##### Table of Contents



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 1934For the fiscal year ended
    December 31,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    333-150888
  T3 Motion, Inc.
 (Exact name of Company 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., Suite A
    Costa Mesa, California(Address of principal
    executive offices)

92626(Zip Code)   Company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
  þ o
  o o
  Regulation S-K Form 10-K Form 10-K. þ
    Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller
    reporting
    company þ   Rule 12b-2 o þ




---



##### 



TABLE OF
    CONTENTS
  TO ANNUAL
    REPORT ON
    FORM 10-K
  FOR YEAR
    ENDED DECEMBER 31, 2009
   
 PagePART I


2Item 1.

Business


2Item 1A.

Risk Factors


13Item 2.

Properties


24Item 3.

Legal Proceedings


25Item 4.

Submission of Matters to a Vote of Security
    Holders


25PART II


26Item 5.

Market for Companys Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity Securities


26Item 6.

Selected Financial Data


27Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


28Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


41Item 8.

Financial Statements and Supplementary Data


41Item 9.

Disagreements With Accountants on Accounting and
    Financial Disclosure


41Item 9A.

Controls and Procedures


41Item 9B.

Other Information


43PART III


44Item 10.

Directors, Executive Officers and Corporate
    Governance


44Item 11.

Executive Compensation


47Item 12.

Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


52Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


55Item 14.

Principal Accounting Fees and Services


60PART IV


60Item 15.

Exhibits, Financial Statement Schedules


60Signatures


63EX-31.1EX-31.2EX-32.1EX-32.2   i




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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 publically 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.
   1




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS  Overview
    stand-up sub-systems
      History
    and Development of the Company
        Corporate
    Background
  Vision
    Financing
   2




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th
             3




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##### Table of Contents



Market
    and Industry Overview
          Law Enforcement.
  College and University Campuses. 2007-2008,
  High Schools.
  Military and Government Agencies. and/or
 4




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Airports.
  Port Security.
  Private Security Companies.
  Manufacturing and Industrial Firms.
  Shopping Malls and Parking Patrol.
  Our
    Operations
    sub-assembly
 5




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##### Table of Contents



The T3
    Motion, Inc. Product Line
  T3
    Series ESV
  stand-up, 17-inch
  
  Power
    Modules
    Accessories
   6




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Camera
    System
  360-degree
  CT
    Micro Car
   7




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Future
    Products
  sub-systems sub-systems
  
    GT3  commuter vehicle is the newest product in
    development. The CT3 commuter vehicle is a front-wheel drive,
    three-wheeled electric vehicle targeted for general consumer
    personal transportation applications. The GT3 commuter vehicle
    is expected to be released for the market in 2011.
    T3 Industrial  is our industrial version of the T3
    Series. The Industrial version will be used for warehouse and
    maintenance applications.
    T3 Fleet Rental  the T3 Fleet Rental vehicle will be
    available for rentals in high traffic areas such as downtowns,
    college campuses and resorts/amusement parks.  Growth
    Strategies and Marketing
  Growth
    Strategies
  stand-up
  
    Increase our leading presence in law
    enforcement.We intend to continue to build
    on our reputation as the ESV of choice by aggressively marketing
    towards the law enforcement community through trade shows and
    direct and indirect sales. We have identified the key accounts
    within our core market segments of law enforcement, government
    and security/private industry that will achieve our primary
    sales goals and objectives, including driving key regional
    market penetration, product recognition and brand presence.
    Capitalize on broader security
    opportunities.Our success in the law
    enforcement market has had a viral effect and led to significant
    inbound demand for the T3 Series from other security markets,
    which hold equal, if not greater, potential. These markets
    include airports, events/promotions, government/military,
    private 8




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##### Table of Contents



security, shopping malls and university campuses. Based on
    current market conditions, we believe we may generate greater
    interest in these markets with potentially new orders over the
    next 12 to 24 months.  
    International.In 2009 the T3i (The
    International model of the T3) was introduced into key
    international markets. These consisted of countries in the
    Middle East (including the United Arab Emirates, Qatar, Kuwait
    and Israel), as well as Mexico, Canada, and, to a limited
    extent, Europe. In 2010 and 2011 we hope to significantly
    increase our level of activity in the GCC region, specifically
    Kuwait, Bahrain, The Kingdom of Saudi Arabia, Lebanon and
    Jordan, as well as other key international markets including
    South America, Australia and New Zealand. We also intend to
    increase our footprint in Europe and continue to deploy the CT
    Micro Car. In general, we intend to leverage our existing
    customer base to introduce and deploy the CT Micro Car.
    Expand the T3 Series product line to address broader
    enterprise markets.We intend to leverage the
    modularity of our
    sub-systems
    to configure additional vehicles that address the needs of the
    broader enterprise markets. These needs include delivery
    services, maintenance, personnel transportation and personal
    mobility.
    Leverage brand into the consumer
    market.As we extend our presence in the law
    enforcement and security markets and continue to develop our
    brand name and reputation, we intend to leverage our strong
    brand to enter the consumer market for personal transportation.
    We have a robust product roadmap of consumer-focused vehicles
    that will utilize the same low-cost, high-quality component
    sourcing and
    sub-assembly.    
    Building a strong brand in our strategic
    market.During 2008 and 2009, we have built
    brand awareness within our strategic market of law enforcement.
    As a result, we sold and shipped over 1,500 vehicles and have
    garnered interest from numerous customers for larger orders. Our
    brand strength and value is evidenced by increasing numbers of
    repeat orders by law enforcement customers and the large volume
    orders from new customers. We have received interest from new
    emerging markets such as emergency medical services, the
    correctional industry, utility/maintenance applications and
    high-profile/high-visibility national security accounts. Through
    this strategy, management believes we will see continued success
    in both our core strategic market (nationally and
    internationally) and emerging markets.
    Grow our partnering relationships with key security
    companies.Currently, we have built
    relationships with national private security providers. In order
    to see continued success, we have marketed the T3 Series and CT
    Micro Car as an integrated security solution. This internal
    sales strategy has positioned our T3 Series as a attractive
    solution due to its economical and environmentally-friendly
    benefits. In particular, it has led to additional trials of our
    T3 Series products with our potential customers. This strategy
    has lead to additional market penetration within the markets for
    property management, entertainment/sporting venues, retail
    department store chains and high-profile venues.
    Return on Investment (ROI).We estimate
    our product demonstrates an approximate cost savings of $17,000
    to $24,000 per year over gas powered vehicles. We intend to
    leverage the ROI to further our market penetration and expand
    into emerging markets.
    Expand our distributors and manufacturing representatives
    nationwide.We have structured our
    distributors and manufacturing representatives base into
    nine geographic regions within the United States as well as
    Canada, Middle East, Europe, Australia, New Zealand, and Mexico.
    Our sales force has a comprehensive qualification process that
    identified the top performing representative firms.
    Subsequently, we have put under contract the leading
    representative companies and distribution companies nationwide.  
    Expand our marketing and sales efforts
    globally.We have positioned global sales
    offices in seven geographic locations (US, Korea, China, Middle
    East, Australia, South America and Europe). Included in our
    global expansion plans, we are developing service solutions for
    each geographic region to maintain our level of customer service. 9




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##### Table of Contents




    Expand our products.We intend to
    continue adding custom and standard accessories to our T3 Series
    such as firearm/rifle mounts, trailer, saddle bag mounts,
    maintenance racks, license plate identification system, vehicle
    camera, helmets, clothing, first aid kits, emergency response
    kits, mirrors, lighting, etc.
    Service.During 2009, we rolled out our
    third party service program, whereby our customers were able to
    take their vehicles to any of the authorized service locations
    for warranty and non-warranty service. The program provides an
    efficient and cost effective way for customers to keep their
    vehicles running in their optimum condition.  Marketing
    and Distribution
        
    We evaluate the available budget from the customer, building the
    value of the product rather than price. For example, one
    packaged T3 Series is able to fulfill the clients needs
    for a multi-shift deployment related to competing products.
    Return on Investment (ROI). Our products have demonstrated
    significant savings over gas powered vehicles and allow the end
    user greater mobility and work efficiencies.
    We maintain a manufacturing process that holds lead times to a
    4-6 weeks 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 allows the user greater mobility to maneuver
    through crowds and tight areas effectively increasing the patrol
    area and granting the user job efficiencies.    Sources
    and Availability of Raw Materials; Principal Suppliers
   10




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Fully-built
  Operating
    and Manufacturing Strategy
    Competition
        Intellectual
    Property
    Type

Name

Issued by

DescriptionTrademark

(T3 MOTION LOGO)

United States Patent and Trademark Office

Logo, brand name used on our productsTrademark



United States Patent and Trademark Office

Logo, brand name used on our productsTrademark

ENABLING PERSONAL MOBILITY

United States Patent and Trademark Office

Logo, brand name used on our products  11




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CT-Series
  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.
    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). 12




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Employees
    Corporate
    Information
  (714) 619-3600. www.T3motion.com.
  ITEM 1A.
    RISK
    FACTORS  Risks
    Related to Our Company and Our Industry
  Our
    limited operating history may not serve as an adequate basis to
    judge our future prospects and results of
    operations.
      As a
    recently formed corporation, we have had very limited operations
    to date and expect to incur losses in the near future. We will
    require additional financing to sustain our operations and
    without it we may not be able to continue our
    operations.
      If we
    are unable to continue as a going concern, our securities will
    have little or no value.
   13




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and/or
  and/or
    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, we will be adversely affected.
   14




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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.
    
