    
    
    Price
    
    
    Life
    
    
    Value(In years)Warrants outstanding  January 1, 2010
    
    
    10,746,143
    
    
    $
    0.87Warrants granted (See Notes 8 and 10)
    
    
    4,397,639
    
    
    
    0.70Warrants exchanged
    
    
    (3,500,000
    )
    
    
    0.70Warrants cancelled (See Note 8)
    
    
    (947,639
    )
    
    
    0.93Warrants outstanding and
exercisable-December 31, 2010
    
    
    10,696,143
    
    
    $
    0.73
    
    
    
    4.07
    
    
    $
    
 NOTE 12  COMMITMENTS AND CONTINGENCIES
 Operating Leases
    YearsEndingDecember 31,
    
    Total2011
    
    
    305,0002012
    
    
    209,000$
    514,000
 Indemnities and Guarantees
  Warranties
  F-28




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##### Table of Contents



2010
    
    
    2009Beginning balance, January 1,
    
    $
    235,898
    
    
    $
    362,469Charged to cost of revenues
    
    
    130,916
    
    
    
    129,183Usage
    
    
    (201,173
    )
    
    
    (255,754
    )Ending balance, December 31
    
    $
    165,641
    
    
    $
    235,898
 Legal Contingency
 Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim
   F-29




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##### Table of Contents



NOTE 13  RELATED PARTY TRANSACTIONS
  Controlling Ownership
  Accounts Receivable
   Fixed Assets
  Related Party Payables
  Accrued Salary
  Intangible Assets
   F-30




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##### Table of Contents



Notes Payable  See Note 8
 NOTE 14  SUBSEQUENT EVENTS
   Date of Advance
    
    Amount AdvancedJanuary 7, 2011
    
    $
    75,000January 25, 2011
    
    
    50,000February 9, 2011
    
    
    45,000February 25, 2011
    
    
    30,000February 28, 2011
    
    
    100,000March 10, 2011
    
    
    25,000March 11, 2011
    
    
    475,000
  F-31




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##### Table of Contents



SIGNATURES
  T3 MOTION, INC.By:
    /s/  Ki NamKi Nam,President, Chief Executive Officer and Chief
Operating Officer   Signature
    
    Position
    
    Date/s/ Ki Nam
Ki Nam
    
    Chairman and Chief Executive Officer (principal
executive officer)
    
    March 31, 2011/s/ Kelly J. Anderson
Kelly J. Anderson
    
    Executive Vice President and Chief Financial
Officer (principal financial
and accounting officer)
    
    March 31, 2011/s/ David Snowden
David Snowden
    
    Director
    
    March 31, 2011/s/ Steven J. Healy
Steven J. Healy
    
    Director
    
    March 31, 2011/s/ Mary S. Schott
Mary S. Schott
    
    Director
    
    March 31, 2011/s/ Robert Thomson
Robert Thomson
    
    Director
    
    March 31, 2011
 71




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##### Table of Contents



INDEX TO EXHIBITS
 ExhibitExhibit
    
    
    
    No. WhereNumber
    
    Description
    
    Filed3.1
    
    Amended and Restated Certificate of Incorporation, as filed with the Delaware
Secretary of State on March 15, 2006(1)
    
    
    3.13.2
    
    Bylaws adopted April 1, 2006(1)
    
    
    3.23.3
    
    Amendment to Bylaws, dated January 16, 2009(5)
    
    
    3.13.4
    
    Amendment to Certificate of Incorporation dated November 12, 2009(9)
    
    
    3.43.5
    
    Certificate of Designation of Preferences, Rights and Limitations of Series A
Convertible Preferred Stock dated November 12, 2009(9)
    
    
    3.510.1
    
    Standard Industrial/Commercial Multi-Tenant Lease between Land Associates
Trust, E.C. Alsenz, Trustee and T3 Motion, Inc., for 2990 Airway Avenue, Costa
Mesa, CA 92626, dated February 14, 2007(1)
    
    
    10.210.2
    
    Rent Adjustment, Standard Lease Addendum between Land Associates Trust, E.C.
Alsenz, Trustee and T3 Motion, Inc., for 2990 Airway Avenue, Costa Mesa, CA
92626, dated February 14, 2007(1)
    
    
    10.310.3
    
    Option to Extend, Standard Lease Addendum between Land Associates Trust, E.C.
Alsenz, Trustee and T3 Motion, Inc., for 2990 Airway Avenue, Costa Mesa, CA
92626, dated February 14, 2007(1)
    
    
    10.410.4
    
    Addendum to the Air Standard Industrial/Commercial Multi-Tenant Lease between
Land Associates Trust, E.C. Alsenz, Trustee and T3 Motion, Inc., for 2990
Airway Avenue, Costa Mesa, CA 92626, dated February 14, 2007(1)
    
    
    10.510.5
    
    Standard Sublease Agreement between Delta Motors, LLC and T3 Motion, Inc. for
2975 Airway Avenue, Costa Mesa, CA 92626, dated November 1, 2006(1)
    
