##### Table of Contents



As filed with the Securities
    and Exchange Commission on October 12, 2007
 
 Registration
    No. 333-144802
    UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
    
  Amendment No. 4
 
 to
 Form S-1
 REGISTRATION
    STATEMENT
 UNDER
 THE SECURITIES ACT OF
    1933
      TRANS1 INC.
 (Exact name of registrant as
    specified in its charter)
      Delaware

3841

33-0909022(State or other jurisdiction
    of
    incorporation or organization)

(Primary Standard Industrial
    Classification Code Number)

(I.R.S. Employer
    Identification No.)     411 Landmark Drive
 Wilmington, NC
    28412-6303
 (910) 332-1700
 (Address, including zip code,
    and telephone number, including area code, of registrants
    principal executive offices)
    Richard Randall
 President and Chief Executive
    Officer
 TranS1 Inc.
 411 Landmark Drive
 Wilmington, NC
    28412-6303
 (910) 332-1700
 (Name, address, including zip
    code, and telephone number, including area code, of agent for
    service)
  Copies to:
  Bruce Feuchter, Esq.
    Michael A. Hedge, Esq.
    Stradling Yocca Carlson & Rauth
    660 Newport Center Drive, Suite 1600
    Newport Beach, California 92660(949) 725-4000

Marc D. Jaffe, Esq.
    Latham & Watkins LLP
    885 Third Avenue
    New York, New York 10022
    (212) 906-1200B. Shayne Kennedy, Esq.
    Latham & Watkins LLP
    650 Town Center Drive, 20th Floor
    Costa Mesa, California 92626
    (714) 540-1235      Approximate date of commencement of proposed sale to the
    public:
  o
  o
  o
  o
      The registrant hereby amends this registration statement on
    such date or dates as may be necessary to delay its effective
    date until the registrant shall file a further amendment which
    specifically states that this registration statement shall
    thereafter become effective in accordance with Section 8(a)
    of the Securities Act of 1933 or until the registration
    statement shall become effective on such date as the Securities
    and Exchange Commission, acting pursuant to said
    Section 8(a), may determine.




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The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the SEC is effective. This prospectus is
not an offer to sell and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not
permitted.  
 Subject to
    Completion, dated October 12, 2007
 
  5,500,000 shares
  
  Common Stock
       This investment involves a high degree of risk. See
    Risk Factors beginning
 on page 8 of this prospectus.
   Per Share

TotalPublic Offering Price

$



$Underwriting Discount

$



$Proceeds, Before Expenses, to TranS1 Inc.

$



$    30-day
  Neither the Securities and Exchange Commission nor any state
    securities commission has approved or disapproved of these
    securities or determined if this prospectus is truthful or
    complete. Any representation to the contrary is a criminal
    offense.
     Lehman
    Brothers
    Piper
    Jaffray  Cowen
    and Company
    Wachovia
    Securities   The date of this prospectus
    is          ,
    2007




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##### 



TABLE OF
    CONTENTS
  
 SUMMARY


1RISK FACTORS


8SPECIAL NOTE REGARDING FORWARD-LOOKING
    STATEMENTS


28USE OF PROCEEDS


29DIVIDEND POLICY


29CAPITALIZATION


30DILUTION


32SELECTED FINANCIAL DATA


34MANAGEMENTS DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS


36BUSINESS


47MANAGEMENT


66COMPENSATION DISCUSSION AND ANALYSIS


71CERTAIN RELATIONSHIPS AND RELATED PARTY
    TRANSACTIONS


85PRINCIPAL STOCKHOLDERS


87DESCRIPTION OF CAPITAL STOCK


90SHARES ELIGIBLE FOR FUTURE SALE


94MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES FOR
    NON-U.S.
    HOLDERS


96UNDERWRITING


99LEGAL MATTERS


104EXPERTS


104WHERE YOU CAN FIND MORE INFORMATION


104INDEX TO FINANCIAL STATEMENTS


F-1EXHIBIT 5.1EXHIBIT 23.2  
       You should rely only on the information contained in this
    prospectus and in any free writing prospectus authorized by us.
    We have not, and the underwriters have not, authorized anyone to
    provide you with different information. We are not making offers
    to sell or seeking offers to buy these securities in any
    jurisdiction where the offer or sale is not permitted. You
    should assume that the information contained in this prospectus
    is accurate as of the date on the front of this prospectus only,
    regardless of the time of delivery of this prospectus or any
    sale of our common stock. Our business, financial condition,
    operating results and prospects may have changed since that
    date.
      Market
    and Industry Data




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SUMMARY
  The items in the following summary are described in more
    detail later in this prospectus. This summary does not contain
    all the information you should consider before investing in our
    common stock. You should carefully read the more detailed
    information set out in this prospectus, especially the risks of
    investing in our common stock that we discuss under the
    Risk Factors section, as well as the financial
    statements and the related notes to those statements included
    elsewhere in this prospectus. References in this prospectus to
    we, us, our,
    company and TranS1 refer to TranS1 Inc.
    unless the context requires otherwise.
  Our
    Business
        Market
    Opportunity
 1




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Limitations
    of Current Lumbar Surgical Procedures
    
    disruption to soft tissue and support structures;
    significant blood loss between 100 and 1,400 cc;
    lengthy operative procedure times between 90 minutes and
    4 hours;
    lengthy patient hospital stays averaging three days;
    significant patient recovery time requiring three to six months
    recovery and rehabilitation; and
    unresolved patient pain related to muscle dissection, implant
    irritation and scar tissue.    Our
    Solution
    
    Least Invasive Approach Minimizes
    Complications.  All of our products are delivered
    using our TranS1 approach. Procedures performed utilizing our
    TranS1 approach have been documented to have favorable clinical
    safety profiles with complication rates of approximately 1%.
 2




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
    Ease of Use and Short Procedure Times.  We have
    received feedback from practicing spine surgeons that they can
    perform our AxiaLIF procedure utilizing our TranS1 approach
    within 45 to 60 minutes after just two to three surgeries. We
    also believe that these short procedure times can result in
    reduced patient recovery times, decreased costs for the
    hospitals and increased productivity for the spine surgeons.
    Low Blood Loss.  We believe the minimally
    invasive nature of our TranS1 approach results in the average
    patient losing approximately 25 to 125 cc of blood during an
    AxiaLIF or AxiaLIF 360° procedure, which we believe
    correlates to reduced pain and faster recoveries. Given the
    associated low blood loss, patients generally do not need to
    donate blood prior to undergoing procedures that utilize our
    TranS1 approach.
    Short Patient Hospital Stays.  Patients
    typically stay only one night in the hospital after receiving a
    procedure performed using our TranS1 approach. In a small
    percentage of cases, patients are able to return home the same
    day.
    Reduction in Patient Pain.  We believe our
    TranS1 approach is effective at reducing lower back pain because
    surrounding soft tissue is not compromised, which prevents the
    creation of scar tissue, a leading cause of pain.  Our
    Strategy
    
    establish our TranS1 approach as a standard of care for lower
    lumbar spine surgery;
    expand our sales and marketing infrastructure to drive surgeon
    adoption;
    broaden the clinical applications of our TranS1
    approach; and
    opportunistically pursue acquisitions of complementary
    businesses and technologies.  Risks
    Associated with Our Business
    
    The potential reluctance or failure altogether of spine surgeons
    to adopt our products as safe and effective alternatives to
    existing surgical treatments of certain spine disorders given
    that the efficacy of our products is not yet supported by
    long-term clinical data.
    Our limited operating history. We have incurred net losses since
    our inception and, through June 30, 2007, we had an
    accumulated deficit of $26.4 million. We may never achieve
    profitability.
    Our ability to develop, receive approval for, and introduce new
    products or product enhancements. Some new products may require
    lengthy clinical trials to support regulatory clearance or
    approval and we may not successfully complete these clinical
    trials.
    Our ability to effectively maintain and prosecute adequate
    intellectual property protection, obtain and maintain regulatory
    clearances or approvals for our products, continue building
    effective sales and marketing capabilities and the ability of
    our customers to obtain adequate third-party coverage and
    reimbursement for their purchase of our products.
    Our ability to compete with large international companies who
    have greater resources in sales and marketing, manufacturing and
    research and development than we do.
 3




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Corporate
    Information
  28412-6303 (910) 332-1700.
  ® ® TM TM TM TM TM TM
 4




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The
    Offering
  Common stock offered by us
    
    5,500,000 sharesCommon stock to be outstanding after this offering
    
    18,776,502 sharesInitial public offering price
    
    $      per shareUse of proceeds
    
    We intend to use the net proceeds of this offering to support
    the commercialization of our existing and future products and to
    support our research and development activities, clinical
    trials, regulatory approvals and for capital expenditures,
    working capital and other general corporate purposes. See
    Use of Proceeds.Proposed Nasdaq Global Market symbol
    
    TSONRisk factors
    
    Investing in our common stock involves certain risks. See the
    risk factors described under the heading Risk
    Factors beginning on page 8 of this prospectus and
    the other information included in this prospectus for a
    discussion of factors you should carefully consider before
    deciding to invest in shares of our common stock.    
    2,339,663 shares of our common stock issuable upon exercise
    of outstanding options under our existing Amended and Restated
    2000 Stock Incentive Plan, at a weighted average exercise price
    of $1.74 per share;
    1,400,000 shares of our common stock available for future
    issuance under our 2007 Stock Incentive Plan, which is currently
    effective, and 250,000 shares of our common stock available
    for future grant under our 2007 Employee Stock Purchase Plan,
    which has been adopted and will become effective upon the
    completion of this offering; and
    automatic annual increases in the number of shares of common
    stock reserved for issuance under our 2007 Employee Stock
    Purchase Plan.    
    a 0.9-for-1 reverse stock split of our common stock and
    preferred stock on or before the closing of this offering;
    no exercise of the underwriters option to purchase
    additional shares;
    the adoption of our amended and restated certificate of
    incorporation and amended and restated bylaws effective
    immediately upon the closing of this offering; and
    the conversion of all our outstanding preferred stock into
    10,793,182 shares of our common stock immediately upon the
    closing of this offering.
 5




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Summary
    Financial Data
    Six Months EndedYear Ended December 31,


June 30,2002


2003


2004


2005


2006


2006


2007(Unaudited)














(Unaudited)(In thousands, except share data)Statements of Operations Data:Revenue

$



$



$



$
1,469


$
5,812


$
2,161


$
7,187Cost of revenue














386



1,580



618



1,459Gross profit














1,083



4,232



1,543



5,728Operating expensesResearch and development


483



1,620



1,758



2,444



4,246



2,094



2,278Sales and marketing






163



746



2,635



9,288



3,950



6,837General and administrative


561



927



1,117



1,293



1,166



625



1,083Total operating expenses


1,044



2,710



3,621



6,372



14,700



6,669



10,198Operating loss


(1,044
)


(2,710
)


(3,621
)


(5,289
)


(10,468
)


(5,126
)


(4,470
)Interest income


19



86



150



264



858



528



343Other income (expense)














(17
)


131







Net loss

$
(1,025
)

$
(2,624
)

$
(3,471
)

$
(5,042
)

$
(9,479
)

$
(4,598
)

$
(4,127
)Net loss per common share  basic and
    diluted(1)

$
(0.63
)

$
(1.28
)

$
(1.63
)

$
(2.25
)

$
(3.91
)

$
(1.90
)

$
(1.67
)Weighted average common shares outstanding  basic and
    diluted(1)


1,637,719



2,046,753



2,127,856



2,243,019



2,423,226



2,418,154



2,467,550Pro forma net loss per common share  basic and
    diluted
    (unaudited)(1)

















$
(0.72
)





$
(0.31
)Pro forma weighted average shares outstanding  basic and
    diluted
    (unaudited)(1)


















13,216,407







13,260,732     (1)
    
    See note 2 of the notes to our financial statements
    included elsewhere in this prospectus for an explanation of the
    determination of the number of shares used in computing per
    share data.
 6




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June 30, 2007Pro FormaActual


Pro
    Forma(1)


As
    Adjusted(2)(Unaudited)(In thousands)Balance Sheet Data:Cash, cash equivalents and short-term investments

$
10,172


$
10,172


$
74,667Working capital


14,306



14,306



78,801Total assets


18,193



18,193



82,688Preferred stock


40,089







Common stock






1



2Additional paid in capital


1,889



41,977



106,471Total stockholders equity (deficit)


(24,549
)


15,540



80,035     (1)
    
    The pro forma column gives effect to the conversion of all of
    our outstanding preferred stock into 10,793,182 shares of
    our common stock immediately upon the closing of this offering.(2)
    
    The pro forma as adjusted column gives further effect to the
    sale of shares of our common stock in this offering at an
    assumed offering price of $13.00 per share, the midpoint of the
    range on the cover page of this prospectus, after deducting
    estimated underwriting discounts and commissions and estimated
    offering costs payable by us. A $1.00 increase or decrease in
    the assumed public offering price of $13.00 per share would
    increase or decrease, respectively, each line item in the
    balance sheet data above by approximately $5.1 million,
    assuming that the number of shares offered by us, as set forth
    on the cover page of this prospectus, remains the same and after
    deducting the underwriting discounts and commissions.
 7




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RISK
    FACTORS
  Investing in our common stock involves a high degree of risk.
    You should carefully consider the following risk factors, as
    well as the other information in this prospectus, before
    deciding whether to invest in shares of our common stock. If any
    of the following risks actually occur, our business, financial
    condition, operating results and prospects would suffer. In that
    case, the trading price of our common stock would likely decline
    and you might lose all or part of your investment in our common
    stock. The risks described below are not the only ones we face.
    Additional risks that we currently do not know about or that we
    currently believe to be immaterial may also impair our
    operations and business results.
  Risks
    Related to Our Business
  To be
    commercially successful, spine surgeons must accept that our
    products are a safe and effective alternative to existing
    surgical treatments of certain spine disorders.
    