    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
    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.
    The
    products we sell are inherently risky and could give rise to
    product liability, product warranty claims and other loss
    contingencies, which could adversely affect our business and
    financial results.
   15




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##### Table of Contents



time-to-time. and/or and/or
  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.
   16




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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.
  sub-assemblies.
  Many
    of our customers have fluctuating budgets, which may cause
    substantial fluctuations in our results of
    operations.
  period-to-period
  Our
    resources may be insufficient to manage the demands imposed by
    our growth.
    Decreased
    demand for electric vehicles could cause our products to become
    obsolete or lose popularity.
    
    continued development of product technology;
    the environmental consciousness of customers;
    the ability of electric vehicles to successfully compete with
    vehicles powered by internal combustion engines;
    widespread electricity shortages and the resultant increase in
    electricity prices, especially in our primary market,
    California, which could derail our past and present efforts to
    promote electric vehicles as a practical solution to vehicles
    which require gasoline; and
    whether future regulation and legislation requiring increased
    use of nonpolluting vehicles is enacted. 17




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The
    failure of certain key suppliers to provide us with components
    could have a severe and negative impact upon our
    business.
    Our
    success is heavily dependent on protecting our intellectual
    property rights.
      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.
   18




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##### Table of Contents



Risks
    Relating Ownership of Our Securities
  If a
    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;
    our capital commitments; and
    the loss of any of our key management personnel.    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.
    Form S-8
   19




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We may
    raise additional capital through a securities offering that
    could dilute your ownership interest and voting
    rights.
      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 from calling special meetings;
    prohibit cumulative voting in the election of directors, which
    would otherwise allow less than a majority of stockholders to
    elect director candidates;
    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; and
    prohibit stockholder action by written consent, requiring all
    stockholder actions to be taken at a meeting of our stockholders.    We
    will be subject to the penny stock rules, which may adversely
    affect trading in our common stock.
   20




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No. 34-29093,
  We
    will incur increased costs and compliance risks as a result of
    becoming a public company.
      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.
   21




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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.
    
    quarterly variations in our revenues and operating expenses;
    announcements of new products or services by us;
    fluctuations in interest rates;
    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.
  quarter-to-quarter
  
    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.
   22




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Investors
    who purchased units of our securities, consisting of common
    stock and warrants to purchase common stock in December 2009,
    have anti-dilution rights with respect to the shares of common
    stock issued in the unit offering. These rights are not
    available to other holders of our common stock. If future
    issuances of our common stock trigger these anti-dilution
    rights, holders of our common stock would have their investments
    diluted.
    Investors
    who purchased units of our securities, consisting of preferred
    stock and warrants to purchase common stock, in December 2009,
    have anti-dilution rights with respect to the underlying shares
    of common stock issued in the unit offering. These rights are
    not available to other holders of our common stock. If future
    issuances of our securities trigger these anti-dilution rights,
    holders of our common stock would have their investments
    diluted.
    Holders
    of our 10% Bridge Financing have anti-dilution rights that are
    triggered by a disposition of our common stock at a price per
    share that is lower than the conversion price of such notes.
    These rights are not available to the holders of our common
    stock. If future issuances of our common stock trigger the
    anti-dilution rights, an investment in our common stock would be
    diluted to the extent such convertible notes are
    converted.
   23




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##### Table of Contents



6-month
  We are
    responsible for the indemnification of our officers and
    directors, which could result in substantial
    expenditures.
    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     Year Ended December 31

Amount2010


399,0002011


305,0002012


209,000    24




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##### Table of Contents



ITEM 3.
    LEGAL
    PROCEEDINGS  Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam
    and Jason Kim No. 30.2009-00125358):
      ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS      Election of Directors

Votes For

Votes WithheldKi Nam


33,670,171



David Snowden


33,670,171



Steven Healy


33,670,171



Mary Schott


33,670,171



Kelly Anderson


33,670,171



     Votes For

Votes Against

Abstentions

Nonvotes33,645,171


0



0



25,000  25




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##### Table of Contents



PART II  ITEM 5.
    MARKET
    FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
    PURCHASES OF EQUITY SECURITIES  Market
    Information
        High

LowQ4 2009

$
2.00


$
1.25   Holders
  (972) 612-4120.
  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 SecuritiesPlan Category

Warrants and Rights

Rights

Reflected in Column (a))(a)

(b)

(c)Equity compensation plans approved by stockholders


6,033,188


$
0.77



1,416,812Equity compensation plans not approved by stockholders


10,746,143


$
0.87



Total


16,779,331







1,416,812  26




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##### Table of Contents



Equity
    Incentive Plan
    Warrants
    Sales of
    Unregistered Securities
  Form 10-Q Form 8-K.
  ITEM 6.
    SELECTED
    FINANCIAL DATA    Period fromMarch 16,2006 (Inception)throughFor the years ended December 31,

December 31,2009

2008

2007

2006Income Statement Data:Total Revenues

$
4,644,022


$
7,589,265


$
1,822,269



Gross Loss


(344,096
)


(1,703,611
)


(2,106,256
)


Operating Expenses


8,449,934



9,917,111



6,422,705



3,466,629Loss from Operations


(8,794,030
)


(11,620,722
)


(8,528,961
)


(3,466,629
)Net Loss


(6,698,893
)


(12,297,797
)


(8,577,232
)


(3,500,798
)Net Loss per Share  Basic and Diluted

$
(0.15
)

$
(0.29
)

$
(0.24
)

$
(0.12
)Statement of Cash Flow Data:Net Cash Used in Operating Activities

$
(5,356,937
)

$
(8,775,598
)

$
(6,655,226
)

$
(3,184,654
)Net Cash Used in Investing Activities

$
(38,450
)

$
(2,063,768
)

$
(780,867
)

$
(216,002
)Net Cash Provided by Financing Activities

$
6,294,076


$
7,584,401


$
12,362,554


$
3,407,244   Balance
    Sheet Data:
  As of December 31,2009

2008

2007

2006Total Assets

$
6,059,321


$
7,904,188


$
7,628,226


$
1,116,402Related Party Note Payable, Net of Debt Discount

$
1,836,837


$
1,986,598


$
1,514,103



Total Liabilities

$
15,703,734


$
7,188,313


$
3,936,979


$
(216,002
)Total Stockholders (Deficit) Equity

$
(9,644,413
)

$
715,875


$
3,691,247


$
3,407,244  27




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##### Table of Contents



Going
    Concern
    and/or
    ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATION  The following discussion and analysis of our results of
    operations and financial condition for the years ended
    December 31, 2009, 2008 and 2007 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
  stand-up
 28




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##### Table of Contents



Going
    Concern
    and/or
    Critical
    Accounting Policies and Estimates
      Concentrations
    of Credit Risk
  Cash
   29




---



##### Table of Contents



Receivables
    Cash
    and Cash Equivalents
    Concentration
    of Risk
      Inventories
  work-in-process, first-in,
  Property
    and Equipment
    Intangible
    Asset
   30




---



##### Table of Contents



Impairment
    of Long-Lived Assets
    Fair
    Value of Financial Instruments
    Revenue
    Recognition
            Share
    Based Compensation
   31




---



##### Table of Contents



Income
    Taxes
    Derivative
    Liability
           32




---



##### Table of Contents



24-month
      Beneficial
    Conversion Features and Debt Discounts
    Loss
    Per Share
    Years Ended December 31,2009