    
    10.610.6
    
    Form of Distribution Agreement(1)
    
    
    10.710.7+
    
    Director Agreement between David L. Snowden and T3 Motion, Inc., dated
February 28, 2007(1)
    
    
    10.810.8+
    
    Director Agreement between Steven J. Healy and T3 Motion, Inc., dated July 1,
2007(1)
    
    
    10.910.9+
    
    Director Indemnification Agreement between Steven J. Healy and T3 Motion,
Inc., dated July 1, 2007(1)
    
    
    10.1010.10
    
    Securities Purchase Agreement between T3 Motion, Inc. and Immersive Media
Corp., dated December 31, 2007(1)
    
    
    10.1110.11
    
    Promissory Note issued by T3 Motion, Inc. to Immersive Media Corp., dated
December 31, 2007 in the original principal amount of $2,000,000(1)
    
    
    10.1210.12
    
    Common Stock Purchase Warrant issued by T3 Motion, Inc. to Immersive Media
Corp., dated December 31, 2007(1)
    
    
    10.1310.13
    
    Investor Rights Agreement between T3 Motion, Inc. and Immersive Media Corp.,
dated December 31, 2007(1)
    
    
    10.1410.14
    
    Securities Purchase Agreement between T3 Motion, Inc. and certain Purchasers,
dated March 28, 2008(1)
    
    
    10.1510.15
    
    Registration Rights Agreement between T3 Motion, Inc. and certain Purchasers,
dated March 28, 2008(1)
    
    
    10.16
 72




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##### Table of Contents



ExhibitExhibit
    
    
    
    No. WhereNumber
    
    Description
    
    Filed10.16
    
    GeoImmersive Image Data & Software Licensing Agreement between the Company and
Immersive Media Company, dated July 9, 2008(2)
    
    
    10.2010.17
    
    Amendment to Promissory Note issued by the Company in favor of Immersive Media
Corp., dated as of December 19, 2008(3)
    
    
    10.110.18
    
    Securities Purchase Agreement between the Company and Vision Opportunity
Master Fund, Ltd. (Vision),
dated December 30, 2008(4)
    
    
    10.110.19
    
    Form of 10% Secured Convertible Debenture Due December 30, 2008(4)
    
    
    10.210.20
    
    Subsidiary Guarantee, dated December 30, 2008(4)
    
    
    10.410.21
    
    Security Agreement, dated December 30, 2008 between the Company and the
holders of the Companys 10% Secured Convertible Debentures(4)
    
    
    10.510.22
    
    Form of Lock-up Agreement, dated December 30, 2008(4)
    
    
    10.610.23
    
    Director Offer Letter to Mary S. Schott from Company, dated January 16, 2009(5)
    
    
    10.110.24
    
    Distribution Agreement, dated November 24, 2008 by and between the Company and
CT&T(7)
    
    
    10.2810.25
    
    Settlement Agreement dated as of February 20, 2009 by and between the Company
on the one hand, and Sooner Cap, Albert Lin and Maddog Executive Services on
the other(7)
    
    
    10.2910.26
    
    Distribution Agreement dated as of March 20, 2009 by and between the Company
and Spear International, Ltd.(6)
    
    
    10.110.27
    
    Amendment to GeoImmersive Image Data and Software License Agreement by and
between the Company and Immersive Media Company dated as of March 16, 2009(7)
    
    
    10.3110.28
    
    Securities Purchase Agreement dated as of February 23, 2009 between the
Company and Ki Nam(7)
    
    
    10.3210.29
    
    10% Convertible Note issued by the Company to Ki Nam in the original principal
amount of up to $1,000,000(7)
    
    
    10.3310.30
    
    Series E Common Stock Purchase Warrant issued by the Company to Ki Nam(7)
    
    
    10.3410.31
    
    Amendment to Debenture, Warrant and
Securities Purchase Agreement between the
Company and Vision(7)
    
    
    10.3510.32
    
    Securities Purchase Agreement dated as of May 28, 2009 between the Company
and Vision, dated May 28, 2009(8)
    
    
    10.110.33
    
    Form of 10% Secured Convertible Debenture issued by the Company to Vision,
dated May 28, 2009(8)
    
    
    10.210.34
    
    Subsidiary Guarantee, dated as of May
28, 2009(8)
    
    
    10.410.35
    
    Security Agreement between the Company and
Vision dated as of May 28, 2009(8)
    
    
    10.510.36
    
    Securities Purchase Agreement between the Company and Vision, dated as of
December 30, 2009(10)
    
    
    10.110.37
    
    Form of 10% Secured Convertible Debenture issued by the Company to Vision, dated
as of December 30, 2009 in the original principal amount of $3,500,000(10)
    
    
    10.210.38
    
    Form of Series G Common Stock Purchase Warrant issued by the Company dated as of December 30, 2009(10)
    
