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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, DC
    20549
 Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal
    year ended December 31, 2009o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition
    period          to   Commission File Number
    001-33744
  TRANS1 INC.
 (Exact name of Registrant as
    specified in its charter)
  DELAWARE(State or other jurisdiction
    of
    incorporation or organization)

33-0909022(I.R.S. employer
    identification no.)   301 GOVERNMENT CENTER DRIVE, WILMINGTON, NC 28403 (Address of principal
    executive office) (Zip code)
  (910) 332-1700
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act
  Title of Each Class:

Name of Each Exchange on Which Registered:Common Stock, par value $0.0001 per share

The NASDAQ Stock Market LLC   Securities registered pursuant to Section 12(g) of the
    Act:
 None
  o þ
  o þ
  þ o
  o o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o(Do not check if a smaller
    reporting company)

Smaller Reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K. Form 10-K.




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##### 





TRANS1
    INC.FORM 10-K
    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
    TABLE OF CONTENTS
   
 PART IItem 1.

Business


4Item 1A.

Risk Factors


17Item 1B.

Unresolved Staff Comments


36Item 2.

Properties


36Item 3.

Legal Proceedings


36Item 4.

Submission of Matters to a Vote of Security
    Holders


36PART IIItem 5.

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


37Item 6.

Selected Financial Data


40Item 7.

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


41Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


47Item 8.

Consolidated Financial Statements and
    Supplementary Data


48Item 9.

Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


48Item 9A.

Controls and Procedures


48Item 9B.

Other Information


48PART IIIItem 10.

Directors, Executive Officers and Corporate
    Governance


48Item 11.

Executive Compensation


48Item 12.

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


49Item 13.

Certain Relationships and Related Transactions,
    and Director Independence


49Item 14.

Principal Accountant Fees and Services


49PART IVItem 15.

Exhibits, Financial Statement Schedules


49SIGNATURES


50Index to Consolidated Financial Statements


51EX-10.7.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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Cautionary
    Note Regarding Forward-Looking Statements
     3




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Item 1.
    Business  Overview
  ® tm tm tm
      Spine
    Anatomy
     4




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Medical
    Conditions Affecting the Lower Lumbar Spine and Traditional
    Treatment Alternatives
          Anterior Lumbar Interbody Fusion, or ALIF.
  Posterior Lumbar Interbody Fusion, or PLIF.
  Transforaminal Lumbar Interbody Fusion, or
    TLIF.
 5




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Extreme Lateral Interbody Fusion, or XLIF.
  360° Lumbar Fusion Procedure.
  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.  Our
    Solution
     6




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
    Least Invasive Approach Minimizes
    Complications.  Our AxiaLIF products are delivered
    using our unique pre-sacral approach, which we believe is the
    least invasive solution for delivering fusion and
    motion-preserving products to the L4/L5/S1 region. Procedures
    performed utilizing our pre-sacral approach have been documented
    to have favorable clinical safety profiles with complication
    rates of approximately 1%.
    Spinal Stability.  We believe our approach is
    the only spinal fusion that does not violate or cut through any
    muscles or ligaments that control the stability of the spine.
    Short Learning Curve.  We believe that the ease
    of use of our pre-sacral approach enables reduced physician
    training as compared to alternative lower lumbar spine
    procedures.
    Low Blood Loss.  We believe the least invasive
    nature of our pre-sacral approach results in the average patient
    losing approximately 25 to 125 cc of blood during an AxiaLIF,
    AxiaLIF 2L or AxiaLIF 360° procedure, which is much lower
    than current techniques and 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 pre-sacral approach.
    Short Patient Hospital Stays.  Patients
    typically stay only one night in the hospital after receiving a
    procedure performed using our pre-sacral approach. In a small
    percentage of cases, patients are able to return home the same
    day.
    Reduction in Patient Pain.  We believe our
    pre-sacral 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 Pre-Sacral 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 pre-sacral approach
    as the least invasive approach to lower back surgery and we
    believe the advantages of our technique will enable our AxiaLIF
    products to become a standard of care for the lower lumbar
    region of the spine.
    Focus 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 pre-sacral approach. We
    believe the ease of use, short hospital stays and reduction in
    patient pain will be compelling reasons for surgeon adoption of
    our technologies. 7