2008


2007Net loss


(6,698,893
)


(12,297,797
)


(8,577,232
)Deemed preferred stock dividend


(6,116
)






Net loss applicable to common shareholders

$
(6,705,009
)

$
(12,297,797
)

$
(8,577,232
)Weighted average number of common shares outstanding:Basic and diluted


44,445,042



42,387,549



35,223,795Net loss per share:Basic and diluted

$
(0.15
)

$
(0.29
)

$
(0.24
)   Research
    and Development
   33




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##### Table of Contents



Advertising
    Commitments
    and Contingencies
  and/or
  Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam
    and Jason Kim No. 30.2009-00125358):
    Recent
    Accounting Pronouncements
  New Accounting Standard.
 34




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##### Table of Contents



2010-6, Fair Value Measurements and Disclosures:Improving Disclosures
    About Fair Value Measurement 2010-6), 2010-6 2010-6
  Business
    Segments
    For the Years Ended December 31,2009


2008


2007Net revenues:T3 Domestic

$
3,654,290


$
6,987,618


$
1,682,492T3 International


963,911



601,647



139,777CT Domestic


25,821







Total net revenues

$
4,644,022


$
7,589,265


$
1,822,269   Recent
    Events
           35




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##### Table of Contents



36




---



##### Table of Contents



Results
    of Operations
    Years Ended December 31,2009


2008


2007Net revenues

$
4,644,022


$
7,589,265


$
1,822,269Cost of revenues


4,988,118



9,292,876



3,928,525Gross loss


(344,096
)


(1,703,611
)


(2,106,256
)Operating expenses:Sales and marketing


1,927,824



2,290,253



1,724,779Research and development


1,395,309



1,376,226



1,243,430General and administrative


5,126,801



6,250,632



3,454,496Total operating expenses


8,449,934



9,917,111



6,422,705Loss from operations


(8,794,030
)


(11,620,722
)


(8,528,961
)Other income (expense):Interest income


2,510



55,091



3,239Other income (expense)


5,565,869



(73,783
)


12,426Interest expense


(3,472,442
)


(657,583
)


(63,136
)Total other income (expense), net


2,095,937



(676,275
)


(47,471
)Loss before provision for income tax


(6,698,093
)


(12,296,997
)


(8,576,432
)Provision for income tax


800



800



800Net loss


(6,698,893
)


(12,297,797
)


(8,577,232
)Other comprehensive (loss) income


(632
)


5,434



(777
)Comprehensive loss

$
(6,699,525
)

$
(12,292,363
)

$
(8,578,009
)Net loss per share:Basic and diluted

$
(0.15
)

$
(0.29
)

$
(0.24
)Weighted average number of common shares outstanding:Basic and diluted


44,445,042



42,387,549



35,223,795   Revenues.
  Cost of revenues.
 37




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##### Table of Contents



Gross loss.
  Sales and marketing.
  Research and development.
  General and administrative.
  Other income (expense).
  Interest Expense.
  Net loss.
  LIQUIDITY
    AND CAPITAL RESOURCES
   38




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##### Table of Contents



and/or and/or
  and/or
    Cash
    Flows
  For
    the Years Ended December 31, 2009, 2008 and
    2007
           39




---



##### Table of Contents



Contractual
    Obligations and Off-Balance Sheet Arrangements
  Contractual
    Obligations
      Less thanContractual Obligation

Total


1 Year


1-3 YearsStockholder notes payable

$
4,500,000


$
4,500,000


$
Operating lease


913,000



399,000



514,000Total Contractual Obligations

$
5,413,000


$
4,899,000


$
514,000   Off-Balance
    Sheet Arrangements
    Warrants
       40




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##### Table of Contents



ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK    Interest Rates.
  ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  page F-1.
  ITEM 9.
    DISAGREEMENTS
    WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
    DISCLOSURES    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
     41




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##### Table of Contents



Internal
    Control over Financial Reporting
  (a)
    Managements
    annual report on internal control over financial
    reporting  Rule 13a-15(f) 15d-15(f)
  
    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
    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
         42




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##### Table of Contents



(b)
    Changes
    in internal control over financial reporting    
    We have hired additional professional accounting resources to
    assist with the review of accounting policies and procedures and
    financial reporting with knowledge, experience and training in
    the application of GAAP.    
    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 that will 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 Case No. 30.2009-00125358):
 43




---



##### Table of Contents



PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Executive
    Officers and Directors
    Name

Age

Positions Held:Ki Nam


50


Chief Executive Officer and ChairmanKelly J. Anderson*


42


Executive Vice President, Chief Financial OfficerJason Kim **


43


Chief Operations OfficerDavid Snowden


66


DirectorSteven Healy


49


DirectorMary S. Schott


49


DirectorRobert Thomson***


34


Director     *
    
    Kelly Anderson resigned as Director on January 28, 2010**
    
    Jason Kim separated from T3 Motion, Inc. on
    January 15, 2010***
    
    Robert Thomson was appointed Director on January 28, 2010  Director
    Independence
    Biographical
    Information
  Ki Nam,
 44




---



##### Table of Contents



Kelly J. Anderson,
  Jason Kim
  David Snowden (1986-2003), (1980-1986).
  Mary S. Schott
  Steven J. Healy
  Robert Thomson
 45




---



##### Table of Contents



Family
    Relationships
    Involvement
    in Certain Legal Proceedings
                         46




---



##### Table of Contents



cease-and-desist
      Compliance
    with Section 16(a) of the Exchange Act
    Code of
    Ethics
    Material
    Changes to the Procedures by which Security Holders May
    Recommend Nominees to the Board of Directors
    Audit
    Committee; Audit Committee Financial Expert
    ITEM 11.
    EXECUTIVE
    COMPENSATION  Compensation
    Discussion and Analysis
    Compensation
    Committee
  Committee
    Members and Independence
   47




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##### Table of Contents



Role
    of the Compensation Committee in Establishing
    Compensation
    Executive
    Compensation Program
    
    attract and retain talented senior management to ensure our
    future success; and
    structure a compensation program that appropriately rewards our
    executive officers for their skills and contributions to our
    company based on competitive market practice.    
    Base salary;
    Annual incentive compensation (discretionary bonuses);
    Equity-based awards;
    Perquisites; and
    Other benefits.  Base Salary.
  Annual Incentive Compensation.
  Equity Compensation.
 48




---



##### Table of Contents



Perquisites.
  Other Benefits.
  Executive
    Compensation
   49




---



##### Table of Contents



Executive
    Compensation  Summary Compensation
    Table:
  Stock

Option

All OtherSalary

Bonus

Awards

Awards

Compensation

TotalName and Principal Position

Year

($)

($)

($)

($)(1)

($)(2)

($)Ki Nam,


2009


$
150,000



















150,000Chief Executive Officer


2008


$
150,000



















150,000and Chairman(3)


2007















990,000



37,000



1,027,000Kelly J. Anderson,


2009


$
175,000



















175,000Executive Vice President,


2008


$
131,923











452,000







583,923Chief Financial Officer(4)Jason Kim(5)


2009


$
170,000



















170,000Chief Operations Officer


2008


$
166,076



















166,0762007


$
156,025











980,000







1,136,025     (1)
    
    The amounts shown in this column represent the dollar amount
    recognized for financial statement reporting purposes for the
    years ended December 31, 2009, 2008 and 2007 with respect
    to stock options granted, as determined pursuant to the
    accounting standard. The option awards fair values ranged from
    $0.98 to $0.99 for 2007 and from $0.96 to $1.30 for 2008. There
    were no grant awards during 2009.(2)
    
    Perquisites and other personal benefits are valued at actual
    amounts paid to each provider of such perquisites and other
    personal benefits. The compensation earned represents the
    automobile allowance.(3)
    
    Prior to January 1, 2008, Mr. Nam did not draw a
    salary.(4)
    
    Ms. Anderson was hired on March 17, 2008, and prior to
    her tenure, Mr. Kim was acting as CFO.(5)
    
    Mr. Kim resigned from the Company effective
    January 15, 2010  Employment
    Agreements
  change-in-control, change-in-control.
  Plan-Based
    Awards
    All OtherStock

All OtherAwards:

Option

ExerciseEstimated Future Payouts

Estimated Future Payouts

Number

Awards:

or Base

Grant DateUnder Non-Equity Incentive

Under Equity Incentive

of Shares

Number of

Price of

Fair ValuePlan Awards

Plan Awards

of Stock

Securities

Option

of OptionThreshold

Target

Maximum

Threshold

Target

Maximum

or Units

Underlying

Awards

AwardsName

Grant Date

($)