    
    10.310.39
    
    Subsidiary Guarantee dated as of December 30, 2009, issued by T3 Motion, Ltd.(10)
    
    
    10.4
 73




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##### Table of Contents



ExhibitExhibit
    
    
    
    No. WhereNumber
    
    Description
    
    Filed10.40
    
    Security Agreement dated as of December 30, 2009, among the Company, T3
Motion, Ltd. and Vision(10)
    
    
    10.510.41
    
    Securities Exchange Agreement dated as of December 30, 2009, among the
Company, Vision and Vision Capital Advantage
Fund, L.P. (VCAF)(10)
    
    
    10.610.42
    
    Lock-Up Agreement dated as of December 30, 2009 between the Company and Ki
Nam(10)
    
    
    10.710.43
    
    Stockholders Agreement dated as of December 30, 2009, among the Company, Ki
Nam, Vision and VCAF(10)
    
    
    10.810.44
    
    Amendment No. 2 dated as of March 31, 2010 to Immersive Media Promissory Note
(11)
    
    
    10.110.45
    
    Employment Agreement dated as of January 1, 2010 between the Company and Kelly
Anderson (11)
    
    
    10.210.46
    
    2010 Stock Option/Stock Issuance Plan (12)
    
    
    10.110.47
    
    Employment Agreement dated as of August 13, 2010 between the Company and Ki
Nam (14)
    
    
    10.110.48
    
    Settlement Agreement dated as of July 29, 2010 and executed on August 3, 2010
by and among the Company, Ki Nam, Jason Kim and Preproduction Plastics, Inc. (13)
    
    
    10.210.49
    
    Amendment No. 1 to 10% Senior Secured Convertible Debenture dated as of
December 31, 2010 between the Company and Vision(15)
    
    
    10.110.50
    
    Securities Exchange Agreement dated December 31, 2010 between the Company and
Vision(15)
    
    
    10.210.51
    
    Unsecured Promissory Note dated September 30, 2010 in the original principal amount of $1.0 million
issued by the Company to Alfonso G. Cordero and Mercy B. Cordero, Trustees of the Cordero Charitable Remainder Trust(16)
    
    
    10.110.52
    
    2007 Stock Option/Stock Issuance
Plan (1)
    
    
    10.110.53*
    
    Form of Stock Option Agreement for use with 2007 Stock Option/Stock Issuance
Plan10.54*
    
    Form of Stock Option Agreement for use with 2010 Stock Option/Stock Issuance Plan10.55
    
    10% Promissory Note dated as of
February 24, 2011 in the original principal amount of up to $2.5 million issued to Ki Nan(17)
    
    
    10.114.1*
    
    Code of Conduct and Ethics21.1
    
    List of Subsidiaries(1)31.1*
    
    Section 302 Certificate of Chief Executive Officer31.2*
    
    Section 302 Certificate of Chief Financial Officer32.1*
    
    Section 906 Certificate of Chief Executive Officer32.2*
    
    Section 906 Certificate of Chief Financial Officer
 
 *
    
    Filed herewith.
    
    A contract, compensatory plan or arrangement in which directors or executive
officers are eligible to participate.
    
    Confidential treatment has previously been granted by the SEC for certain
portions of the referenced exhibit pursuant to Rule 406 under the Securities Act.(1)
    
    Filed with the Companys Registration Statement on Form S-1 filed on May 13, 2008.(2)
    
    Filed with the Companys Amendment No. 1 to the Registration Statement on Form
S-1 filed on July 14, 2008.(3)
    
    Filed with the Companys Current Report on Form 8-K filed on December 31, 2008.(4)
    
    Filed with the Companys Current Report on Form 8-K filed on January 12, 2009. 74




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##### Table of Contents



(5)
    
    Filed with the Companys Current Report on Form 8-K filed on January 20, 2009.(6)
    
    Filed with the Companys Current Report on Form 8-K filed on March 26, 2009.(7)
    
    Filed with the Companys Annual Report on Form 10-K filed on March 31, 2009.(8)
    
    Filed with the Companys Current Report on Form 8-K filed on June 5, 2009.(9)
    
    Filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2009 and filed on November 16, 2009.(10)
    
    Filed with the Companys Current Report on Form 8-K filed on January 6, 2010.(11)
    
    Filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
March 31, 2010 and filed on May 17, 2010.(12)
    
    Filed with the Companys Current Report on Form 8-K
filed on July 7, 2010.(13)
    
    Filed with the Companys Current Report on Form 8-K filed on August 9, 2010.(14)
    
    Filed with the Companys Quarterly Report on Form 10-Q for the quarter ended June
30, 2010 filed on August 16, 2010.(15)
    
    Filed with the Companys Current Report on Form 8-K filed on January 6, 2011.(16)
    
    Filed with the Companys Current Report on Form 8-K filed on January 21, 2011.(17)
    
    Filed with the Companys Current Report on Form 8-K
filed on March 1, 2011. 75