    lack of long-term clinical data supporting additional patient
    benefits;
    lack of experience with our products;
    lack of evidence supporting cost savings of our procedure over
    existing surgical alternatives;
    perceived liability risks generally associated with the use of
    new products and procedures;
    training time required to use a new product; and
    availability of adequate coverage and reimbursement for
    hospitals and surgeons.    The
    efficacy of our products is not yet supported by long-term
    clinical data and may therefore prove to be less effective than
    initially thought.
   8




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Our
    future growth depends on increasing physician awareness of our
    TranS1 approach and our related products for appropriate
    treatment, intervention and referral.
    We
    have a limited operating history and have incurred losses since
    inception and we expect to incur increasing losses for the
    foreseeable future. We may never achieve or sustain
    profitability.
    We are
    in a highly competitive market segment, which is subject to
    rapid technological change. If our competitors are better able
    to develop and market products that are safer, more effective,
    less costly or otherwise more attractive than any products that
    we may develop, our ability to generate revenue will be reduced
    or eliminated.
    
    greater financial and human resources for product development,
    sales and marketing and patent litigation;
    significantly greater name recognition;
    established relationships with spine surgeons, customers and
    third-party payors;
    additional lines of products, and the ability to offer rebates
    or bundle products to offer greater discounts or incentives to
    gain a competitive advantage;
    established sales and marketing, and distribution
    networks; and 9




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
    greater experience in conducting research and development,
    manufacturing, clinical trials, preparing regulatory submissions
    and obtaining regulatory clearance or approval for products and
    marketing approved products.    Our
    failure to continue building effective sales and marketing
    capabilities for our products could significantly impair our
    ability to increase sales of our products.
    The
    demand for our products and the prices which customers and
    patients are willing to pay for our products depend upon the
    ability of our customers to obtain adequate third-party coverage
    and reimbursement for their purchases of our
    products.
    country-by-country
 10




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Our
    future success depends on our ability to timely develop, receive
    regulatory clearance or approval, and introduce new products or
    product enhancements that will be accepted by the
    market.
      
    properly identify and anticipate spine surgeon and patient needs;
    develop and introduce new products or product enhancements in a
    timely manner;
    avoid infringing upon the intellectual property rights of third
    parties;
    demonstrate, if required, the safety and efficacy of new
    products with data from preclinical studies and clinical trials;
    obtain the necessary regulatory clearances or approvals for new
    products or product enhancements;
    be fully
    FDA-compliant
    with marketing of new devices or modified products;
    provide adequate training to potential users of our products;
    receive adequate coverage and reimbursement for procedures
    performed with our products; and
    develop an effective and
    FDA-compliant,
    dedicated marketing and distribution network.   11




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If
    clinical trials of our current or future product candidates do
    not produce results necessary to support regulatory clearance or
    approval in the United States or elsewhere, we will be unable to
    commercialize these products.
    
    the FDA, institutional review boards or other regulatory
    authorities do not approve a clinical study protocol, force us
    to modify a previously approved protocol, or place a clinical
    study on hold;
    patients do not enroll in, or enroll at the expected rate, or
    complete a clinical study;
    patients or investigators do not comply with study protocols;
    patients do not return for post-treatment
    follow-up at
    the expected rate;
    patients experience serious or unexpected adverse side effects
    for a variety of reasons that may or may not be related to our
    products such as the advanced stage of co-morbidities that may
    exist at the time of treatment, causing a clinical study to be
    put on hold;
    sites participating in an ongoing clinical study may withdraw,
    requiring us to engage new sites;
    difficulties or delays associated with bringing additional
    clinical sites on-line;
    third-party clinical investigators decline to participate in our
    clinical studies, do not perform the clinical studies on the
    anticipated schedule or consistent with the investigator
    agreement, clinical study protocol, good clinical practices, and
    other FDA and Institutional Review Board requirements;
    third-party organizations do not perform data collection and
    analysis in a timely or accurate manner;
    regulatory inspections of our clinical studies require us to
    undertake corrective action or suspend or terminate our clinical
    studies;
    changes in U.S. federal, state, or foreign governmental
    statutes, regulations or policies;
    interim results are inconclusive or unfavorable as to immediate
    and long-term safety or efficacy; or
    the study design is inadequate to demonstrate safety and
    efficacy.  and/or
  Our
    international operations subject us to certain operating risks,
    which could adversely impact our net sales, results of
    operations and financial condition.
   12




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
    the imposition of additional U.S. and foreign governmental
    controls or regulations;
    the imposition of costly and lengthy new export licensing
    requirements;
    the imposition of U.S. or international sanctions against a
    country, company, person or entity with whom we do business that
    would restrict or prohibit continued business with the
    sanctioned country, company, person or entity;
    economic instability;
    a shortage of high-quality sales people and distributors;
    changes in third-party reimbursement policies that may require
    some of the patients who receive our products to directly absorb
    medical costs or that may necessitate the reduction of the
    selling prices of our products;
    changes in duties and tariffs, license obligations and other
    non-tariff barriers to trade;
    the imposition of new trade restrictions;
    the imposition of restrictions on the activities of foreign
    agents, representatives and distributors;
    scrutiny of foreign tax authorities which could result in
    significant fines, penalties and additional taxes being imposed
    on us;
    pricing pressure that we may experience internationally;
    laws and business practices favoring local companies;
    longer payment cycles;
    difficulties in maintaining consistency with our internal
    guidelines;
    difficulties in enforcing agreements and collecting receivables
    through certain foreign legal systems; and
    difficulties in enforcing or defending intellectual property
    rights.   13




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The
    use, misuse or off-label use of our products may harm our image
    in the marketplace or result in injuries that lead to product
    liability suits, which could be costly to our business or result
    in FDA sanctions if we are deemed to have engaged in such
    promotion.
    We
    purchase some of the key components of our products from single
    suppliers. The loss of these suppliers could prevent or delay
    shipments of our products or delay our clinical trials or
    otherwise adversely affect our business.
     14




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We
    depend on our officers and other key employees, and if we are
    not able to retain and motivate them or recruit additional
    qualified personnel, our business will suffer.
    If we
    fail to properly manage our anticipated growth, our business
    could suffer.
        We may
    need substantial additional funding beyond the proceeds of this
    offering and may be unable to raise capital when needed, which
    would force us to delay, reduce, eliminate or abandon our
    commercialization efforts or product development
    programs.
    
    expand the commercialization of our products;
    fund our operations and clinical trials;
    continue our research and development;
    defend, in litigation or otherwise, any claims that we infringe
    third-party patents or other intellectual property rights;
    address FDA or other governmental, legal/enforcement actions and
    remediate underlying problems
    commercialize our new products, if any such products receive
    regulatory clearance or approval for commercial sale; and
    acquire companies and in-license products or intellectual
    property.   15




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
    market acceptance of our products;
    the scope, rate of progress and cost of our clinical trials;
    the cost of our research and development activities;
    the cost of filing and prosecuting patent applications and
    defending and enforcing our patent and other intellectual
    property rights;
    the cost of defending, in litigation or otherwise, any claims
    that we infringe third-party patent or other intellectual
    property rights;
    the cost and timing of additional regulatory clearances or
    approvals;
    the cost and timing of establishing additional sales, marketing
    and distribution capabilities;
    the effect of competing technological and market
    developments; and
    the extent to which we acquire or invest in businesses, products
    and technologies, although we currently have no commitments or
    agreements relating to any of these types of transactions.      If we
    choose to acquire new businesses, products or technologies, we
    may experience difficulty in the identification or integration
    of any such acquisition, and our business may
    suffer.
    Consolidation
    in the healthcare industry could lead to demands for price
    concessions or to the exclusion of some suppliers from certain
    of our markets, which could have an adverse effect on our
    business, financial condition or results of
    operations.
   16




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We
    face the risk of product liability or other claims and may not
    be able to obtain sufficient insurance coverage, if at
    all.
          If our
    independent contract manufacturers fail to timely deliver to us
    sufficient quantities of some of our products and components in
    a timely manner, our operations may be harmed.
    
    inadequate capacity of the manufacturers facilities;
    interruptions in access to certain process technologies; and
    reduced control over product availability, quality, delivery
    schedules, manufacturing yields and costs. 17




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We
    operate at a single location. Any disruption in this facility or
    any inability to ship a sufficient number of our products to
    meet demand could adversely affect our business and results of
    operations.
    We
    have no experience operating as a public company. Compliance
    with public company requirements will increase our costs and
    require additional management resources, and we still may fail
    to comply.
  Form 10-K. Form 10-K
  Changes
    to existing accounting pronouncements regarding stock-based
    compensation may affect how we conduct our business and affect
    our reported results of operations.
   18




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Risks
    Related to Regulatory Environment
  If we
    fail to maintain regulatory approvals and clearances, or are
    unable to obtain, or experience significant delays in obtaining,
    FDA clearances or approvals for our future products or product
    modifications, our ability to commercially distribute and market
    these products could suffer.
        Modifications
    to our marketed products may require new 510(k) clearances or
    PMA approvals, or may require us to cease marketing or recall
    the modified products until clearances or approvals are
    obtained.
   19




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Clinical
    trials necessary to support a PMA application will be expensive
    and will require the enrollment of large numbers of patients,
    and suitable patients may be difficult to identify and recruit.
    Delays or failures in our clinical trials will prevent us from
    commercializing any modified or new products and will adversely
    affect our business, operating results and
    prospects.
    follow-up follow-up
  and/or follow-up
  If the
    third parties on which we rely to conduct our clinical trials
    and to assist us with pre-clinical development do not perform as
    contractually required or expected, we may not be able to obtain
    regulatory clearance or approval for or commercialize our
    products.
   20




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Even
    if our products are approved by regulatory authorities, if we or
    our suppliers fail to comply with ongoing FDA or other foreign
    regulatory authority requirements, or if we experience
    unanticipated problems with our products, these products could
    be subject to restrictions or withdrawal from the
    market.
    
    warning letters or untitled letters;
    fines and civil penalties;
    unanticipated expenditures to address or defend such actions;
    delays in clearing or approving, or refusal to clear or approve,
    our products;
    withdrawal or suspension of approval of our products or those of
    our third-party suppliers by the FDA or other regulatory bodies;
    product recall or seizure;
    orders for physician notification or device repair, replacement
    or refund;
    interruption of production;
    operating restrictions;
    injunctions; and
    criminal prosecution.       21




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##### Table of Contents



We may
    be subject to or otherwise affected by federal and state
    healthcare laws, including fraud and abuse and health
    information privacy and security laws, and could face
    substantial penalties if we are unable to fully comply with such
    laws.
    
    the federal Anti-Kickback Law, which constrains our marketing
    practices and those of our independent sales agents and
    distributors, educational programs, pricing policies, and
    relationships with healthcare providers, by prohibiting, among
    other things, soliciting, receiving, offering or providing
    remuneration, intended to induce the purchase or recommendation
    of an item or service reimbursable under a federal healthcare
    program (such as the Medicare or Medicaid programs);
    federal false claims laws which prohibit, among other things,
    knowingly presenting, or causing to be presented, claims for
    payment from Medicare, Medicaid, or other third-party payors
    that are false or fraudulent;
    the federal Health Insurance Portability and Accountability Act
    of 1996, or HIPAA, and its implementing regulations, which
    created federal criminal laws that prohibit executing a scheme
    to defraud any healthcare benefit program or making false
    statements relating to healthcare matters and which also imposes
    certain regulatory and contractual requirements regarding the
    privacy, security and transmission of individually identifiable
    health information; and
    state laws analogous to each of the above federal laws, such as
    anti-kickback and false claims laws that may apply to items or
    services reimbursed by any third-party payor, including
    commercial insurers, and state laws governing the privacy of
    certain health information, many of which differ from each other
    in significant ways and often are not preempted by HIPAA, thus
    complicating compliance efforts.  and/or
  Risks
    Related to Our Intellectual Property
  Our
    ability to protect our intellectual property and proprietary
    technology through patents and other means is
    uncertain.
   22




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##### Table of Contents



Any
    lawsuit, whether initiated by us to enforce our intellectual
    property rights or by a third party against us alleging
    infringement, may cause us to expend significant financial and
    other resources, and may divert our attention from our business
    and adversely affect our business, operating results and
    prospects.
     23




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##### Table of Contents



and/or
  
    pay damages, including, but not limited to, treble damages and
    attorneys fees, which may be substantial;
    cease the development, manufacture, use and sale of products
    that infringe the patent rights of others, through a
    court-imposed sanction called an injunction;
    expend significant resources to redesign our technology so that
    it does not infringe others patent rights, or develop or
    acquire non-infringing intellectual property, which may not be
    possible;
    discontinue manufacturing or other processes incorporating
    infringing technology; or
    obtain licenses to the infringed intellectual property, which
    may not be available to us on acceptable terms, or at all.    Risks
    Related to this Offering
  Our
    common stock has not been publicly traded and an active trading
    market may not develop, and we expect that the price of our
    common stock will fluctuate substantially.
    
    announcements relating to litigation or our commencement of, or
    involvement in, litigation;
    any major change in our board of directors or management; 24