($)

($)

(#)

(#)

(#)

(#)

Options (#)

($/Sh)

($/Sh)(2)Ki Nam


12/10/2007































1,000,000


$
0.77


$
990,000Kelly J. Anderson(1)


3/17/2008































200,000


$
0.60


$
192,00011/13/2008































200,000


$
1.40


$
260,000Jason Kim(3)


12/10/2007































1,000,000


$
0.60


$
980,000     (1)
    
    Ms. Anderson commenced employment on March 17, 2008,
    and prior to her employment, Mr. Kim was the acting CFO.(2)
    
    The grant date fair value is the value of awards granted in
    2009, 2008, and 2007 as determined in accordance with accounting
    standard, which is recognized for financial reporting purposes.(3)
    
    Mr. Kim resigned from the Company effective
    January 15, 2010 50




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##### Table of Contents



OUTSTANDING
    EQUITY AWARDS AT FISCAL YEAR-END
  Option Awards

Stock AwardsEquityIncentiveEquity

PlanEquity









Incentive

Awards:Incentive









Plan

Market orPlan









Awards:

PayoutAwards:









Number of

ValueNumber of







Market

Unearned

of UnearnedNumber of

Number of

Securities





Number

Value of

Shares,

Shares,Securities

Securities

Underlying





of Shares

Shares or

Units

UnitsUnderlying

Underlying

Unexercised





or Units of

Units of

or Other

or OtherUnexercised

Unexercised

Unearned

Option

Option

Stock that

Stock that

Rights that

Rights thatOptions (#)

Options (#)

Options

Exercise

Expiration

Have Not

Have Not

Have Not

Have NotName

Exercisable

Unexercisable

(#)

Price ($)

Date

Vested (#)

Vested ($)

Vested (#)

Vested ($)Ki Nam


937,500







62,500



0.77



12/10/2017Kelly J. Anderson(1)


87,500







112,500



0.6



3/17/201854,167







145,833



1.4



11/13/2018Jason Kim(2)


854,167







145,833



0.6



12/10/2017     (1)
    
    Ms. Anderson commenced employment on March 17, 2008,
    and prior to employment, Mr. Kim was the acting CFO.(2)
    
    Mr. Kim resigned from the Company effective
    January 15, 2010.  Option
    Exercises and Stock Vested
    Option Exercises and Stock VestedOption Awards

Stock AwardsNumber of Shares



Number of SharesAcquired

Value Realized

Acquired

Value Realizedon Exercise

on Exercise

on Vesting

on VestingName

(#)

($)

(#)

($)Ki Nam





$







$
Kelly J. Anderson(1)














     (1)
    
    Ms. Anderson commenced employment on March 17, 2008,
    and prior to her employment, Mr. Kim was the acting CFO. 51




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##### Table of Contents



Director
    Compensation
    PensionValue andNonqualifiedFees Earned





Non-Equity

Deferredor Paid in

Stock



Incentive Plan

Compensation

All OtherCash

Awards

Options

Compensation

Earnings

Compensation

TotalName

($)

($)

($)(2)

($)

($)

($)

($)Ki Nam










(1
)










(1
)


David Snowden


20,000























Steven Healy


20,000























Mary Schott


20,000







61,000















81,000     (1)
    
    Mr. Nam compensation as a director is reflected in
    the table titled Summary Compensation Table above.(2)
    
    The amounts shown in this column represent the dollar amount
    recognized for financial statement reporting purposes for the
    years ended December 31, 2009, 2008 and 2007 with respect
    to stock options granted, as determined pursuant to the
    accounting standard. The option awards fair values were $0.98
    and $1.22 for 2007 and 2009, respectively. There were no grant
    awards during 2008.  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
   52




---



##### Table of Contents



Security
    Ownership of Certain Beneficial Owners and Management
        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


34,116,631



68.5
%(3)


976,865



Kelly Anderson


158,333



*
(4)






Jason Kim


895,833



2.0
%(5)






David Snowden


37,500



*
(6)






Steven Healy


33,333



*
(7)






Mary S. Schott














Robert Thomson


33,105,000



44.8
%(8)


9,370,698



75.9
%(14)5% Stockholders:Immersive Media Corp.


2,749,491



6.0
%(9)






Choon Sun Cho


2,298,851



5.2
%






Vision Opportunity Master Fund, Ltd.


28,401,165



40.5
%(10)


7,451,765



60.4
%Total Force International Limited


8,000,000



15.2
%(11)






Vision Capital Advantage Fund


4,723,835



9.7
%(15)


1,918,933



15.5
%All Executive Officers and Directors as a Group (7 persons)


35,241,630



69.2
%(12)


10,347,563



83.8
%     (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; and (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 March 8, 2010, there were 44,663,462 common shares
    issued and outstanding.(3)
    
    This number includes 27,155,230 shares of common stock,
    1,953,730 shares of common stock, as converted, and
    warrants to purchase 2,228,504 shares of common stock held
    by The Nam Family Trust Dated 02/17/07, Ki Nam and Yeong
    Hee Nam as 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 includes
    900,000 shares of common stock held by Michelle Nam, who is
    the daughter of this stockholder. These include
    979,167 shares subject to an 53




---



##### Table of Contents



option to purchase common stock. Thus, the percentage of common
    stock beneficially owned by Mr. Nam is based on a total of
    49,824,863 shares of common stock.(4)
    
    This number includes options to purchase 158,333 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 44,821,795 shares of common stock.(5)
    
    This number includes options to purchase 895,833 shares of
    common stock held by Mr. Kim. Thus, the percentage of
    common stock beneficially owned by Mr. Kim is based on a
    total of 45,559,295 shares of common stock.(6)
    
    This number includes options to purchase 37,500 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 44,700,962 shares of common stock.(7)
    
    This number includes options to purchase 33,333 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 44,696,795 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. The 33,105,000 shares listed represent the
    2,977,635 and 885,969 common shares held by VOMF and VCAF,
    respectively, as well as (all figures given in the aggregate)
    (a) the series G Warrants to purchase up to
    3,500,000 shares of our common stock, (b) the
    10% Convertible Promissory Notes (the Notes)
    currently convertible into 7,000,000 shares of our common
    stock, (c) the 7,451,765 Series A Convertible Preferred Stock
    convertible into 14,903,530 shares of our common stock held
    by VOMF (d) (c) the 1,918,933 Series A Convertible Preferred
    Stock convertible into 3,837,866 shares of our common stock
    held by VCAF. The Series G Warrants, the Notes, and the Series A
    Convertible Preferred Stock owned by the Vision Entities are
    subject to a beneficial ownership limitation such that the
    Vision Entities may not convert or exercise such securities to
    the extent that the conversion or exercise would cause the
    Vision Entities 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. 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 73,904,858 shares of common stock.
    The address for Vision Opportunity Master Fund is 20 West
    55th Street, Fifth Floor, New York, New York, 10019.(9)
    
    This number includes warrants to purchase 897,639 shares of
    common stock held by Immersive Media Corp. Thus, the percentage
    of common stock beneficially owned by Immersive Media Corp. is
    based on a total of 45,561,101 shares of common stock. The
    address for Immersive Media Corp. is Immersive Media Corp. is
    224  15th Avenue SW, Calgary, AB T2R 0P7 Canada.(10)
    
    The reported securities are owned directly by Vision Opportunity
    Master Fund, Ltd. (VOMF) include 2,997,635 common
    shares, as well as (all figures given in the aggregate)
    (a) the Series G Warrants to purchase up to
    3,500,000 shares of our common stock, (b) the
    10% Convertible Promissory Notes (the Notes)
    currently convertible into 7,000,000 shares of our common
    stock, (c) the 7,451,765 Series A Convertible
    Preferred Stock convertible into 14,903,530 shares of our
    common stock. The Series G Warrants, the Notes, and the
    Series A Convertible Preferred Stock are subject to a
    beneficial ownership limitation such that VOMF may not convert
    or exercise such securities to the extent that the conversion or
    exercise would cause VOMF 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. These reported securities do not
    include equity owned by Vision Capital Advantage Fund, L.P.
    Thus, the percentage of common stock beneficially owned by
    Vision Opportunity Master Fund is based on a total of
    70,066,992 shares of common stock. The address for Vision
    Opportunity Master Fund is 20 West 55th Street, Fifth
    Floor, New York, New York, 10019.(11)
    
    This number includes 4,000,000 shares of common stock, as
    converted, 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
    52,663,462 shares of common stock. The address for Total
    Force International Limited is Rm 1604 Wst Tower, Shun Tak
    Center, Hong Kong. 54




---



##### Table of Contents



(12)
    
    This number includes 1,953,730 shares of common stock, as
    converted, warrants to purchase 2,228,504 shares of common
    stock and options to purchase 2,104,165 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
    50,949,861 shares of common stock.(13)
    
    As of March 8, 2010, there were 12,347,563 shares of
    Series A 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 $1.00 per share divided by the
    current conversion price of $0.50 per share times the number of
    shares of Series A 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 Vision Capital
    Advantage Fund, L.P. (VCAF) include, 885,969 common
    shares, as well as (all figures given in the aggregate) the
    1,918,933 Series A Convertible Preferred Stock convertible
    into 3,837,866 shares of our common stock. 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
    48,501,328 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  Transactions
    with Related Parties
    Accounts
    Receivable
      Prepaid
    Expenses
    Related
    Party Payables
     55




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##### Table of Contents



Intangible
    Assets
          Notes
    Payable
  Immersive
    Note
       56




---



##### Table of Contents



Vision
    Opportunity Master Fund, Ltd. Bridge Financing
           57




---



##### Table of Contents



58




---



##### Table of Contents



Lock-Up
    Agreement
   59




---



##### Table of Contents



ITEM 14.
    PRINCIPAL
    ACCOUNTING FEES AND SERVICES    Years Ended December 312009


2008Audit Fees

$
171,270


$
221,180Audit Related Fees


Tax Fees


3,525



2,800All Other Fees


Total

$
174,795


$
223,980     (1)
    
    Audit Fees This category includes the audit
    of our annual financial statements and registration statement
    filed 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.(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
  Form 10-K page F-1.
  Exhibits
  INDEX
    TO EXHIBITS
  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation, as currently
    in effect(1)3
.2

Bylaws(1)3
.3

Amendment to Bylaws, dated January 16, 2009(5)3
.4

Amendment to Certificate of Incorporation(9) 60




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##### Table of Contents



ExhibitNumber

Description3
.5

Certificate of Designation of Preferences, Rights and
    Limitations of Series A Convertible Preferred Stock(9)10
.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
.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
.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
.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
.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
.6

Form of Distribution Agreement(1)10
.7

Director Agreement between David L. Snowden and T3 Motion, Inc.,
    dated February 28, 2007(1)10
.8

Director Agreement between Steven J. Healy and T3 Motion, Inc.,
    dated July 1, 2007(1)10
.9

Director Indemnification Agreement between Steven J. Healy and
    T3 Motion, Inc., dated July 1, 2007(1)10
.10

Securities Purchase Agreement between T3 Motion, Inc. and
    Immersive Media Corp., dated December 31, 2007(1)10
.11

Promissory Note issued to Immersive Media Corp., dated December
    31, 2007(1)10
.12

Common Stock Purchase Warrant issued to Immersive Media Corp.,
    dated December 31, 2007(1)10
.13

Investor Rights Agreement between T3 Motion, Inc. and Immersive
    Media Corp., dated December 31, 2007(1)10
.14

Securities Purchase Agreement between T3 Motion, Inc. and
    certain Purchasers, dated March 28, 2008(1)10
.15

Registration Rights Agreement between T3 Motion, Inc. and
    certain Purchasers, dated March 28, 2008(1)10
.16

Series A Common Stock Purchase Warrant issued to Vision
    Opportunity Master Fund, Ltd., dated March 28, 2008(1)10
.17

Series B Common Stock Purchase Warrant issued to Vision
    Opportunity Master Fund, Ltd., dated March 28, 2008(1)10
.18

Series C Common Stock Purchase Warrant issued to Vision
    Opportunity Master Fund, Ltd., dated March 28, 2008(1)10
.19

GeoImmersive Image Data & Software Licensing Agreement
    dated July 9, 2008(2)10
.20

Amendment to Promissory Note dated as of December 19, 2008(3)10
.21

Securities Purchase Agreement, dated December 30, 2008(4)10
.22

Form of 10% Secured Convertible Debenture(4)10
.23

Form of Series D Common Stock Purchase Warrant(4)10
.24

Subsidiary Guarantee, dated December 30, 2008(4)10
.25

Security Agreement, dated December 30, 2008(4)10
.26

Form of Lock-up Agreement, dated December 30, 2008(4)10
.27

Director Offer Letter to Mary S. Schott from Company, dated
    January 16, 2009(5)10
.28

Distribution Agreement, dated November 24, 2008 by and between
    the Company and CT&T*10
.29

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.*10
.30

Distribution Agreement dated as of March 20, 2009 by and between
    the Company and Spear International, Ltd.(6)10
.31

Amendment to GeoImmersive Image Data and Software License
    Agreement by and between the Company and Immersive Media dated
    as of March 16, 2009.(7) 61




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##### Table of Contents



ExhibitNumber

Description10
.32

Securities Purchase Agreement dated as of March 31, 2009 by and
    between the Company and Ki Nam.(7)10
.33

Form of Convertible Promissory Note granted to Ki Nam.(7)10
.34

Form of Warrant granted to Ki Nam.(7)10
.35

Amendment to Debenture, Warrant and Securities Purchase
    Agreement.(7)10
.36

Securities Purchase Agreement dated as of May 28, 2009(8)10
.37

Form of 10% Secured Convertible Debenture(8)10
.38

Form of Series E Common Stock Purchase Warrant(8)
    Subsidiary Guarantee dated as of May 28, 2009(8)10
.39

Security Agreement dated as of May 28, 2009(8)10
.40

Form of Amendment to Series B Common Stock Purchase Warrant(8)10
.41

Form of Amendment to Series C Common Stock Purchase Warrant(8)10
.42

Securities Purchase Agreement dated as of December 30, 2009,
    between the Company and Vision Opportunity Master Fund, Ltd.(8)10
.43

Form of 10% Secured Convertible Debenture issued December 30,
    2009.(10)10
.44

Form of Series G Common Stock Purchase Warrant issued December
    30, 2009.(10)10
.45

Subsidiary Guarantee dated as of December 30, 2009,  by T3
    Motion, Ltd.(10)10
.46

Security Agreement dated as of December 30, 2009, among the
    Company, T3 Motion, Ltd. and Vision Opportunity Master Fund,
    Ltd.(10)10
.47

Securities Exchange Agreement dated as of December 30, 2009,
    among the Company, Vision Opportunity Master Fund, Ltd. and
    Vision Capital Advantage Fund, L.P.(10)10
.48

Lock-Up Agreement dated as of December 30, 2009 between the
    Company and Ki Nam.(10)10
.49

Stockholders Agreement dated as of December 30, 2009, among the
    Company, Ki Nam, Vision Opportunity Master Fund, Ltd. and Vision
    Capital Advantage Fund, L.P.(10)21
.1

List of Subsidiaries(1)31
.1

Section 302 Certificate of Chief Executive Officer*31
.2

Section 302 Certificate of Chief Financial Officer*32
.1

Section 906 Certificate of Chief Executive Officer*32
.2

Section 906 Certificate of Chief Financial Officer*     *
    
    Filed herewith.(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.(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. 62




---



##### 



T3
    MOTION, INC.
  FINANCIAL
    INFORMATION TABLE OF CONTENTS
   
 PageCONSOLIDATED FINANCIAL STATEMENTSReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2009 and 2008


F-3Consolidated Statements of Operations and
    Comprehensive Loss for the years ended December 31, 2009,
    2008 and 2007


F-4Consolidated Statements of Stockholders
    (Deficit) Equity for the years ended December 31, 2009,
    2008 and 2007


F-5Consolidated Statements of Cash Flows for the
    years ended December 31, 2009, 2008 and 2007


F-6 - F-7Notes to Consolidated Financial Statements


F-8 - F-30   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM             KMJ
    CORBIN & COMPANY LLP
    F-2




---



##### Table of Contents



T3
    MOTION, INC.CONSOLIDATED BALANCE SHEETS
  December 31,


December 31,2009


2008ASSETSCurrent assets:Cash and cash equivalents

$
2,580,798


$
1,682,741Accounts receivable, net of reserves of $37,000 and $27,000,
    respectively