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##### Table of Contents




    the announcement of new products, acquisitions, commercial
    relationships, or service enhancements by us or our competitors;
    failure to achieve certain milestones within certain timeframes,
    if at all;
    quarterly variations in our or our competitors operating
    results;
    changes in earnings estimates, investors perceptions,
    recommendations by securities analysts or our failure to achieve
    analysts earning estimates; and
    general economic and market conditions and other factors
    unrelated to our operating performance or the operating
    performance of our competitors.    New
    investors in our common stock will experience immediate and
    substantial dilution after this offering.
    A sale
    of a substantial number of shares of our common stock may cause
    the price of our common stock to decline.
  lock-ups lock-up lock-up lock-up lock-up lock-up
  Our
    directors, officers and principal stockholders have significant
    voting power and may take actions that may not be in the best
    interests of our other stockholders.
   25




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##### Table of Contents



If
    securities or industry analysts do not publish research or
    reports about our business, if they change their recommendations
    regarding our stock adversely or if our operating results do not
    meet their expectations, our stock price and trading volume
    could decline.
    We
    have broad discretion in the use of proceeds of this offering
    for working capital and general corporate
    purposes.
    Volatility
    in the stock price of other companies may contribute to
    volatility in our stock price.
    Our
    amended and restated certificate of incorporation, amended and
    restated bylaws and Delaware law contain provisions that could
    discourage a takeover.
    
    a classified board so that only one of the three classes of
    directors on our board of directors is elected each year;
    procedures for advance notification of stockholder director
    nominations and proposals;
    the ability of our board of directors to amend our bylaws
    without stockholder approval;
    a supermajority stockholder vote requirement for amending
    certain provisions of our amended and restated certificate of
    incorporation and our amended and restated bylaws; and
    the ability of our board of directors to issue up to
    5,000,000 shares of preferred stock without stockholder
    approval upon the terms and conditions and with the rights,
    privileges and preferences as our board of directors may
    determine. 26




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##### Table of Contents



We
    have not paid dividends in the past and do not expect to pay
    dividends in the future, and any return on investment may be
    limited to the value of our stock.
   27




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##### Table of Contents



SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
     28




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##### Table of Contents



USE
    OF PROCEEDS
      
    $30.0 million for sales and marketing initiatives to
    support the commercialization of our existing and any future
    products; and
    $10.0 million to support our research and development
    activities, clinical trials and obtaining necessary regulatory
    approvals.      DIVIDEND
    POLICY
   29




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##### Table of Contents



CAPITALIZATION
      
    an actual basis;
    A pro forma basis to give effect to the conversion of all of our
    outstanding preferred stock into 10,793,182 shares of our
    common stock immediately upon the closing of this
    offering; and
    a pro forma as adjusted basis to give further effect to the sale
    of 5,500,000 shares of our common stock in this offering at
    an assumed offering price of $13.00 per share, the midpoint
    of the range on the cover page of this prospectus, after
    deducting estimated underwriting discounts and commissions and
    estimated offering costs payable by us.  As of June 30, 2007Pro FormaActual


Pro Forma


As
    Adjusted(1)(Unaudited)(In thousands, except per shareand par value data)Preferred Stock:Series A preferred stock; $0.0001 par value;
    1,125,000 shares authorized, 1,125,000 shares issued
    and outstanding, actual; no shares authorized, no shares issued
    and outstanding, pro forma and pro forma as adjusted

$
956


$



$
Series AA preferred stock; $0.0001 par value;
    1,260,000 shares authorized, 1,260,000 shares issued
    and outstanding, actual; no shares authorized, no shares issued
    and outstanding, pro forma and pro forma as adjusted


1,694







Series B preferred stock; $0.0001 par value;
    4,909,091 shares authorized, 4,909,091 shares issued
    and outstanding, actual; no shares authorized, no shares issued
    and outstanding, pro forma and pro forma as adjusted


11,894







Series C preferred stock; $0.0001 par value;
    3,499,091 shares authorized, 3,499,091 shares issued
    and outstanding, actual; no shares authorized, no shares issued
    and outstanding, pro forma and pro forma as adjusted


25,545







Stockholders equity (deficit):Preferred stock, $0.0001 par value, no shares authorized,
    no shares issued or outstanding, actual; 5,000,000 shares
    authorized, no shares issued or outstanding, pro forma as
    adjusted










Common stock; $0.0001 par value, 17,100,000 shares
    authorized, 2,483,320 issued and outstanding, actual and
    13,276,502 shares issued and outstanding, pro forma;
    75,000,000 shares authorized, 18,776,502 issued and
    outstanding, pro forma as adjusted






1



2Additional paid-in capital


1,889



41,977



106,471Accumulated deficit


(26,438
)


(26,438
)


(26,438
)Total stockholders equity (deficit)


(24,549
)


15,540



80,035Total capitalization

$
15,540


$
15,540


$
80,035  30




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##### Table of Contents



(1)
    
    A $1.00 increase or decrease in the assumed public offering
    price of $13.00 per share would increase or decrease,
    respectively, each of additional paid-in capital, total
    stockholders equity and total capitalization by
    approximately $5.1 million, assuming that the number of
    shares offered by us, as set forth on the cover page of this
    prospectus, remains the same and after deducting the
    underwriting discounts and commissions.    
    2,339,663 shares of our common stock issuable upon exercise
    of outstanding options under our existing Amended and Restated
    2000 Stock Incentive Plan, at a weighted average exercise price
    of $1.74 per share;
    1,400,000 shares of our common stock available for future
    issuance under our 2007 Stock Incentive Plan, which is currently
    effective, and 250,000 shares of our common stock available
    for future grant under our 2007 Employee Stock Purchase Plan,
    which has been adopted and will become effective upon the
    completion of this offering; and
    automatic annual increases in the number of shares of common
    stock reserved for issuance under our 2007 Employee Stock
    Purchase Plan. 31




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##### Table of Contents



DILUTION
        Assumed public offering price per share





$
13.00Historical net tangible book value per share as of June 30,
    2007

$
(9.89
)Pro forma increase in net tangible book value per share
    attributable to conversion of preferred stock


11.06Pro forma net tangible book value per share as of June 30,
    2007


1.17Increase in pro forma net tangible book value per share
    attributable to this offering


3.09Pro forma as adjusted net tangible book value per share after
    this offering






4.26Dilution per share to new investors





$
8.74       WeightedAverageShares Purchased


Total Consideration


PriceNumber


Percent


Amount


Percent


Per ShareExisting stockholders


13,276,502



70.7
%

$
40,565,000



36.2
%

$
3.06New investors


5,500,000



29.3



71,500,000



63.8


$
13.00Total


18,776,502



100.0
%

$
112,065,000



100.0
%  32




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##### Table of Contents




    2,339,663 shares issuable upon exercise of outstanding
    options under our existing Amended and Restated 2000 Stock
    Incentive Plan, at a weighted average exercise price of $1.74
    per share;
    1,400,000 shares available for future issuance under our
    2007 Stock Incentive Plan, which is currently effective, and
    250,000 shares available for future grant under our 2007
    Employee Stock Purchase Plan, which has been adopted and will
    become effective upon the completion of this offering; and
    automatic annual increases in the number of shares of common
    stock reserved for issuance under our 2007 Employee Stock
    Purchase Plan.      WeightedAverageShares Purchased


Total Consideration


PriceNumber


Percent


Amount


Percent


Per ShareExisting stockholders


15,616,165



74.0
%

$
44,632,394



38.4
%

$
2.86New investors


5,500,000



26.0



71,500,000



61.6


$
13.00Total


21,116,165



100.0
%

$
116,132,394



100.0
%    33




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##### Table of Contents



SELECTED
    FINANCIAL DATA
    Year Ended December 31,


Six Months Ended June 30,2002


2003


2004


2005


2006


2006


2007(Unaudited)














(Unaudited)(In thousands, except share data)Statements of Operations Data:Revenue

$



$



$



$
1,469


$
5,812


$
2,161


$
7,187Cost of revenue














386



1,580



618



1,459Gross profit














1,083



4,232



1,543



5,728Operating expensesResearch and development


483



1,620



1,758



2,444



4,246



2,094



2,278Sales and marketing






163



746



2,635



9,288



3,950



6,837General and administrative


561



927



1,117



1,293



1,166



625



1,083Total operating expenses


1,044



2,710



3,621



6,372



14,700



6,669



10,198Operating loss


(1,044
)


(2,710
)


(3,621
)


(5,289
)


(10,468
)


(5,126
)


(4,470
)Interest income


19



86



150



264



858



528



343Other income (expense)














(17
)


131







Net loss

$
(1,025
)

$
(2,624
)

$
(3,471
)

$
(5,042
)

$
(9,479
)

$
(4,598
)

$
(4,127
)Net loss per common share  basic and
    diluted(1)

$
(0.63
)

$
(1.28
)

$
(1.63
)

$
(2.25
)

$
(3.91
)

$
(1.90
)

$
(1.67
)Weighted average common shares outstanding  basic and
    diluted(1)


1,637,719



2,046,753



2,127,856



2,243,019



2,423,226



2,418,154



2,467,550Pro forma net loss per common share  basic and
    diluted
    (unaudited)(1)

















$
(0.72
)





$
(0.31
)Pro forma weighted average shares outstanding  basic
    and diluted
    (unaudited)(1)


















13,216,407







13,260,732     (1)
    
    See note 2 of the notes to our financial statements
    included elsewhere in this prospectus for an explanation of the
    determination of the number of shares used in computing per
    share data.  34




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##### Table of Contents



June 30, 2007December 31,








Pro Forma2002


2003


2004


2005


2006


Actual


Pro
    Forma(1)


As
    Adjusted(2)(Unaudited)

















(Unaudited)(In thousands)Balance Sheet Data:Cash, cash equivalents and short-term investments

$
1,119


$
10,283


$
6,708


$
25,994


$
14,962


$
10,172


$
10,172


$
74,667Working capital


1,013



10,193



6,674



26,695



17,448



14,306



14,306



78,801Total assets


1,144



10,461



7,139



28,013



20,004



18,193



18,193



82,688Preferred stock


2,650



14,544



14,544



40,089



40,089



40,089







Common stock


























1



2Additional paid in capital


83



141



147



219



820



1,889



41,977



106,471Total stockholders deficit


(1,613
)


(4,215
)


(7,680
)


(12,654
)


(21,529
)


(24,549
)


15,540



80,035     (1)
    
    The pro forma column gives effect to the conversion of all of
    our outstanding preferred stock into 10,793,182 shares of
    our common stock immediately upon the closing of this offering.(2)
    
    The pro forma as adjusted column gives further effect to the
    sale of shares of our common stock in this offering at an
    assumed offering price of $13.00 per share, the midpoint of the
    range on the cover page of this prospectus, after deducting
    estimated underwriting discounts and commissions and estimated
    offering costs payable by us. A $1.00 increase or decrease in
    the assumed public offering price of $13.00 per share would
    increase or decrease, respectively, each line item in the
    balance sheet data above by approximately $5.1 million,
    assuming that the number of shares offered by us, as set forth
    on the cover page of this prospectus, remains the same and after
    deducting the underwriting discounts and commissions. 35




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##### Table of Contents



MANAGEMENTS
    DISCUSSION AND ANALYSIS OF
    FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  The following discussion of our financial condition and
    results of operations should be read in conjunction with our
    financial statements and the related notes to our financial
    statements included elsewhere in this prospectus. In addition to
    historical financial information, the following discussion and
    analysis contains forward-looking statements that involve risks,
    uncertainties and assumptions. Our actual results and timing of
    selected events may differ materially from those anticipated in
    these forward-looking statements as a result of many factors,
    including those discussed under Risk Factors and
    elsewhere in this prospectus.
  Overview
    start-up
       36




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##### Table of Contents



Financial
    Operations
  Revenue
    Cost
    of Revenue
    Research
    and Development
    Sales
    and Marketing
    General
    and Administrative
    Other
    and Interest Income (Expense)
   37




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##### Table of Contents



Results
    of Operations
  Comparison
    of Six Months Ended June 30, 2006 and 2007
    (Unaudited)
  Revenue.
  Cost of Revenue.
  Research and Development.
  Sales and Marketing.
  General and Administrative.
  Other and Interest Income (Expense).
 38




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##### Table of Contents



Comparison
    of the Years Ended December 31, 2004, 2005 and
    2006
  Revenue.
  Cost of Revenue.
  Research and Development.
  Sales and Marketing.
  General and Administrative.
  Other and Interest Income (Expense).
 39




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##### Table of Contents



Liquidity
    and Capital Resources
  Sources
    of Liquidity
            Cash
    Flows
  Net Cash Used in Operating Activities.
  Net Cash Provided by (Used in) Investing
    Activities.
    Net Cash Provided by Financing
    Activities.
 40




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##### Table of Contents



Operating
    Capital and Capital Expenditure Requirements
    Contractual
    Obligations
    Payments Due by YearLess than








AfterContractual Obligations

Total


1 Year


1-3 Years


4-5 Years


5 YearsOperating
    leases(1)

$
563,000


$
152,000


$
318,000


$
93,000



     (1)
    
    We rent office space under an operating lease which expires in
    2010.    Related
    Party Transactions
    Off-Balance
    Sheet Arrangements
    Critical
    Accounting Policies and Estimates
     41




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##### Table of Contents



Revenue recognition.
  Accounts receivable and allowances.
  Inventory. first-in,
  Accounting for Income Taxes.
  Stock-Based
    Compensation
   42




---



##### Table of Contents



18-month
  
    important developments in our operations;
    our performance and the status of our research and development
    efforts;
    the likelihood of achieving a liquidity event for the shares of
    common stock, such as an initial public offering or an
    acquisition of the company, given prevailing market conditions;
    the lack of control of the minority interest granted under the
    stock options to influence the occurrence of a liquidity event;
    the options to acquire shares of our common stock were subject
    to vesting, generally vesting over a four-year period;
    the prices at which we issued preferred stock in September 2005
    and the rights and privileges associated with those preferred
    stock issuances; and
    the illiquidity of our common stock as a private company.       43