747,661



1,447,004Related party receivables


35,658



33,248Inventories


1,169,216



1,814,469Prepaid expenses and other current assets


161,997



612,795Total current assets


4,695,330



5,590,257Property and equipment, net


868,343



1,197,170Intangible asset, net






625,000Deposits


495,648



491,761Total assets

$
6,059,321


$
7,904,188LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable

$
872,783


$
2,260,738Accrued expenses


1,064,707



785,494Related party payables


104,931



2,155,483Derivative liabilities


11,824,476



Related party notes payable, net of debt discounts


1,836,837



986,598Total current liabilities


15,703,734



6,188,313Long-term liabilities:Related party note payable






1,000,000Total liabilities


15,703,734



7,188,313Commitments and contingenciesStockholders (deficit) equity:Series A convertible preferred stock, $0.001 par value;
    20,000,000 shares authorized; 12,347,563 and no shares
    issued and outstanding, respectively


12,348



Common stock, $0.001 par value; 150,000,000 shares
    authorized; 44,663,462 and 43,592,428 shares issued and
    outstanding, respectively


44,664



43,593Additional paid-in capital


23,356,724



25,043,452Accumulated deficit


(33,062,174
)


(24,375,827
)Accumulated other comprehensive income


4,025



4,657Total stockholders (deficit) equity


(9,644,413
)


715,875Total liabilities and stockholders (deficit) equity

$
6,059,321


$
7,904,188    F-3




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##### Table of Contents



T3
    MOTION, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND
    COMPREHENSIVE LOSS
  Years Ended December 31,2009


2008


2007Net revenues

$
4,644,022


$
7,589,265


$
1,822,269Cost of revenues


4,988,118



9,292,876



3,928,525Gross loss


(344,096
)


(1,703,611
)


(2,106,256
)Operating expenses:Sales and marketing


1,927,824



2,290,253



1,724,779Research and development


1,395,309



1,376,226



1,243,430General and administrative


5,126,801



6,250,632



3,454,496Total operating expenses


8,449,934



9,917,111



6,422,705Loss from operations


(8,794,030
)


(11,620,722
)


(8,528,961
)Other income (expense):Interest income


2,510



55,091



3,239Other income (expense)


5,565,869



(73,783
)


12,426Interest expense


(3,472,442
)


(657,583
)


(63,136
)Total other income (expense), net


2,095,937



(676,275
)


(47,471
)Loss before provision for income taxes


(6,698,093
)


(12,296,997
)


(8,576,432
)Provision for income tax


800



800



800Net loss


(6,698,893
)


(12,297,797
)


(8,577,232
)Other comprehensive (loss) income:Foreign currency translation (loss) income


(632
)


5,434



(777
)Comprehensive loss

$
(6,699,525
)

$
(12,292,363
)

$
(8,578,009
)Net loss per share:Basic and diluted

$
(0.15
)

$
(0.29
)

$
(0.24
)Weighted average number of common shares outstanding:Basic and diluted


44,445,042



42,387,549



35,223,795    F-4




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##### Table of Contents



T3
    MOTION, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS
    (DEFICIT) EQUITY
  OtherPreferred





Common








ComprehensivePreferred


Stock


Common


Stock


Additional


Accumulated


Income


StockholdersShares


Amount


Shares


Amount


Paid-in Capital


Deficit


(Loss)


(Deficit) EquityBalance, January 1, 2007










33,921,212


$
33,921


$
2,261,079


$
(3,500,798
)

$



$
(1,205,798
)Issuance of common stock for cash, net of issuance costs of
    $210,000










2,911,622



2,912



3,385,088











3,388,000Issuance of common stock for a note receivable










2,298,851



2,299



1,997,701











2,000,000Capital contributed by the majority stockholder


















4,000,000











4,000,000Conversion of related-party debt to equity


















1,673,279











1,673,279Value of warrants issued with debt


















485,897











485,897Share-based compensation expense


















1,927,878











1,927,878Foreign currency translation loss


























(777
)


(777
)Net loss






















(8,577,232
)






(8,577,232
)Balance, December 31, 2007










39,131,685



39,132



15,730,922



(12,078,030
)


(777
)


3,691,247Issuance of common stock for cash, net of issuance costs of
    $240,240










4,420,743



4,421



6,664,742











6,669,163Foreign currency translation income


























5,434



5,434Issuance of common stock for outside services










40,000



40



79,960











80,000Value of warrants issued with debt


















1,215,638











1,215,638Value of debt issuance costs


















79,000











79,000Correction of prior year related-party conversion of debt to
    equity


















(93,300
)










(93,300
)Share-based compensation expense


















1,366,490











1,366,490Net loss






















(12,297,797
)






(12,297,797
)Balance, December 31, 2008










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
)    F-5




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##### Table of Contents



T3
    MOTION, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS
  Year Ended December 31,2009


2008


2007Cash flows from operating activities:Net loss

$
(6,698,893
)

$
(12,297,797
)

$
(8,577,232
)Adjustments to reconcile net loss to net cash used in operating
    activities:Bad debt expense


10,000



3,000



30,000Depreciation and amortization


989,867



720,206



191,736Loss on disposal of property and equipment






74,516



Warranty expense


129,183



417,857



410,795Share-based compensation expense


1,683,484



1,366,490



1,927,878Loss on conversion of debt to preferred stock, net


617,932







Change in fair value of derivative liability


(6,184,151
)






Investor relations expense


130,000



1,406,206



Amortization of debt discount


2,919,673



488,133



Changes in operating assets and liabilities:Accounts receivable


689,343



(1,107,819
)


(372,185
)Inventories


645,254



(595,375
)


(929,387
)Prepaid expenses and other current assets


450,798



(474,328
)


19,345Security deposits


(3,887
)


(2,925
)


(44,782
)Accounts payable and accrued liabilities


(719,720
)


1,105,489



688,606Related party payables


(15,818
)


120,749



Net cash used in operating activities


(5,356,937
)


(8,775,598
)


(6,655,226
)Cash flows from investing activities:Loans/advances to related parties


(6,756
)


(11,685
)


(24,563
)Deposits on fixed assets






(444,054
)


Purchases of property and equipment


(36,040
)


(619,929
)


(756,304
)Repayment of loans/advances to related parties


4,346



3,000



Purchase of data license from related party






(1,000,000
)


Proceeds from the sale of property and equipment






8,900



Net cash used in investing activities


(38,450
)


(2,063,768
)


(780,867
)Cash flows from financing activities:Proceeds from notes payable from related parties


4,514,963



2,200,000



2,000,000Loans/advances from related parties






715,000



4,236,778Payment of loans from related parties






(1,999,762
)


(3,562,224
)Repayment of note payable


(199,829
)






Proceeds from the sale of common stock and contributions from
    stockholder






6,669,163



7,388,000Proceeds from the sale of preferred stock, net of issuance costs


1,978,942







Proceeds from related party note receivable










2,300,000Net cash provided by financing activities


6,294,076



7,584,401



12,362,554 F-6




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##### Table of Contents



T3
    MOTION, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (Continued)
  Year Ended December 31,2009


2008


2007Effect of exchange rates on cash


(632
)


5,434



(777
)Net increase (decrease) in cash and cash equivalents


898,057



(3,249,531
)


4,925,684Cash and cash equivalents, beginning of year


1,682,741



4,932,272



6,588Cash and cash equivalents, end of year

$
2,580,798


$
1,682,741


$
4,932,272SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest

$
127,116


$
158,382


$
Income taxes

$
800


$
1,600


$
800Supplemental disclosure of non cash activities:Issuance of common stock for related party payables

$
1,536,206


$



$
2,000,000Conversion of related party payable to related party notes
    payable

$
498,528


$



$
Conversion of accounts payable to note payable

$
199,829


$



$
Cumulative effect to retained earnings due to adoption of
    accounting standard

$
1,981,338


$



$
Cumulative effect to additional paid-in capital due to adoption
    of accounting standard

$
4,013,085


$



$
Cumulative effect to debt discount due to adoption of accounting
    standard

$
859,955


$



$
Conversion option of preferred stock and warrants issued with
    preferred stock recorded as derivative liabilities

$
9,054,851


$



$
Conversion of debt and accrued interest to equity

$
4,031,865


$



$
Reclassification of derivative liability to equity

$
208,857


$



$
Issuance of preferred stock for exchange of warrants

$
1,155,390


$



$
Debt discount and warrant liability recorded upon issuance of
    warrants

$
3,510,751


$



$
Amortization of preferred stock discount related to conversion
    feature and warrants