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##### Table of Contents




    During 2006 we were still implementing and attempting to prove
    our business model and increasing the number of spine surgeons
    trained to use our products and perform our procedures in an
    effort to achieve a market share that we believed could allow us
    to achieve profitable operations in the future.
    At the time of our option grants in November 2006, while we
    continued to prove our business model, we were awaiting the
    preliminary twelve month clinical results from our prospective
    registry study. As we awaited this data, we did not believe it
    was appropriate to increase the revenue estimates for the
    twelve-month period ending December 31, 2007 that we used
    in implementing our valuation methodology. Moreover, we
    recognized that we continued to operate at a loss and expected
    to do so for the foreseeable future. We also took into account
    the aggregate liquidation preference of $40 million on our
    preferred stock outstanding and that any sale of the company
    would need to exceed that amount before holders of common stock
    received any benefit in such sale. Finally, we believed that an
    initial public offering of our common stock was unlikely for at
    least the next 18 months. As a result of these
    considerations, the board determined that the fair value of our
    common stock was $1.11 per share.
    At the time of our option grants in January 2007, we continued
    to prove our business model and await the results of our twelve
    month clinical data regarding the use of our AxiaLIF products.
    At the time of such stock option grants, we had completed
    interviews with investment bankers which provided us with
    valuations that assumed the positive outcome of such clinical
    data. Other than such interviews and the increase in the number
    of spine surgeons who had been trained to perform our surgery,
    there was no new information to support changes to the fair
    valuation of our stock from November 2006. For these reasons,
    the board determined that the fair value of our common stock was
    $2.00 per share.      
    Additionally, during this period, investment bankers advised us
    that general market conditions and the initial public offering
    market conditions had improved significantly, such that an
    offering of our common stock could be completed late in 2007 or
    early in 2008. Consequently, we engaged investment bankers to
    initiate the process of an initial public offering and began
    drafting our registration statement. In the light of all of
    these considerations, the board believed the fair market value
    of our common stock had increased to $5.56 per share.
    At the time of the stock option grants in June 2007, we
    continued to train surgeons to perform the AxiaLIF procedure and
    we also continued to receive positive results from our twelve
    month clinical data. In addition, our results of operations
    reinforced our belief that our products and procedures had 44




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##### Table of Contents



become recognized by surgeons as a viable alternative for lower
    back pain surgery. Using our valuation methodology, and without
    changing the forecasted revenues we relied on for our valuation
    in May 2007, we found that the valuation was stable. On the
    other hand, using a valuation methodology of discounting from
    the date of a projected public offering of our common stock, the
    board believed that the fair value of our common stock had
    further increased to $6.67 per share.      EstimatedReassessed Fair


Intrinsic Value PerDate of Grant

Number


Exercise Price


Value


ShareNov. 11, 2006


735,374


$
1.11


$
5.20


$
4.09Jan. 18, 2007


67,388


$
2.00


$
5.94


$
3.94Mar. 15, 2007


29,251


$
2.38


$
5.94


$
3.56May 16, 2007


418,770


$
5.56


$
10.00


$
4.44June 18, 2007


72,000


$
6.67


$
10.00


$
3.33        45




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##### Table of Contents



Recent
    Accounting Pronouncements
        Quantitative
    and Qualitative Disclosures About Market Risk
      Income
    Taxes
     46




---



##### Table of Contents



BUSINESS
  Overview
          Spine
    Anatomy
   47




---



##### Table of Contents



Medical
    Conditions Affecting the Lower Lumbar Spine and Traditional
    Treatment Alternatives
     48




---



##### Table of Contents



Anterior Lumbar Interbody Fusion, or ALIF.
  Posterior Lumbar Interbody Fusion, or PLIF.
  Transforaminal Lumbar Interbody Fusion, or
    TLIF.
  Extreme Lateral Interbody Fusion, or XLIF.
  360° Lumbar Fusion Procedure.
 49




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##### Table of Contents



Limitations
    of Traditional Lower Lumbar Spine Procedures
    
    Disruption to Soft Tissue and Support
    Structures.  Current lumbar fusion procedures
    require creating a pathway from the skin to the degenerative
    disc that is large enough to allow direct visualization and work
    by the surgeon. It is common to cut through healthy muscle or
    move critical organs, arteries, nerves and soft tissue, which
    can lead to bleeding, scarring, nerve damage and bowel
    disruption.
    Significant Blood Loss.  As a result of
    undergoing current lumbar fusion procedures, patients typically
    experience significant blood loss of between 100 and
    1,400 cc of blood. As a result, it is common for patients
    to use the hospitals blood supply or donate units of their
    own blood before a lumbar fusion procedure to replenish any
    significant blood loss.
    Lengthy Operative Procedure Times.  We believe
    it is common for current lumbar fusion procedures to take
    between 90 minutes and 4 hours to complete. With some
    procedures a second surgeon may be required. Long procedure
    times increase the risks of complications and blood loss. Also,
    hospital and physician resources are consumed for lengthy
    periods of time, which can reduce productivity and increase
    costs.
    Lengthy Patient Hospital Stays.  Patients
    remain in the hospital for an average of three days following a
    lumbar fusion procedure which consumes hospital and physician
    resources.
    Significant Patient Recovery Time.  Patients
    require three to six months to recover and rehabilitate after
    undergoing a lumbar fusion procedure before resuming normal
    activities.
    Unresolved Patient Pain.  Patients may continue
    to experience lower back pain after undergoing lumbar fusion
    procedures even though x-rays show successful fusion has been
    achieved through the growth of new bone. We believe this may be
    caused by muscle dissection, implant irritation and scar tissue
    that develops around the site of the surgery.  Market
    Opportunity
       50




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##### Table of Contents



Our
    Solution
     51




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##### Table of Contents



1. Initial access is achieved with an introducer through a
    small incision next to the tailbone

2. Introducer is advanced along the sacrum to the S13. After access into the disc, the degenerated disc
    material is removed

4. Bone grafting material is placed into the disc5. The AxiaLIF implant is introduced

6. Fixation is established and disc height is restored     
    Least Invasive Approach Minimizes
    Complications.  Our Axia LIF products are
    delivered using our TranS1 approach, which we believe is the
    least invasive approach to deliver fusion and motion preserving
    products to the L4/L5/S1 region. Procedures performed
    utilizing our TranS1 approach have been documented to have
    favorable clinical safety profiles with complication rates of
    approximately 1%.
    Ease of Use and Short Procedure Times.  We have
    received feedback from practicing surgeons that they can perform
    AxiaLIF procedures utilizing our TranS1 approach within 45 to 60
    minutes after they have performed just two to three surgeries.
    We believe that these short procedure times can result in
    reduced patient recovery times, decreased costs for the
    hospitals and increased productivity for the surgeons. We also
    believe the ease of use of our TranS1 approach enables reduced
    physician training as compared to alternative lower lumbar spine
    procedures. 52




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##### Table of Contents




    Low Blood Loss.  We believe the least invasive
    nature of our TranS1 approach results in the average patient
    losing approximately 25 to 125 cc of blood during an AxiaLIF or
    AxiaLIF 360° procedure, which correlates to reduced pain
    and faster recoveries. Given the associated low blood loss,
    patients generally do not need to donate blood prior to
    undergoing procedures that utilize our TranS1 approach.  
    Short Patient Hospital Stays.  Patients
    typically stay only one night in the hospital after receiving a
    procedure performed using our TranS1 approach. In a small
    percentage of cases, patients are able to return home the same
    day.  
    Reduction in Patient Pain.  We believe our
    TranS1 approach is effective at reducing lower back pain because
    surrounding soft tissue is not violated which prevents the
    creation of scar tissue, a leading cause of pain.  Our
    Strategy
    
    Establish our TranS1 Approach as a Standard of Care for Lower
    Lumbar Spine Surgery.  We believe patients
    commonly avoid back surgery due to its invasive nature and other
    drawbacks associated with current surgical treatment options. We
    expend significant resources promoting our TranS1 approach as
    the least invasive approach to lower back surgery and we believe
    the advantages of our TranS1 approach will enable our AxiaLIF
    products to become a standard of care for the lower lumbar
    region of the spine.
    Expand our Sales and Marketing Infrastructure to Drive
    Surgeon Adoption.  We intend to continue expending
    significant resources targeting spine surgeons through our sales
    and marketing efforts in the United States and internationally
    in order to drive the adoption of our TranS1 approach. We
    believe the ease of use, short procedure times, short hospital
    stays and reduction in patient pain will be compelling reasons
    for surgeon adoption of our technologies.
    Broaden the Applications of the TranS1
    Approach.  We believe that the applications for
    our TranS1 approach can be expanded beyond AxiaLIF and AxiaLIF
    360° to include multi-level fusion and multi-level motion
    preservation technologies. We are currently undertaking research
    and development activities with respect to these applications.
    Opportunistically Pursue Acquisitions of Complementary
    Businesses and Technologies.  In addition to
    building our internal product development efforts, we intend to
    selectively license or acquire complementary products and
    technologies that we believe will enable us to leverage our
    growing distribution platform.  Products
    AxiaLIF Lumbar Fusion Implants.
 53




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##### Table of Contents



AxiaLIF 360° Implants.
  TranS1 Access and Disc Preparation
    Instruments.
  Product
    Pipeline
    Percutaneous Nucleus Replacement.
  Partial Disc Replacement. ball-and-socket
    AxiaLIF
    Clinical Data Summary
   54




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##### Table of Contents



follow-up
  12-month
  VAS

ODIImprovement

Improvement12-Months





12-MonthsComplication

Before

Post-

Point

Before

Post-

PointFusion Rate

Rate

Procedure

Procedure

Change

Procedure

Procedure

Change91%

3%

75

31

44

42%

22%

20    
   
 55




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##### Table of Contents



12-month follow-up,
  VAS

ODIImprovement

ImprovementComplication

Before

Post-

Point

Before

Post-

PointRate

Procedure

Procedure

Change

Procedure

Procedure

Change0%

73

29

44

43%

26%

17  
   
  24-month 12-month follow-up
  12-month
  VAS


ODIImprovement


Improvement12-Months








12-MonthsComplication


Before


Post-


Point


Before


Post-


PointFusion Rate


Rate


Procedure


Procedure


Change


Procedure


Procedure


Change88%



0%



67



41



26



49%



33%



16  
   
 56




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##### Table of Contents



Sales and
    Marketing
      mid-2008,
    Surgeon
    Training
    Third-Party
    Reimbursement
   57




---



##### Table of Contents



side-by-side.
    Competition
    
    improved outcomes for medical conditions affecting the lower
    lumbar spine;
    acceptance by spine surgeons;
    ease of use and reliability;
    product price and qualification for reimbursement;
    technical leadership and superiority;
    effective marketing and distribution; and 58




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
    speed to market.      Research
    and Development
      Manufacturing
    and Supply
       59




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##### Table of Contents



Patents
    and Proprietary Technology
    Patents
    
    our method for performing trans-sacral procedures in the spine,
    including diagnostic or therapeutic procedures, and trans-sacral
    introduction of instrumentation or implants;
    apparatus for conducting these procedures including access, disc
    preparation and implantation including the current TranS1
    instruments individually and in kit form; and
    implants for fusion and motion preservation in the spine.     60




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Trademarks
    Government
    Regulation
    
    product design and development;
    product testing;
    product manufacturing;
    product labeling;
    product storage;
    premarket clearance or approval;
    advertising and promotion;
    product marketing, sales and distribution; and
    post-market surveillance, including reporting deaths or serious
    injuries related to products and certain product malfunctions.  FDAs
    Premarket Clearance and Approval Requirements
    510(k)
    Clearance Pathway
     61




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and/or
  Premarket
    Approval Pathway
      Clinical
    Trials
   62




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##### Table of Contents



Pervasive
    and Continuing FDA Regulation
    
    quality system regulation, which requires manufacturers,
    including third-party contract manufacturers, to follow
    stringent design, testing, control, documentation, and other
    quality assurance controls, during all aspects of the
    manufacturing process;
    labeling regulations, and FDA prohibitions against the promotion
    of products for uncleared or unapproved off-label
    uses;
    medical device reporting obligations, which require that
    manufacturers submit reports to the FDA if information
    reasonably suggests their device (i) may have caused or
    contributed to a death or serious injury, or
    (ii) malfunctioned and the device or a similar company
    device would likely cause or contribute to a death or serious
    injury if the malfunction were to recur; and
    other post-market surveillance requirements, which apply when
    necessary to protect the public health or to provide additional
    safety and effectiveness data for the device.      
    warning letters, fines, injunctions, consent decrees and civil
    penalties;
    repair, replacement, refunds, recall or seizure of our products;
    operating restrictions, partial suspension or total shutdown of
    production;
    refusing our request for 510(k) clearance or premarket approval
    of new products, new intended uses or other modifications to
    existing products;
    withdrawing or suspending premarket approvals that are already
    granted; and
    criminal prosecution.    Fraud
    and Abuse
   63




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International
      Employees
   64




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Facilities
    Litigation
   65




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##### Table of Contents



MANAGEMENT
  Executive
    Officers and Directors
    Name

Age

PositionRichard Randall


55


President, Chief Executive Officer and DirectorMichael Luetkemeyer


57


Chief Financial OfficerRick Simmons


45


Vice President, Marketing and SalesRobert Assell


54


Vice President, Product DevelopmentWilliam Jackson


56


Vice President, Regulatory, Clinical and QualityRobert Martin


42


Vice President, International SalesMichael Carusi


42


DirectorMitchell Dann


47


DirectorJonathan Osgood


58


DirectorJames Shapiro


49


Director   Richard Randall
  Michael Luetkemeyer
  Rick Simmons
  Robert Assell
 66




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##### Table of Contents



William Jackson
  Robert Martin
  Michael Carusi
  Mitchell Dann
  Jonathan Osgood
  James Shapiro
 67




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##### Table of Contents



Board
    Composition
    
    Mr. Mitchell Dann was elected by the holders of our
    series A preferred stock, voting together as a single
    class, and was designated by Sapient Capital, L.P. pursuant to
    its contractual right.
    Mr. Jonathan Osgood was elected by the holders of our
    series AA preferred stock, voting together as a single
    class, and was designated by Cutlass Capital, L.P. pursuant to
    its contractual right.


    Mr. Michael Carusi was elected by the holders of our
    series B preferred stock, voting together as a single
    class, and was designated by Advanced Technology Ventures
    pursuant to its contractual right.
    Mr. James Shapiro was elected by the holders of our
    series C preferred stock, voting together as a single
    class, and was designated by Thomas Weisel Healthcare Venture
    Partners pursuant to its contractual right.
    Mr. Richard Randall was elected by the holders of our
    common stock and preferred stock, voting together as a combined
    class, and was designated by such holders in his capacity as our
    chief executive officer.      Committees
    of the Board of Directors
    Audit
    Committee
   68




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Compensation
    Committee
    Nominating
    and Corporate Governance Committee
    Other
    Committees
    Non-Employee
    Director Compensation for 2006
        Compensation
    Committee Interlocks and Insider Participation in Compensation
    Decisions
   69




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Family
    Relationships
   70




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##### Table of Contents



COMPENSATION
    DISCUSSION AND ANALYSIS
  General
    Our
    Compensation Objectives
    Role of
    Compensation Committee
  Rule 16b-3
       71




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##### Table of Contents



Compensation
    Components
    Base
    Salary
       72




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##### Table of Contents



Short-Term
    Incentive Program
      Weight


Achievement2006 First Half ObjectivesAchieve six month revenue target of $2.77 million


45
%


50
%Gross margin of 75%


15
%


100
%Net cash used in operating activities of $6.6 million for
    first six months of 2006


10
%


100
%AxiaLIF 360° commercial launch in United States


10
%


100
%AxiaLIF commercial launch in European Union


5
%


100
%Completion of PNR pilot study and pre-IDE meeting


15
%


0
%2006 Second Half ObjectivesAchieve twelve month revenue target of $9.66 million


45
%


35
%Gross margin of 76%


15
%


100
%Net cash used in operating activities of $6.8 million for
    second six months of 2006


10
%


100
%Submit IDE for PNR implant


10
%


0
%AxiaLIF 2L commercial launch in European Union


10
%


100
%Miscellaneous operational objectives


10
%


100
%  73




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##### Table of Contents



Mr. Simmons
  WeightObjectiveAchieve revenue target


40
%Hire product manager, 4 regional sales managers and 6 direct
    sales representatives


20
%Train 200 surgeons


15
%Average product sales price target


10
%Miscellaneous operating objectives


15
%   Mr. Luetkemeyer
  WeightObjectiveComplete initial public offering in 2007


50
%Timely report financial results


25
%Hire operations director, SEC reporting manager and investor
    relations firm


20
%Reduce days sales outstanding


5
%  74




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Mr. Assell
  WeightObjectiveComplete PNR product design and testing


30
%Development of AxiaLIF product enhancements


25
%Operations milestones, including ERP system conversion, no
    product recalls and achieving a target gross margin


25
%Obtain intellectual property opinion letters on all commercial
    products


10
%Miscellaneous product milestones


10
%   Mr. Jackson
  WeightObjectiveCollect AxiaLIF 2L fusion data


25
%Complete AxiaLIF data registry


20
%Successfully complete ISO or FDA internal audit


20
%Pre-IDE meeting with FDA for PNR


15
%Miscellaneous regulatory milestones


20
%     fully-vested short-term
    Objective

Weight


AchievementAchieve twelve month revenue of $9.66 million


40%



60%Comply with budgeted sales and marketing expenses


20%



100%Hire director of marketing, product manager, regional manager
    and 8 direct sales representatives


20%



100%Train 65 surgeons


15%



100%Miscellaneous operational objectives


5%



100%  75




---



##### Table of Contents



Objective

Weight


AchievementDesign PNR pilot study and submit IDE for PNR


45%



44%AxiaLIF 360° commercial launch in United States


20%



100%Gross margin target of 76%


15%



100%No product recalls


15%



100%Hire AxiaLIF engineer and production manager


5%



100%     early-stage
  Long-Term
    Equity-Based Incentive Awards
     76




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##### Table of Contents



Other
    Benefits
    Accounting
    and Tax Considerations
      Summary
    Compensation Table
    Non-EquityIncentive PlanSalary


Option


CompensationName and Principal Position

($)


Awards(1)


($)


TotalRichard Randall

$
215,000


$
36,351


$
33,057
(2)

$
284,408President, Chief Executive Officer and DirectorJames
    Barrile(3)


158,333











158,333






Chief Financial OfficerRick Simmons


199,385



19,487



30,000



248,872Vice President, Marketing and SalesRobert Assell


197,543



19,487



30,000



247,030






Vice President, Product DevelopmentRobert
    Sheridan(4)


100,000











100,000Vice President, Regulatory and Clinical Affairs  77




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##### Table of Contents



(1)
    
    Amounts represent the fair value of stock options expensed in
    2006 under SFAS 123(R) as discussed in note 2 to our
    financial statements included elsewhere in this prospectus.(2)
    
    In addition to his cash incentive payment, Mr. Randall received
    2,251 options to purchase common stock at $2.38 per share
    and 8,273 options to purchase common stock at $1.11 per
    share, which options were fully vested and immediately
    exercisable. These options were granted as part of
    Mr. Randalls annual incentive compensation.(3)
    
    Mr. Barrile terminated his employment with us in October
    2006. Prior to his resignation, Mr. Barriles annual
    base salary was $200,000. Mr. Randall, our president and chief
    executive officer, served as our interim chief financial officer
    from October 2006 to April 2007. Michael Luetkemeyer
    was appointed chief financial officer in April 2007.
    Mr. Luetkemeyers annual base salary for fiscal 2007
    is $225,000.(4)
    
    Mr. Sheridan terminated his employment with us in June
    2007, but remains engaged with us as a clinical affairs
    consultant. Prior to his resignation, Mr. Sheridan worked
    on a half-time basis and his annual base salary was $100,000.
    William Jackson was appointed Vice President, Regulatory,
    Clinical and Quality in May 2007. Mr. Jackson works on a
    full-time basis and his annual base salary for fiscal 2007 is
    $200,000.  Grants of
    Plan-Based Awards in 2006
    All OtherAwards:





Grant DatePossible


Number of


Exercise or


Fair Value ofFuture Payouts


Securities


Base Price of


Stock andUnder Non-Equity


Underlying


Option


OptionName

Grant Date


Incentive Plan Awards


Options


Awards


Awards(1)Richard Randall


11/08/2006


$
53,750



8,273


$
1.11


$
36,351James Barrile


















Rick Simmons


11/08/2006



40,000



18,000



1.11



79,093Robert Assell


11/08/2006



40,000



18,000



1.11



79,093Robert Sheridan


















     (1)
    
    Amounts represent the estimated total fair value of stock
    options granted in 2006 under SFAS 123(R) as discussed in
    note 2 to our financial statements included elsewhere in
    this prospectus. 78




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##### Table of Contents



Outstanding
    Equity Awards at Fiscal Year-End for 2006
    Option AwardsNumber of


Number ofSecurities


SecuritiesUnderlying


UnderlyingUnexercised


Unexercised





OptionOptions


Options


Option


ExpirationName

Exercisable


Unexercisable(1)


Exercise Price


Date(1)Richard Randall


122,907






$
0.28



5/22/20138,964







0.28



1/06/20154,410







0.78



9/22/20158,273







1.11



11/08/2016James Barrile














Rick Simmons


57,375



19,125



0.28



11/13/201326,250



5,250



0.28



7/29/20133,562



5,438



0.28



5/17/20154,155



13,845
(2)


1.11



11/08/2016Robert Assell


18,000







0.11



9/27/201254,000







0.11



3/20/201354,000







0.28



5/22/20133,937



5,063



0.28



3/22/20155,344



8,156



0.28



5/17/20154,155



13,845
(2)


1.11



11/08/2016Robert Sheridan


25,875



28,125



0.28



1/06/2015     (1)
    
    Except where otherwise noted, all options expire ten years from
    the date of grant and option shares vest at the rate of 25% on
    the first anniversary of the option grant and 1/48 per month
    thereafter, such that options are fully vested upon the fourth
    anniversary of the option grant date. In addition, the vesting
    of options may accelerate upon a change in control of the
    company.(2)
    
    Option shares vest at the rate of 21% on the date of grant and
    1/48 per month thereafter, such that options are fully vested
    upon the fourth anniversary of the option grant date.  Option
    Exercises for 2006
    Employment
    and Severance Agreements and Employee Benefit Plans
  Employment
    Agreements
    Severance
    Agreements
   79




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##### Table of Contents



Employee
    Benefit Plans
  Amended
    and Restated 2000 Stock Incentive Plan
            2007
    Stock Incentive Plan
       80




---



##### Table of Contents



and/or
 81




---



##### Table of Contents



2007
    Employee Stock Purchase Plan
       82




---



##### Table of Contents




    immediately after the grant would own stock possessing 5% or
    more of the total combined voting power or value of all classes
    of our capital stock; or
    whose rights to purchase stock under all of our employee stock
    purchase plans accrues at a rate that exceeds $25,000 worth of
    stock for each calendar year.              401(k)
    Plan
   83




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##### Table of Contents



Nonqualified
    Deferred Compensation
    Potential
    Payments Following a Change in Control
    Limitation
    of Liability and Indemnification Matters
      
    for any breach of the directors duty of loyalty to the
    corporation or its stockholders;
    for acts or omissions not in good faith or which involve
    intentional misconduct or a knowing violation of law;
    arising under Section 174 of the DGCL; or
    for any transaction from which the director derived an improper
    personal benefit.   84




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##### Table of Contents



CERTAIN
    RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
    
    the amounts involved exceeded or will exceed $120,000; and
    a director, executive officer, holder of more than 5% of our
    common stock or any member of their immediate family had or will
    have a direct or indirect material interest.  Preferred
    Stock Financings
      Number ofShares ofSeries CInvestor

Preferred StockOfficersRick Simmons


27,2705% StockholdersAdvanced Technology Ventures and Affiliated
    Entities(1)


954,545Delphi Ventures and Affiliated
    Entities(2)


681,818Cutlass Capital and Affiliated
    Entities(3)


409,091Sapient Capital,
    L.P.(4)


245,250Thomas Weisel Healthcare Venture Partners,
    L.P.(5)


954,545     (1)
    
    Consists of (i) 895,969 shares held by Advanced
    Technology Ventures VII, L.P., (ii) 35,955 shares held
    by Advanced Technology Ventures VII (B), L.P.,
    (iii) 17,283 shares held by Advanced Technology
    Ventures VII (C), L.P., and (iv) 5,339 shares held by
    ATV Entrepreneurs VII, L.P. Michael Carusi, one of our
    directors, is a managing director of ATV Associates VII, L.L.C.,
    the general partner of the funds affiliated with Advanced
    Technology Ventures which hold these shares.(2)
    
    Consists of (i) 675,068 shares held by Delphi Ventures
    VI, L.P., and (ii) 6,751 shares held by Delphi
    BioInvestments VI, L.P.(3)
    
    Consists of (i) 359,786 shares held by Cutlass
    Capital, L.P., (ii) 25,847 shares held by Cutlass
    Capital Principals Fund, L.L.C., and
    (iii) 23,459 shares held by Cutlass Capital Affiliates
    Fund, L.P. Jonathan Osgood, one of our directors, is one of two
    managing members of Cutlass Capital Management, L.L.C., which is
    the general partner of each of Cutlass Capital, L.P. and Cutlass
    Capital Affiliates Fund, L.P.(4)
    
    Mitchell Dann, one of our directors, is the managing member of
    Sapient Capital Management, L.L.C., which is the general partner
    of Sapient Capital Management L.P., which is the general partner
    of Sapient Capital, L.P.(5)
    
    James Shapiro, one of our directors, is a general partner of
    Kearny Venture Partners, the successor of Thomas Weisel
    Healthcare Venture Partners LLC, the general partner of Thomas
    Weisel Healthcare Venture Partners L.P. 85




---



##### Table of Contents



Registration
    Rights
    Indemnification
    of Directors and Executive Officers
    Review,
    Approval or Ratification of Transactions with Related
    Persons
   86




---



##### Table of Contents



PRINCIPAL
    STOCKHOLDERS
    
    any person (or group of affiliated persons) who was known by us
    to own more than 5% of our voting securities;
    each of our directors;
    each of our named executive officers; and
    all current directors and executive officers as a group.    Number of


Percentage of SharesShares


Beneficially OwnedBeneficially


Before


AfterBeneficial
    Owners(1)

Owned(2)


Offering


Offering5% StockholdersAdvanced Technology Ventures and Affiliated
    Entities(3)


2,590,909



19.5
%


13.8
%Delphi Ventures and Affiliated
    Entities(4)


2,158,637



16.3
%


11.5
%Cutlass Capital and Affiliated
    Entities(5)