$
6,116


$



$
Fair value of stock warrants issued with debt

$



$
1,215,638


$
485,897Issuance of preferred stock for anti-dilution

$
4,052


$



$
Conversion of accrued liability to related-party payable

$



$
210,000


$
Fair value of loan issue costs

$



$
79,000


$
Conversion of related-party debt to equity

$



$
(93,300
)

$
1,673,279    F-7




---



##### Table of Contents



T3
    MOTION, INC.
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    FOR THE YEARS ENDED
 DECEMBER
    31, 2009, 2008 and 2007
  NOTE 1 
    DESCRIPTION
    OF BUSINESS  Organization
  stand-up four-wheeled
  Going
    Concern
    and/or
  NOTE 2 
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES  Principles
    of Consolidation
    Reclassifications
   F-8




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use
    of Estimates
    Foreign
    Currency Translation
    Concentrations
    of Credit Risk
  Cash
    Accounts
    Receivable
      Accounts
    Payable
   F-9




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Inventories
  work-in-process, first-in,
  Property
    and Equipment
    Impairment
    of Long-Lived Assets
    Fair
    Value of Financial Instruments
    Revenue
    Recognition
     F-10




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Share
    Based Compensation
        Beneficial
    Conversion Features and Debt Discounts
    Income
    Taxes
   F-11




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Loss
    Per Share
    Years Ended December 31,2009


2008


2007Net loss

$
(6,698,893
)

$
(12,297,797
)

$
(8,577,232
)Deemed preferred stock dividend


(6,116
)






Net loss applicable to common stockholders

$
(6,705,009
)

$
(12,297,797
)

$
(8,577,232
)Weighted average number of common shares outstanding:Basic and diluted


44,445,042



42,387,549



35,223,795Net loss per share:Basic and diluted

$
(0.15
)

$
(0.29
)

$
(0.24
)   Research
    and Development
    Advertising
    Business
    Segments
    For the Years Ended December 31,2009


2008


2007Net revenues:T3 Domestic

$
3,654,290


$
6,987,618


$
1,682,492T3 International


963,911



601,647



139,777CT Domestic


25,821







Total net revenues

$
4,644,022


$
7,589,265


$
1,822,269  F-12




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Recent
    Accounting Pronouncements
  New Accounting Standards.
  2010-6, Fair Value Measurements and Disclosures:Improving Disclosures
    About Fair Value Measurement 2010-6), 2010-6 2010-6
  NOTE 3 
    INVENTORIES    2009


2008Raw materials

$
959,909


$
1,170,278Work-in-process


91,013



540,260Finished goods


118,294



103,931$
1,169,216


$
1,814,469   NOTE 4 
    PREPAID
    EXPENSES AND OTHER CURRENT ASSETS    2009


2008Prepaid inventory

$
64,744


$
355,720Prepaid expenses and other current assets


97,253



257,075$
161,997


$
612,795   NOTE 5 
    INTANGIBLE
    ASSET       F-13




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    EstimatedUseful Life


2009


2008Geolmmersive License Agreement


2 Years


$
1,000,000


$
1,000,000Less: accumulated amortization






(1,000,000
)


(375,000
)$



$
625,000   NOTE 6 
    PROPERTY
    AND EQUIPMENT    2009


2008Office and computer equipment

$
291,874


$
290,760Demonstration vehicles


370,456



368,685Manufacturing equipment


1,015,320



976,735Leasehold improvements


108,336



113,7651,785,986



1,749,945Less accumulated depreciation and amortization


(917,643
)


(552,775
)$
868,343


$
1,197,170Depreciation and amortization expense consisted of the
    following:   For the Years Ended December 31,2009


2008


2007Cost of revenues

$
200,151


$
176,818


$
119,355General and administrative


164,716



168,388



72,381$
364,867


$
345,206


$
191,736  F-14




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   NOTE 7 
    INCOME
    TAXES    2009


2008


2007Current:Federal

$



$



$
State


800



800



800Foreign










800



800



800Deferred:Federal


(2,580,732
)


(3,799,565
)


(2,228,726
)State


(702,405
)


(1,108,919
)


(591,164
)Foreign


(30,563
)


(54,227
)


(30,529
)(3,313,700
)


(4,962,711
)


(2,850,419
)Less change in valuation allowance


3,313,700



4,962,711



2,850,419$
800


$
800


$
800     2009


2008


2007Taxes calculated at federal rate


(2,277,629
)

$
(4,183,747
)


(2,915,987
)State tax, net of federal benefit


528



528



528Exclusion of certain meals and entertainment


4,678



4,033



1,170Foreign losses  not benefitted


34,638



61,458



34,600Incentive stock options


572,385



453,197



638,725Loss on debt conversion


225,686







Research credits


(36,723
)


(135,710
)


Other, net


35,575



1,496



5,428Valuation allowance


1,441,662



3,799,545



2,236,336Net deferred tax asset

$
800


$
800



800  F-15




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008Accruals and reserves

$
240,483


$
227,081Basis difference in fixed assets


(70,771
)


(102,525
)Stock options


21,109



21,109Tax credits


353,808



278,458Net operating loss carryforward


12,075,249



8,882,03912,619,878



9,306,162Valuation allowance  federal


(12,619,878
)


(9,306,162
)Net deferred tax asset

$



$
              F-16




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   NOTE 8 
    RELATED
    PARTY NOTES PAYABLE    2009


2008Note payable to Immersive Media Corp., 12% interest rate, net of
    discount of $41,265 and $0, respectively

$
958,735


$
1,000,000Note payable to Vision Opportunity Master Fund, Ltd., 10%
    interest rate, net of discount of $2,621,898 and $1,213,402,
    respectively


878,102



986,598$
1,836,837


$
1,986,598     Year

Related Party Notes Payable2010

$
4,500,000   Immersive
    Note
           F-17




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Vision
    Opportunity Master Fund, Ltd. Bridge Financing
    th
       F-18




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
               F-19




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Ki Nam
    Note
              Lock-Up
    Agreement
   F-20




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    NOTE 9 
    DERIVATIVE
    LIABILITIES            24-month
     F-21




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,

January 1,2009

2009Annual dividend yield



Expected life (years)

0.25-5

1-5Risk-free interest rate

0.40%-2.69%

0.57%-1.67%Expected volatility

84%-159%

104%-159%                      F-22




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Level 3


Level 3Carrying Value


Carrying ValueDecember 31,


January 1,2009


2009Embedded conversion options

$
8,853,893


$
1,237,435Warrants


2,970,583



5,615,673$
11,824,476


$
6,853,108Decrease in fair value

$
6,184,151     Balance at December 31, 2008





$
Cumulative effect of adoption






6,853,108Issuance of warrants and conversion option






12,565,601Conversion of debt






(1,410,082
)Change in fair value






(6,184,151
)Balance at December 31, 2009





$
11,824,476   NOTE 10 
    EQUITY
  Series A
    Convertible Preferred Stock
        F-23




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Common
    Stock
       F-24




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Form S-1
      NOTE 11 
    STOCK
    OPTIONS AND WARRANTS  Common
    Stock Options
   F-25




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2009


2008


2007Stock compensation expense  cost of revenue

$
124,373



124,850


$
225,839Stock compensation expense  sales and marketing


347,556



301,371



419,400Stock compensation expense  research and development


202,507



140,735



150,737Stock compensation expense  general and administrative


1,009,048



799,534



1,131,902Total stock compensation expense

$
1,683,484


$
1,366,490


$
1,927,878     Weighted-Weighted-


AverageAverage


Remaining


AggregateNumber of


Exercise


Contractual


IntrinsicShares


Price


Life


ValueOptions outstanding  January 1, 2009


6,468,167



0.76Options granted


160,000



1.40Options exercised






Options forfeited


(594,979
)


0.82Options cancelled






Total options outstanding  December 31, 2009


6,033,188


$
0.77



8.10


$
Options exercisable  December 31, 2009


4,543,442


$
0.68



7.99


$
Options vested and expected to vest 
    December 31, 2009


5,995,877


$
0.77



8.10


$
Options available for grant under the Plan at December 31,
    2009


1,416,812Weighted average fair value of options granted

$
1.23     Options OutstandingWeighted Average


WeightedRemaining


Average


Options ExercisableExercise




Contractual


Exercise





Weighted AveragePrices

Number of Shares


Life


Price


Number of Shares


Exercise Price(In years)$0.60


4,004,188



8.0


$
0.60



3,352,360


$
0.60$0.77


1,000,000



7.9


$
0.77



937,500


$
0.77$1.40


954,000



8.9


$
1.40



229,624


$
1.40$1.70


75,000



8.7


$
1.70



23,958


$
1.706,033,188



8.1


$
0.77



4,543,442


$
0.68  F-26




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Summary
    of Assumptions and Activity
      Years Ended December 31,2009