1,996,364



15.0
%


10.6
%Sapient Capital,
    L.P.(6)


1,588,091



12.0
%


8.5
%Thomas Weisel Healthcare Venture Partners,
    L.P.(7)


954,545



7.2
%


5.1
%Andrew
    Cragg, M.D.(8)


1,126,239



8.5
%


6.0
%George
    Wallace(9)


794,250



6.0
%


4.2
%Named Executive Officers and DirectorsRichard
    Randall(10)


671,024



5.0
%


3.5
%Michael Luetkemeyer










Rick
    Simmons(11)


142,699



1.1
%


*Robert
    Assell(12)


128,179



*



*William Jackson










Robert Martin










Michael
    Carusi(13)


2,590,909



19.5
%


13.8
%Mitchell
    Dann(14)


1,588,091



12.0
%


8.5
%Jonathan
    Osgood(15)


1,996,364



15.0
%


10.6
%James
    Shapiro(16)


954,545



7.2
%


5.1
%All executive officers and directors as a group
    (9 persons)(17)


8,071,810



59.1
%


42.1
%     *
    
    Represents beneficial ownership of less than 1%.(1)
    
    Unless otherwise indicated, the business address of each holder
    is:
    c/o TranS1
    Inc., 411 Landmark Drive, Wilmington, North Carolina
    28412-6303.(2)
    
    Beneficial ownership is based on information furnished by the
    individuals or entities and is determined in accordance with the
    rules of the SEC and generally includes voting or investment
    power with respect to securities. Shares of common stock subject
    to options currently exercisable, or exercisable within
    60 days of June 30, 2007 are deemed outstanding for
    computing the percentage of the person holding such options but
    are not deemed outstanding for computing the percentage of any
    other person. As of June 30, 87




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##### Table of Contents



2007, we had a total of 13,276,502 shares of common stock
    issued and outstanding, including the shares of common stock
    issuable upon conversion of our preferred stock. Except as
    indicated by footnote and subject to community property laws
    where applicable, to our knowledge, the companies and persons
    named in this table have sole voting and investment power with
    respect to all shares of common stock shown to be beneficially
    owned by them.(3)
    
    Consists of (i) 2,427,307 shares held by Advanced
    Technology Ventures VII, L.P. (ATV VII),
    (ii) 97,407 shares held by Advanced Technology
    Ventures VII (B), L.P. (ATV VII-B),
    (iii) 46,821 shares held by Advanced Technology
    Ventures VII (C), L.P. (ATV VII-C),
    (iv) 14,464 shares held by ATV Entrepreneurs VII, L.P.
    (ATV VII-E and together with ATV VII, ATV VII-B, and
    ATV VII-C, collectively referred to as the ATV VII
    Entities), and (v) 4,910 shares held by ATV
    Alliance 2002, L.P. (ATV A 2002 and together with
    the ATV VII Entities, the ATV Entities). ATV
    Associates VII, L.L.C. (ATV A VII) is the general
    partner of each of the ATV VII Entities and exercises voting and
    dispositive authority over the shares held by the ATV VII
    Entities. ATV Alliance Associates, L.L.C. (ATV
    Alliance) is the sole general partner of ATV A 2002 and
    exercises voting and dispositive authority over the shares held
    by ATV A 2002. Voting and dispositive decisions of ATV A VII are
    made by a board of six managing directors (the ATV
    Managing Directors), including Michael Carusi, one of our
    directors. Each of the ATV Managing Directors disclaims
    beneficial ownership of the shares held by the ATV VII Entities.
    Voting and dispositive decisions of ATV Alliance are made by its
    sole manager, Jean George, who disclaims beneficial ownership of
    the shares held by ATV A 2002. Each of ATV A VII and ATV
    Alliance disclaims beneficial ownership of any shares held by
    any of the ATV Entities. The address for Advanced Technology
    Ventures is 1000 Winter Street, Suite 3700, Waltham, MA
    02451.(4)
    
    Consists of (i) 2,137,264 shares held by Delphi
    Ventures VI, L.P., and (ii) 21,373 shares held by
    Delphi BioInvestments VI, L.P. (together, the Delphi
    Funds). Delphi Management Partners VI, LLC is the general
    partner of each of the Delphi Funds. The managing members of
    Delphi Management Partners VI, LLC are James J. Bochnowski,
    David L. Douglass, Douglas A. Roeder, John F. Maroney and
    Deepika R. Pakianathan. Delphi Management Partners VI, LLC and
    each of the foregoing managing members may be deemed a
    beneficial owner of the reported shares but each disclaims
    beneficial ownership except to the extent of any indirect
    pecuniary interest therein. The address for all entities and
    individuals affiliated with Delphi Ventures is 3000 Sand Hill
    Road, Building 1, Suite 135, Menlo Park, CA 94025.(5)
    
    Consists of (i) 1,755,754 shares held by Cutlass
    Capital, L.P., (ii) 126,134 shares held by Cutlass
    Capital Principals Fund, L.L.C., and
    (iii) 114,476 shares held by Cutlass Capital
    Affiliates Fund, L.P. Jonathan Osgood, one of our directors, is
    one of two managing members of Cutlass Capital Management,
    L.L.C., which is the general partner of each of Cutlass Capital,
    L.P. and Cutlass Capital Affiliates Fund, L.P. Mr. Osgood
    is also one of two managing members of Cutlass Capital
    Principals Fund, L.L.C. Mr. Osgood has shared voting and
    investment power over the shares held by each of Cutlass
    Capital, L.P., Cutlass Capital Principals Fund, L.L.C. and
    Cutlass Capital Affiliates Fund, L.P. Mr. Osgood disclaims
    beneficial ownership of the shares held by Cutlass Capital,
    L.P., Cutlass Capital Principals Fund, L.L.C. and Cutlass
    Capital Affiliates Fund, L.P., except to the extent of his
    proportionate pecuniary interest in them. The address for
    Cutlass Capital is 84 State Street, Suite 1040, Boston, MA
    02109.(6)
    
    Mitchell Dann, one of our directors, is the managing member of
    Sapient Capital Management, L.L.C., which is the general partner
    of Sapient Capital Management L.P., which is the general partner
    of Sapient Capital, L.P. Mr. Dann has sole voting and
    investment power over the shares held by Sapient Capital, L.P.
    Mr. Dann disclaims beneficial ownership of the shares held
    by Sapient Capital, L.P., except to the extent of his
    proportionate pecuniary interest in them. The address for
    Sapient Capital is 4020 Lake Creek Drive,
    P.O. Box 1590, Wilson, WY 83014.(7)
    
    James Shapiro, one of our directors, is a general partner of
    Kearny Venture Partners, the successor of Thomas Weisel
    Healthcare Venture Partners LLC, the general partner of Thomas
    Weisel Healthcare Venture Partners L.P., and has shared
    voting and investment power over the 954,545 shares held by
    Thomas Weisel Healthcare Venture Partners L.P. The address
    for Thomas Weisel Healthcare Venture Partners is One Montgomery
    St., San Francisco, CA 94104. 88




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##### Table of Contents



(8)
    
    Includes 27,000 shares subject to options exercisable
    within 60 days of June 30, 2007. The address for
    Mr. Cragg is 5024 Bruce Ave., Edina, MN 55424.(9)
    
    Consists of (i) 648,000 shares held by Wallace
    Partners, L.P., of which Mr. Wallace is the general
    partner, and (ii) 146,250 shares held by George B.
    Wallace and Jane F. Wallace, as Co-Trustees of the Wallace
    Family Trust, U/D/T March 26, 2002. The address for
    Mr. Wallace is 26429 Rancho Parkway South, #140, Lake
    Forest, CA 92679.(10)
    
    Includes 146,804 shares subject to options exercisable
    within 60 days of June 30, 2007.(11)
    
    Includes 115,429 shares subject to options exercisable
    within 60 days of June 30, 2007.(12)
    
    Comprised of shares subject to options exercisable within
    60 days of June 30, 2007.(13)
    
    Consists solely of shares identified in footnote 3.
    Mr. Carusi, one of our directors, is a managing director of
    ATV Associates VII, LLC. Mr. Carusi disclaims beneficial
    ownership of the shares held by the ATV Entities except to the
    extent of his proportionate pecuniary interest in them.(14)
    
    Consists solely of the shares identified in footnote 6. Mitchell
    Dann, one of our directors, is the managing member of Sapient
    Capital Management, L.L.C., which is the general partner of
    Sapient Capital Management L.P., which is the general partner of
    Sapient Capital, L.P. Mr. Dann has sole voting and
    investment power over the shares held by Sapient Capital, L.P.
    Mr. Dann disclaims beneficial ownership of the shares held
    by Sapient Capital, L.P., except to the extent of his
    proportionate pecuniary interest in them.(15)
    
    Consists solely of the shares identified in footnote 5, which
    include (i) 1,755,754 shares held by Cutlass Capital,
    L.P., (ii) 126,134 shares held by Cutlass Capital
    Principals Fund, L.L.C., and (iii) 114,476 shares held
    by Cutlass Capital Affiliates Fund, L.P. Jonathan Osgood is one
    of two managing members of Cutlass Capital Management, L.L.C.,
    which is the general partner of each of Cutlass Capital, L.P.
    and Cutlass Capital Affiliates Fund, L.P. Mr. Osgood is
    also one of two managing members of Cutlass Capital Principals
    Fund, L.L.C. Mr. Osgood has shared voting and investment
    power over the shares held by each of Cutlass Capital, L.P.,
    Cutlass Capital Principals Fund, L.L.C. and Cutlass Capital
    Affiliates Fund, L.P. Mr. Osgood disclaims beneficial
    ownership of the shares held by Cutlass Capital, L.P., Cutlass
    Capital Principals Fund, L.L.C. and Cutlass Capital Affiliates
    Fund, L.P., except to the extent of his proportionate pecuniary
    interest in them.(16)
    
    Consists solely of shares identified in footnote 7.
    Mr. Shapiro, one of our directors, is a general partner of
    Kearny Venture Partners, the successor of Thomas Weisel
    Healthcare Venture Partners LLC, the general partner of Thomas
    Weisel Healthcare Venture Partners L.P., and has shared voting
    and investment power over the shares held by Thomas Weisel
    Healthcare Venture Partners L.P. Mr. Shapiro disclaims
    beneficial ownership of these shares except to the extent of his
    proportionate pecuniary interest in them.(17)
    
    Includes 390,412 shares subject to options exercisable
    within 60 days of June 30, 2007. 89




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DESCRIPTION
    OF CAPITAL STOCK
    Common
    Stock
      
    each holder of common stock is entitled to one vote per share on
    all matters to be voted upon by the stockholders, including the
    election of directors;
    the affirmative vote of a majority of the shares present in
    person or represented and voting at a duly held meeting at which
    a quorum is present shall be the act of the stockholders;
    holders of common stock are not entitled to cumulate votes in
    the election of directors, which means that the holders of a
    majority of the shares voted can elect all of the directors then
    standing for election;
    subject to preferences that may be applicable to the holders of
    outstanding shares of preferred stock, if any, the holders of
    common stock are entitled to receive dividends when, as and if
    declared by our board of directors out of assets legally
    available for dividends;
    upon our liquidation, dissolution or winding up, after
    satisfaction of all our liabilities and the payment of any
    liquidation preference of any outstanding preferred stock, the
    holders of shares of common stock will be entitled to receive on
    a pro rata basis all of our assets remaining for distribution;
    there are no redemption or sinking fund provisions applicable to
    our common stock; and
    there are no preemptive or conversion rights applicable to our
    common stock.  Preferred
    Stock
    
    the number of shares constituting the series and the distinctive
    designation of the series; 90




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##### Table of Contents




    the dividend rate on the shares of the series, whether dividends
    will be cumulative, and if so, from which date or dates, and the
    relative rights of priority, if any, of payment of dividends on
    shares of the series;
    whether the series will have voting rights in addition to the
    voting rights provided by law and, if so, the terms of the
    voting rights;
    whether the series will have conversion privileges and, if so,
    the terms and conditions of conversion;
    whether or not the shares of the series will be redeemable or
    exchangeable, and, if so, the dates, terms and conditions of
    redemption or exchange, as the case may be;
    whether the series will have a sinking fund for the redemption
    or purchase of shares of that series, and, if so, the terms and
    amount of the sinking fund; and
    the rights of the shares of the series in the event of our
    voluntary or involuntary liquidation, dissolution or winding up
    and the relative rights or priority, if any, of payment of
    shares of the series.    Registration
    Rights
    Demand
    registration rights
  Form S-1 Form S-3, Form S-3
  Piggyback
    registration rights
   91




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Postponement
    of Registration
    Expenses
    of Registration
    Indemnification
    Termination
    of registration rights
  Form S-3 90-day
  Options
    Anti-Takeover
    Effects of Certain Provisions of Delaware Law and Our
    Certificate of Incorporation and Bylaws
  Application of Interested Director Provisions of Delaware
    Law.
  
    prior to the date at which the person becomes an interested
    stockholder, the board of directors approves such transaction or
    business combination;
    the stockholder acquires more than 85% of the outstanding voting
    stock of the corporation (excluding shares held by directors who
    are officers or held in certain employee stock plans) upon
    consummation of such transaction; or
    the business combination is approved by the board of directors
    and by the holders of two-thirds of the outstanding voting stock
    of the corporation (excluding shares held by the interested
    stockholder) at a meeting of stockholders (and not by written
    consent).   92




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2 3
  2 3
    Transfer
    Agent and Registrar
    Nasdaq
    Global Market Listing
   93




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SHARES
    ELIGIBLE FOR FUTURE SALE
      lock-up lock-up
  Registration
    Rights
    Lock-Up
    Agreements
  lock-up 180-day lock-up 180-day lock-up 16-day 180-day lock-up 180-day lock-up
  Rule 144
    
    one percent of the number of shares of common stock then
    outstanding (equal to approximately 187,765 shares upon
    completion of this offering), assuming no exercise of the
    underwriters option to purchase additional shares; or 94




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
    the average weekly trading volume of the common stock as
    reported through The Nasdaq Global Market during the four
    calendar weeks preceding the filing of a notice on Form 144
    with respect to such sale. Sales under Rule 144 are also
    subject to certain manner of sale provisions, and notice
    requirements and the availability of current public information
    about us.  Rule 144(k)
    lock-up
  Rule 701
    lock-up 180-day
  Registration
    of Shares Issuable Under Benefit Plans
  Form S-8 lock-up
 95




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MATERIAL
    U.S. FEDERAL INCOME TAX CONSEQUENCES FOR
    NON-U.S.
    HOLDERS
  Non-U.S. Holder, Non-U.S. Holders Non-U.S. Holder
    If you are considering the purchase of common stock, you
    should consult your own tax advisors regarding the United States
    federal income tax consequences to you of the purchase,
    ownership, and disposition of common stock, as well as any
    consequences arising under the laws of any other taxing
    jurisdiction.
  Non-U.S. Holder
  U.S.
    Trade or Business Income
  Non-U.S. Holder Non-U.S. Holder Non-U.S. Holder Non-U.S. Holder Non-U.S. Holder
  Distributions
  Non-U.S. Holder
 96




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Non-U.S. Holders Non-U.S. Holders Non-U.S. Holder, Form W-8BEN Non-U.S. Holders
  Non-U.S. Holder
  Non-U.S. Holder Form W-8ECI, Non-U.S. Holders
  Sale or
    Other Disposition of Our Common Stock
  Non-U.S. Holder
  
    The gain is U.S. trade or business income, as defined and
    discussed above;
    The
    Non-U.S. Holder
    is an individual who is present in the United States for
    183 days or more in the taxable year of the disposition,
    and certain other conditions are met; or
    Our common stock constitutes a United States Real Property
    interest by reason of our status as a United States real
    property holding corporation, or a USRPHC, under
    Section 897 of the Code at any time during the shorter of
    the five-year period ending on the date of disposition and the
    Non-U.S. Holders
    holding period for our common stock.  Non-U.S. Holder Non-U.S. Holder
    U.S.
    Federal Estate Tax
  Non-U.S. Holder,
 97




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Information
    Reporting and Backup Withholding
    Form W-8BEN) Non-U.S. Holder
  Non-U.S. Holder non-U.S. office non-U.S. broker non-U.S. broker non-U.S. office Non-U.S. Holder Non-U.S. Holders
  Non-U.S. Holder
 98




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UNDERWRITING
    Number ofUnderwriters

SharesLehman Brothers Inc.Piper Jaffray & Co.Cowen and Company, LLCWachovia Capital Markets, LLCTotal


5,500,000     
    the obligation to purchase all of the shares of common stock
    offered hereby other than those shares of common stock covered
    by their option to purchase additional shares as described
    below, if any of the shares are purchased;
    the representations and warranties made by us to the
    underwriters are true;
    there is no material change in our business or the financial
    markets; and
    we deliver customary closing documents to the underwriters.  Commissions
    and Expenses
    No Exercise


Full ExercisePer Share

$



$Total

$



$       Option to
    Purchase Additional Shares
   99




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##### Table of Contents



Lock-Up
    Agreements
    180-day
  
    during the last 17 days of the
    180-day
    restricted period we issue an earnings release or material news
    or a material event relating to us occurs; or
    prior to the expiration of the
    180-day
    restricted period, we announce that we will release earnings
    results during the
    16-day
    period beginning on the last day of the
    180-day
    period,  18-day
  lock-up lock-up
  Offering
    Price Determination
    
    the history and prospects for the industry in which we compete;
    our financial information;
    the ability of our management and our business potential and
    earning prospects;
    the prevailing securities markets at the time of this offering;
    and
    the recent market prices of, and the demand for, publicly traded
    shares of generally comparable companies.  Indemnification
   100




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Stabilization,
    Short Positions and Penalty Bids
    
    Stabilizing transactions permit bids to purchase the underlying
    security so long as the stabilizing bids do not exceed a
    specified maximum.
    A short position involves a sale by the underwriters of shares
    in excess of the number of shares the underwriters are obligated
    to purchase in the offering, which creates the syndicate short
    position. This short position may be either a covered short
    position or a naked short position. In a covered short position,
    the number of shares involved in the sales made by the
    underwriters in excess of the number of shares they are
    obligated to purchase is not greater than the number of shares
    that they may purchase by exercising their option to purchase
    additional shares. In a naked short position, the number of
    shares involved is greater than the number of shares in their
    option to purchase additional shares. The underwriters may close
    out any short position by either exercising their option to
    purchase additional shares
    and/or
    purchasing shares in the open market. In determining the source
    of shares to close out the short position, the underwriters will
    consider, among other things, the price of shares available for
    purchase in the open market as compared to the price at which
    they may purchase shares through their option to purchase
    additional shares. A naked short position is more likely to be
    created if the underwriters are concerned that there could be
    downward pressure on the price of the shares in the open market
    after pricing that could adversely affect investors who purchase
    in the offering.
    Syndicate covering transactions involve purchases of the common
    stock in the open market after the distribution has been
    completed in order to cover syndicate short positions.
    Penalty bids permit the representatives to reclaim a selling
    concession from a syndicate member when the common stock
    originally sold by the syndicate member is purchased in a
    stabilizing or syndicate covering transaction to cover syndicate
    short positions.      Electronic
    Distribution
  and/or
     101




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and/or
  Nasdaq
    Global Market
    Discretionary
    Sales
    Stamp
    Taxes
    Relationships
    Notice to
    Prospective Investors in the European Economic Area
    
    to any legal entity that is authorized or regulated to operate
    in the financial markets or, if not so authorized or regulated,
    whose corporate purpose is solely to invest in
    securities; or
    to any legal entity that has two or more of (1) an average
    of at least 250 employees during the last financial year;
    (2) a total balance sheet of more than 43,000,000 and
    (3) an annual net turnover of more than 50,000,000,
    as shown in its last annual or consolidated accounts; or
    in any other circumstances that do not require the publication
    of a prospectus pursuant to Article 3 of the Prospectus
    Directive.     102




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Notice to
    Prospective Investors in the United Kingdom
   103




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##### Table of Contents



LEGAL
    MATTERS
    EXPERTS
    WHERE
    YOU CAN FIND MORE INFORMATION
  Form S-1
  www.sec.gov. (800) SEC-0330
   104




---



##### 



TranS1
    Inc.
    Index to Financial Statements
  
  PageReport of Independent Registered Public
    Accounting Firm

F-2Balance Sheets

F-3Statements of Operations

F-4Statements of Stockholders Deficit

F-5Statements of Cash Flows

F-6Notes to Financial Statements

F-7   F-1




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Report
    of Independent Registered Public Accounting Firm
           
 F-2




---



##### Table of Contents



TranS1
    Inc.
  Balance
    Sheets
  Pro FormaDecember 31,


June 30,


June 30,2005


2006


2007


2007(Unaudited)


(Unaudited)(In thousands, except share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
20,544


$
5,034


$
5,537


$
5,537Short-term investments


5,450



9,928



4,635



4,635Accounts receivable


564



1,620



3,248



3,248Inventory


584



2,080



3,055



3,055Prepaid expenses and other assets


131



230



484



484Total current assets


27,273



18,892



16,959



16,959Property and equipment, net


740



1,112



1,234



1,234Total assets

$
28,013


$
20,004


$
18,193


$
18,193LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)Current liabilities:Accounts payable

$
335


$
843


$
1,023


$
1,023Accrued expenses


243



601



1,630



1,630Total current liabilities


578



1,444



2,653



2,653Preferred Stock:Series A convertible preferred stock, $0.0001 par
    value; 1,125,000 shares authorized, issued and outstanding
    at December 31, 2005 and 2006 and June 30, 2007
    (unaudited)


956



956



956



Series AA convertible preferred stock, $0.0001 par
    value; 1,260,000 shares authorized, issued and outstanding
    at December 31, 2005 and 2006 and June 30, 2007
    (unaudited)


1,694



1,694



1,694



Series B convertible preferred stock, $0.0001 par
    value; 4,909,091 shares authorized, issued and outstanding
    at December 31, 2005 and 2006 and June 30, 2007
    (unaudited)


11,894



11,894



11,894



Series C convertible preferred stock, $0.0001 par
    value; 3,499,091 shares authorized, issued and outstanding
    at December 31, 2005 and 2006 and June 30, 2007
    (unaudited)


25,545



25,545



25,545



Commitments (Note 5)Stockholders equity (deficit):Common stock, $0.0001 par value; 13,500,000, 17,100,000 and
    17,100,000 shares authorized at December 31, 2005 and
    2006 and June 30, 2007 (unaudited), respectively;
    2,411,775, 2,435,486 and 2,483,320 shares issued and
    outstanding at December 31, 2005 and 2006 and June 30,
    2007 (unaudited), respectively; 13,276,502 shares issued
    and outstanding, pro forma at June 30, 2007 (unaudited)














1Additional paid-in capital


219



820



1,889



41,977Notes receivable for common stock


(41
)


(38
)






Accumulated deficit


(12,832
)


(22,311
)


(26,438
)


(26,438
)Total stockholders equity (deficit)


(12,654
)


(21,529
)


(24,549
)


15,540Total liabilities and stockholders equity (deficit)

$
28,013


$
20,004


$
18,193


$
18,193    F-3




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##### Table of Contents



TranS1
    Inc.
  Statement of Operations
  Six Months EndedYears Ended December 31,


June 30,2004


2005


2006


2006


2007(In thousands, except share amounts)(Unaudited)Revenue

$



$
1,469


$
5,812


$
2,161


$
7,187Cost of revenue






386



1,580



618



1,459Gross profit






1,083



4,232



1,543



5,728Operating expensesResearch and development


1,758



2,444



4,246



2,094



2,278Sales and marketing


746



2,635



9,288



3,950



6,837General and administrative


1,117



1,293



1,166



625



1,083Total operating expenses


3,621



6,372



14,700



6,669



10,198Operating loss


(3,621
)


(5,289
)


(10,468
)


(5,126
)


(4,470
)Interest income


150



264



858



528



343Other income (expense)






(17
)


131







Net loss

$
(3,471
)

$
(5,042
)

$
(9,479
)

$
(4,598
)

$
(4,127
)Net loss per common share  basic and diluted

$
(1.63
)

$
(2.25
)

$
(3.91
)

$
(1.90
)

$
(1.67
)Weighted average common shares outstanding  basic and
    diluted


2,127,856



2,243,019



2,423,226



2,418,154



2,467,550Pro forma net loss per common share  basic and
    diluted (unaudited)









$
(0.72
)





$
(0.31
)Pro forma weighted average shares outstanding  basic
    and diluted (unaudited)










13,216,407







13,260,732    F-4




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##### Table of Contents



TranS1
    Inc.
  Statement of Stockholders Deficit
  Additional








TotalCommon Stock


Paid - In


Notes


Accumulated


StockholdersNumber


Amount


Capital


Receivable


Deficit


Deficit(In thousands, except share amounts)Balance at December 31, 2003


2,090,435


$



$
142


$
(38
)

$
(4,319
)

$
(4,215
)Issuance of common stock from exercised options


57,600







6











6Net loss


















(3,471
)


(3,471
)Balance at December 31, 2004


2,148,035







148



(38
)


(7,790
)


(7,680
)Issuance of common stock from exercised options


263,740







71



(3
)






68Net loss


















(5,042
)


(5,042
)Balance at December 31, 2005


2,411,775







219



(41
)


(12,832
)


(12,654
)Issuance of common stock from exercised options


23,711







2



3







5Stock based compensation










599











599Net loss


















(9,479
)


(9,479
)Balance at December 31, 2006


2,435,486







820



(38
)


(22,311
)


(21,529
)Issuance of common stock from exercised options (unaudited)


47,834







11











11Stock based compensation (unaudited)










1,058











1,058Repayment of note receivable (unaudited)














38







38Net loss (unaudited)


















(4,127
)


(4,127
)Balance at June 30, 2007 (unaudited)


2,483,320


$



$
1,889


$



$
(26,438
)

$
(24,549
)    F-5




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##### Table of Contents



TranS1
    Inc.
  Statement of Cash Flows
  Six Months EndedYears Ended December 31,


June 30,2004


2005


2006


2006


2007(In thousands)(Unaudited)Cash flows from operating activities:Net loss

$
(3,471
)

$
(5,042
)

$
(9,479
)

$
(4,598
)

$
(4,127
)Adjustments to reconcile net loss to net cash used in operating
    activitiesDepreciation


52



106



237



83



268Stock-based compensation










599







1,058Disposal of fixed assets






17











Changes in operating assets and liabilitiesIncrease in accounts receivable






(564
)


(1,056
)


(444
)


(1,628
)(Increase) decrease in prepaid expenses


(13
)


(76
)


(99
)


42



(254
)Increase in inventory


(185
)


(400
)


(1,496
)


(848
)


(975
)Increase (decrease) in accounts payable


40



280



508



160



180Increase in accrued liabilities


102



23



358



228



1,030Net cash used in operating activities


(3,475
)


(5,656
)


(10,428
)


(5,377
)


(4,448
)Cash flows from investing activities:Purchase of property and equipment


(106
)