2008Expected term (in years)

5.5

6.1Expected volatility

94%  100%

93%  100%Risk-free interest rate

2.0%

2.2%  3.4%Expected dividends



Forfeiture rate

2.80%

2.80%Weighted-average grant date fair value per share

$1.03

$1.33       Warrants
    Weighted-


Weighted-AverageExercise


Contractual


Aggregate IntrinsicNumber of Shares


Price


Life


Value(In years)Warrants outstanding  January 1, 2009


5,380,408



1.48Warrants granted (See Notes 8 and 10)


16,338,504



0.80Warrants exercised






Warrants cancelled (See Note 8)


(10,972,769
)


0.88Warrants outstanding and exercisable-December 31, 2009


10,746,143


$
0.87



4.89


$
  F-27




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   NOTE 12 
    COMMITMENTS
    AND CONTINGENCIES  Operating
    Leases
        YearsEndingDecember 31,

Total2010

$
399,0002011


305,0002012


209,000$
913,000   Indemnities
    and Guarantees
    Warranties
       F-28




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  and/or
    2009


2008Beginning balance, January 1,

$
362,469


$
296,000Charged to cost of revenues


129,183



417,857Usage


(255,754
)


(351,388
)Ending balance, December 31

$
235,898


$
362,469   Legal
    Contingency
  Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam
    and Jason Kim No. 30.2009-00125358):
   F-29




---



##### Table of Contents



T3
    MOTION, INC.
    NOTES TO CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   NOTE 13 
    RELATED
    PARTY TRANSACTIONS    Accounts
    Receivable
      Prepaid
    Expenses
    Related
    Party Payables
      Intangible
    Asset  see Note 5
  Notes
    Payable  see Note 8
  NOTE 14 
    SUBSEQUENT
    EVENTS           F-30




---



##### Table of Contents



SIGNATURES    T3 MOTION, INC.
  By:
    /s/  Ki
    Nam   
      Signature

Position

Date/s/  Ki
    NamKi
    Nam

Chairman and Chief Executive Officer (principal executive
    officer)

March 31, 2010/s/  Kelly
    J. AndersonKelly
    J. Anderson

Executive Vice President and Chief Financial Officer (principal
    financial officer)

March 31, 2010/s/  David
    SnowdenDavid
    Snowden

Director

March 31, 2010/s/  Steven
    J. HealySteven
    J. Healy

Director

March 31, 2010/s/  Mary
    S. SchottMary
    S. Schott

Director

March 31, 2010/s/  Robert
    ThomsonRobert
    Thomson

Director

March 31, 2010  63




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##### Table of Contents



INDEX
    TO EXHIBITS
  ExhibitNumber

Description3
.1

Amended and Restated Certificate of Incorporation, as currently
    in effect(1)3
.2

Bylaws(1)3
.3

Amendment to Bylaws, dated January 16, 2009(5)3
.4

Amendment to Certificate of Incorporation(9)3
.5

Certificate of Designation of Preferences, Rights and
    Limitations of Series A Convertible Preferred Stock(9)10
.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
.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
.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
.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
.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
.6

Form of Distribution Agreement(1)10
.7

Director Agreement between David L. Snowden and T3 Motion, Inc.,
    dated February 28, 2007(1)10
.8

Director Agreement between Steven J. Healy and T3 Motion, Inc.,
    dated July 1, 2007(1)10
.9

Director Indemnification Agreement between Steven J. Healy and
    T3 Motion, Inc., dated July 1, 2007(1)10
.10

Securities Purchase Agreement between T3 Motion, Inc. and
    Immersive Media Corp., dated December 31, 2007(1)10
.11

Promissory Note issued to Immersive Media Corp., dated
    December 31, 2007(1)10
.12

Common Stock Purchase Warrant issued to Immersive Media Corp.,
    dated December 31, 2007(1)10
.13

Investor Rights Agreement between T3 Motion, Inc. and Immersive
    Media Corp., dated December 31, 2007(1)10
.14

Securities Purchase Agreement between T3 Motion, Inc. and
    certain Purchasers, dated March 28, 2008(1)10
.15

Registration Rights Agreement between T3 Motion, Inc. and
    certain Purchasers, dated March 28, 2008(1)10
.16

Series A Common Stock Purchase Warrant issued to Vision
    Opportunity Master Fund, Ltd., dated March 28, 2008(1)10
.17

Series B Common Stock Purchase Warrant issued to Vision
    Opportunity Master Fund, Ltd., dated March 28, 2008(1)10
.18

Series C Common Stock Purchase Warrant issued to Vision
    Opportunity Master Fund, Ltd., dated March 28, 2008(1)10
.19

GeoImmersive Image Data & Software Licensing Agreement
    dated July 9, 2008(2)10
.20

Amendment to Promissory Note dated as of December 19,
    2008(3)10
.21

Securities Purchase Agreement, dated December 30, 2008(4)10
.22

Form of 10% Secured Convertible Debenture(4)10
.23

Form of Series D Common Stock Purchase Warrant(4)10
.24

Subsidiary Guarantee, dated December 30, 2008(4)10
.25

Security Agreement, dated December 30, 2008(4)10
.26

Form of
    Lock-up
    Agreement, dated December 30, 2008(4)10
.27

Director Offer Letter to Mary S. Schott from Company, dated
    January 16, 2009(5)10
.28

Distribution Agreement, dated November 24, 2008 by and
    between the Company and CT&T(7)10
.29

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) 64




---



##### Table of Contents



ExhibitNumber

Description10
.30

Distribution Agreement dated as of March 20, 2009 by and
    between the Company and Spear International, Ltd.(6)10
.31

Amendment to GeoImmersive Image Data and Software License
    Agreement by and between the Company and Immersive Media dated
    as of March 16, 2009.(7)10
.32

Securities Purchase Agreement dated as of March 31, 2009 by
    and between the Company and Ki Nam.(7)10
.33

Form of Convertible Promissory Note granted to Ki Nam.(7)10
.34

Form of Warrant granted to Ki Nam.(7)10
.35

Amendment to Debenture, Warrant and Securities Purchase
    Agreement.(7)10
.36

Securities Purchase Agreement dated as of May 28, 2009(8)10
.37

Form of 10% Secured Convertible Debenture(8)10
.38

Form of Series E Common Stock Purchase Warrant(8)
    Subsidiary Guarantee dated as of May 28, 2009(8)10
.39

Security Agreement dated as of May 28, 2009(8)10
.40

Form of Amendment to Series B Common Stock Purchase Warrant(8)10
.41

Form of Amendment to Series C Common Stock Purchase Warrant(8)10
.42

Securities Purchase Agreement dated as of December 30,
    2009, between the Company and Vision Opportunity Master Fund,
    Ltd.(10)10
.43

Form of 10% Secured Convertible Debenture issued
    December 30, 2009.(10)10
.44

Form of Series G Common Stock Purchase Warrant issued
    December 30, 2009.(10)10
.45

Subsidiary Guarantee dated as of December 30, 2009, by T3
    Motion, Ltd.(10)10
.46

Security Agreement dated as of December 30, 2009, among the
    Company, T3 Motion, Ltd. and Vision Opportunity Master Fund,
    Ltd.(10)10
.47

Securities Exchange Agreement dated as of December 30,
    2009, among the Company, Vision Opportunity Master Fund, Ltd.
    and Vision Capital Advantage Fund, L.P.(10)10
.48

Lock-Up
    Agreement dated as of December 30, 2009 between the Company
    and Ki Nam.(10)10
.49

Stockholders Agreement dated as of December 30, 2009, among
    the Company, Ki Nam, Vision Opportunity Master Fund, Ltd. and
    Vision Capital Advantage Fund, L.P.(10)21
.1

List of Subsidiaries(1)31
.1

Section 302 Certificate of Chief Executive Officer*31
.2

Section 302 Certificate of Chief Financial Officer*32
.1

Section 906 Certificate of Chief Executive Officer*32
.2

Section 906 Certificate of Chief Financial Officer*     *
    
    Filed herewith.(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.(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. 65