(672
)


(609
)


(273
)


(390
)Purchases of short-term investments






(5,449
)


(13,925
)


(41,128
)


(10,716
)Sales of short-term investments










9,447



41,347



16,009Net cash provided by (used in) investing activities


(106
)


(6,121
)


(5,087
)


(54
)


4,903Cash flows from financing activities:Proceeds from issuance of convertible preferred stock, net






25,545











Proceeds from issuance of common stock


6



68



5







48Net cash provided by financing activities


6



25,613



5







48Net increase (decrease) in cash and cash equivalents


(3,575
)


13,836



(15,510
)


(5,431
)


503Cash and cash equivalents, beginning of period


10,283



6,708



20,544



20,544



5,034Cash and cash equivalents, end of period

$
6,708


$
20,544


$
5,034


$
15,113


$
5,537    F-6




---



##### Table of Contents



TranS1
    Inc.
  Notes to Financial Statements
  1.
    Organization      2.
    Summary
    of Significant Accounting Policies  Unaudited
    Interim Financial Information
    Basis
    of Presentation
    Pro
    Forma Balance Sheet (Unaudited)
    Use of
    Estimates
   F-7




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##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
  Cash
    and Cash Equivalents
    Fair
    Value of Financial Instruments
    Accounts
    Receivable
    Concentration
    of Credit Risk and Significant Customers
        Inventories
    December 31,


June 30,2005


2006


2007(Unaudited)Raw materials

$
361


$
1,261


$
1,877Finished goods


223



819



1,178$
584


$
2,080


$
3,055   first-in,
 F-8




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##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
    Property
    and Equipment
      Furniture and fixtures


5-10 yearsEquipment


3-5 yearsOther depreciable assets


2-10 yearsLeasehold improvements


Lesser of estimated useful life or lease term   Revenue
    Recognition
  and/or
    Shipping
    and Handing Costs
   F-9




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##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
  Sales
    and Marketing Expenses
    Research
    and Development Expenses
    Patent
    Costs
    Income
    Taxes
    Stock-Based
    Compensation
  Accounting for Stock Issued to
    Employees Accounting for Stock-Based
    Compensation
    Share-Based Payment
 F-10




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
    96-18, Accounting for Equity Instruments That Are Issued to Other
    Than Employees for Acquiring, or in Conjunction with Selling
    Goods or Services
  Net
    Loss Per Common Share
  Historical
      December 31,


June 30,2004


2005


2006


2006


2007(unaudited)Convertible preferred stock


7,294,091



10,793,182



10,793,182



10,793,182



10,793,182Stock options outstanding


1,033,226



1,199,381



1,841,675



1,190,381



2,339,663   Pro Forma
    (Unaudited)
    Segment
    Reporting
    Recently
    Issued Accounting Standards
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109
 F-11




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##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
    Fair Value
    Measurements
  Considering the Effects of Prior Year
    Misstatements When Quantifying Misstatements in Current Year
    Financial Statements
  The Fair
    Value Option for Financial Assets and Financial
    Liabilities  Including an amendment of FASB Statement
    No. 115
  3.
    Property
    and Equipment    December 31,


June 30,2005


2006


2007(In thousands)(unaudited)Furniture and fixtures

$
110


$
115


$
115Equipment


349



682



1,037Computer software


45



158



276Leasehold improvements


299



314



316Tools


73



73



73Construction in process






143



58876



1,485



1,875Less: accumulated depreciation and amortization


(136
)


(373
)


(641
)$
740


$
1,112


$
1,234    F-12




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##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
  4.
    Accrued
    Expenses    December 31,


June 30,2005


2006


2007(In thousands)(Unaudited)Bonus

$
71


$
167


$
250Commissions


72



209



356Vacation


48



73



73Legal and IPO related






50



637Clinical trial expenses






69



50Travel


20







89Other


32



33



175$
243


$
601


$
1,630   5.
    Lease
    Obligations      Year ending December 31,(In thousands)2007

$
1522008


1572009


1612010


932011


$
563     6.
    Capital
    Stock    Convertible
    Preferred Stock
   F-13




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##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
    Voting
    Dividends
    Liquidation
          Conversion
   F-14




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
      Protective
    Rights
    Common
    Stock
    Dividends
    Voting
    Liquidation
      7.
    Stock
    Options   F-15




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
      Number


PriceOutstanding as of December 31, 2003


949,504


$
0.13Options granted


159,322



0.28Options exercised


(57,600
)


0.11Options forfeited


(18,000
)


0.11Outstanding as of December 31, 2004


1,033,226



0.27Options granted


416,574



0.29Options exercised


(263,739
)


0.28Options forfeited






Outstanding as of December 31, 2005


1,186,061



0.27Options granted


735,374



1.11Options exercised


(30,274
)


0.21Options forfeited


(49,486
)


0.28Outstanding as of December 31, 2006


1,841,675



0.59Options granted (unaudited)


587,408



5.12Options exercised (unaudited)


(47,833
)


0.23Options forfeited (unaudited)


(41,587
)


0.28Outstanding as of June 30, 2007 (unaudited)


2,339,663


$
1.74     Weighted


WeightedAverage


Average


Number ofNumber


Contractual


Exercise


OptionsExercise Price

Outstanding


Life (Years)


Price


Exercisable$0.11


271,125



4.6


$
0.11



271,125$0.28


741,346



6.9



0.28



595,002$0.78


4,410



8.2



0.78



4,410$1.11


735,374



9.4



1.11



241,456$2.00


67,387



9.6



2.00



5,188$2.38


29,251



9.7



2.38



3,001$5.56


418,770



9.9



5.56



5,395$6.67


72,000



9.9



6.67



2,339,663



8.1


$
1.74



1,125,577  F-16




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
    Weighted


WeightedAverage


Average


Number ofNumber


Contractual


Exercise


OptionsExercise Price

Outstanding


Life (Years)


Price


Exercisable$0.11


283,725



5.1


$
0.11



217,125$0.28


818,166



7.5



0.28



524,647$0.78


4,410



8.7



0.78



4,410$1.11


735,374



9.9



1.11



87,7361,841,675



8.1


$
0.59



833,918   Stock
    Based Compensation for Non-employees
      Employee
    Stock-Based Compensation on or Subsequent to January 1,
    2006
       F-17




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
    Expected Life. Share-Based
    Payment
  Volatility.
  Risk-Free Interest Rate.
  Dividend Yield.
  Forfeitures.
    8.
    Income
    Taxes   F-18




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
    December 31,2005


2006Deferred tax assetsDomestic net operating loss carryforwards

$
4,761


$
7,584Other


3



3Research and development credit


402



624Total deferred tax assets


5,166



8,211Valuation allowance for deferred assets


(5,137
)


(8,121
)Deferred tax assets


29



90Deferred tax liabilitiesFixed assets


29



90Total deferred tax liabilities


29



90Net deferred tax assets (liabilities)

$



$
           2004


2005


2006% of





% of





% ofAmount


Net loss


Amount


Net loss


Amount


Net lossTax at statutory rate

$
(1,215
)


35.0
%

$
(1,765
)


35.0
%

$
(3,318
)


35.0
%State taxes


(157
)


4.5
%


(226
)


4.5
%


(213
)


2.2
%Non deductible items


25



(0.7
)%


71



(1.4
)%


270



(2.8
)%Other


















421



(4.3
)%R&D credits


(62
)


1.8
%


(97
)


1.9
%


(144
)


1.5
%Change in valuation allowance


1,409



(40.6
)%


2,017



(40.0
)%


2,984



(31.5
)%Total

$




0.0
%

$




0.0
%

$




0.0
%   9.
    Subsequent
    Event  0.9-for-1
 F-19




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Financial Statements  (Continued)
   F-20




---



##### Table of Contents








---



##### Table of Contents



5,500,000 shares
  
  Common Stock
     PROSPECTUS
     Lehman
    Brothers
    Piper
    Jaffray  Cowen
    and Company
    Wachovia
    Securities




---



##### Table of Contents



PART II
  INFORMATION
    NOT REQUIRED IN PROSPECTUS
  Item 13.
    Other
    Expenses of Issuance and Distribution    SEC registration fee

$
2,719NASD filing fee


9,355Nasdaq Global Market listing application fee


100,000Printing expenses


200,000Legal fees and expenses


1,000,000Accounting fees and expenses


600,000Blue sky fees and expenses


15,000Transfer Agent fees


15,500Miscellaneous expenses


57,426Total

$
2,000,000   Item 14.
    Indemnification
    of Directors and Officers          Item 15.
    Recent
    Sales of Unregistered Securities   II-1




---



##### Table of Contents



Item 16.
    Exhibits
    and Financial Statement Schedules  (a) Exhibits
  
 ExhibitNo.

Description1
.1**

Form of Underwriting Agreement3
.1**

Fourth Amended and Restated Certificate of Incorporation, as
    currently in effect3
.2**

Form of Amended and Restated Certificate of Incorporation (to be
    filed in connection with the closing of this offering)3
.3**

Amended and Restated Bylaws, as currently in effect3
.4**

Form of Amended and Restated Bylaws (to be effective upon the
    closing of this offering)4
.1**

Specimen common stock certificate4
.2**

Third Amended and Restated Investor Rights Agreement dated
    September 20, 2005, among TranS1 Inc. and certain of its
    stockholders5
.1

Opinion of Stradling Yocca Carlson & Rauth, a
    Professional Corporation10
.1**

Amended and Restated 2000 Stock Incentive Plan10
.2**

Form of Stock Option Agreement under Amended and Restated 2000
    Stock Incentive Plan10
.3**

2007 Stock Incentive Plan10
.4**

Form of Stock Option Agreement under 2007 Stock Incentive
    Plan10
.5**

2007 Employee Stock Purchase Plan10
.6**

Lease, dated March 16, 2005, between TranS1 Inc. and
    Ellmore Enterprises10
.7**

Form of Indemnification Agreement10
.7.1**

Schedule of Parties to Indemnification Agreement10
.8**

Form of Series C Preferred Stock Purchase Agreement dated
    September 20, 2005, among TranS1 Inc. and the investors
    listed therein23
.1

Consent of Stradling Yocca Carlson & Rauth, a
    Professional Corporation (included in Exhibit 5.1) 
 II-2




---



##### Table of Contents



ExhibitNo.

Description23
.2

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm23
.3**

Consent of W. Daniel Bradley, M.D.23
.4**

Consent of Christopher Ames, M.D.24
.1**

Power of Attorney (included on the signature page to this
    Registration Statement)     *
    
    To be filed by amendment.**
    
    Previously filed.
    
    Indicates management contract or compensatory plan or
    arrangement.  (b) Financial Statement Schedules
    Item 17.
    Undertakings.             II-3




---



##### Table of Contents



II-4




---



##### Table of Contents



SIGNATURES
 
  Form S-1
 
    By:
    /s/  Richard
    Randall   President and Chief Executive Officer
 
  Form S-1
 
  
 Signature

Title

Date/s/  Richard
    RandallRichard
    Randall

President, Chief Executive Officer
    and Director
    (Principal Executive Officer)

October 12, 2007/s/  Michael
    LuetkemeyerMichael
    Luetkemeyer

Chief Financial Officer
    (Principal Financial and
    Accounting Officer)

October 12, 2007/s/  Michael
    Carusi*Michael
    Carusi

Director

October 12, 2007/s/  Mitchell
    Dann*Mitchell
    Dann

Director

October 12, 2007/s/  James
    Shapiro*James
    Shapiro

Director

October 12, 2007/s/  Jonathan
    Osgood*Jonathan
    Osgood

Director

October 12, 2007*

/s/  Richard
    RandallRichard
    Randall
    Attorney-in-Fact  
 II-5




---



##### Table of Contents



EXHIBIT
    INDEX
  
 ExhibitNo.

Description1
.1**

Form of Underwriting Agreement3
.1**

Fourth Amended and Restated Certificate of Incorporation, as
    currently in effect3
.2**

Form of Amended and Restated Certificate of Incorporation (to be
    filed in connection with the closing of this offering)3
.3**

Amended and Restated Bylaws, as currently in effect3
.4**

Form of Amended and Restated Bylaws (to be effective upon the
    closing of this offering)4
.1**

Specimen common stock certificate4
.2**

Third Amended and Restated Investor Rights Agreement dated
    September 20, 2005, among TranS1 Inc. and certain of its
    stockholders5
.1

Opinion of Stradling Yocca Carlson & Rauth, a
    Professional Corporation10
.1**

Amended and Restated 2000 Stock Incentive Plan10
.2**

Form of Stock Option Agreement under Amended and Restated 2000
    Stock Incentive Plan10
.3**

2007 Stock Incentive Plan10
.4**

Form of Stock Option Agreement under 2007 Stock Incentive
    Plan10
.5**

2007 Employee Stock Purchase Plan10
.6**

Lease, dated March 16, 2005, between TranS1 Inc. and
    Ellmore Enterprises10
.7**

Form of Indemnification Agreement10
.7.1**

Schedule of Parties to Indemnification Agreement10
.8**

Form of Series C Preferred Stock Purchase Agreement dated
    September 20, 2005, among TranS1 Inc. and the investors
    listed therein23
.1

Consent of Stradling Yocca Carlson & Rauth, a
    Professional Corporation (included in Exhibit 5.1)23
.2

Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm23
.3**

Consent of W. Daniel Bradley, M.D.23
.4**

Consent of Christopher Ames, M.D.24
.1**

Power of Attorney (included on the signature page to this
    Registration Statement)  
    *
    
    To be filed by amendment.**
    
    Previously filed.
    
    Indicates management contract or compensatory plan or
    arrangement. II-6