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
    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.
  AxiaLIF 360° Implants.
  TranS1 Access and Disc Preparation
    Instruments.
  AVATAR Pedicle Screw System.
  Product
    Pipeline
      Sales and
    Marketing
     8




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Surgeon
    Training
    Third-Party
    Reimbursement
    453/454/455 459 460
 9




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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
    speed to market.   10




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Research
    and Development
    Manufacturing
    and Supply
         11




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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.    Trademarks
    Government
    Regulation
    
    product design and development;
    registration and listing;
    product testing (preclinical and clinical);
    product manufacturing;
    product labeling;
    product storage; 12




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
    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
    and/or
  Premarket
    Approval Pathway
     13




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Clinical
    Trials
    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;
    establishment registration and listing;
    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. 14




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
    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
       15




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International
      Employees
   16




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General
    Information
  (910) 332-1700. www.trans1.com
  Form 10-K, Form 10-Q, Form 8-K www.trans1.com
  1-800-SEC-0330.
  Item 1A.
    Risk
    Factors  Investing in our common stock involves a high degree of risk.
    You should carefully consider the following risk factors, as
    well as the other information contained in this report, before
    deciding whether to invest in shares of our common stock. If any
    of the following risks actually occur, our business, financial
    condition, operating results and prospects would suffer. In that
    case, the trading price of our common stock would likely decline
    and you might lose all or part of your investment in our common
    stock. The risks described below are not the only ones we face.
    Additional risks that we currently do not know about or that we
    currently believe to be immaterial may also impair our
    operations and business results.
  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.   17




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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.
    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
 18




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Our
    future growth depends on increasing physician awareness of our
    pre-sacral approach and our related products for appropriate
    treatment, intervention and referral.
    We
    have incurred losses since inception and we expect to incur
    increasing losses for the foreseeable future. We may never
    achieve or sustain profitability.
   19




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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
    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.
   20




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Our
    future success depends on our ability to develop, receive
    regulatory clearance or approval, and introduce new products or
    product enhancements that will be accepted by the market in a
    timely manner.
      
    properly identify and anticipate spine surgeon and patient needs;
    develop and introduce new products or product enhancements in a
    timely manner;
    avoid infringing upon the intellectual property rights of third
    parties;
    demonstrate, if required, the safety and efficacy of new
    products with data from preclinical studies and clinical trials;
    obtain the necessary regulatory clearances or approvals for new
    products or product enhancements;
    be fully FDA-compliant with marketing of new devices or modified
    products;
    provide adequate training to potential users of our products;
    receive adequate coverage and reimbursement for procedures
    performed with our products; and
    develop an effective and FDA-compliant, dedicated marketing and
    distribution network.    If
    clinical trials of our current or future product candidates do
    not produce results necessary to support regulatory clearance or
    approval in the United States or elsewhere, we will be unable to
    commercialize these products.
    
    the FDA, institutional review boards or other regulatory
    authorities do not approve a clinical study protocol, force us
    to modify a previously approved protocol, or place a clinical
    study on hold;
    patients do not enroll in, or enroll at the expected rate, or
    complete a clinical study;
    patients or investigators do not comply with study protocols;
    patients do not return for post-treatment
    follow-up at
    the expected rate;
    patients experience serious or unexpected adverse side effects
    for a variety of reasons that may or may not be related to our
    products such as the advanced stage of co-morbidities that may
    exist at the time of treatment, causing a clinical study to be
    put on hold;
    sites participating in an ongoing clinical study may withdraw,
    requiring us to engage new sites; 21




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
    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 revenues, results of
    operations and financial condition.
      
    the imposition of additional U.S. and foreign governmental
    controls or regulations;
    the imposition of costly and lengthy new export licensing
    requirements;
    the imposition of U.S. or international sanctions against a
    country, company, person or entity with whom we do business that
    would restrict or prohibit continued business with the
    sanctioned country, company, person or entity;
    economic instability;
    a shortage of high-quality sales people and distributors;
    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; 22




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
    changes in duties and tariffs, license obligations and other
    non-tariff barriers to trade;
    the imposition of new trade restrictions;
    the imposition of restrictions on the activities of foreign
    agents, representatives and distributors;
    scrutiny of foreign tax authorities which could result in
    significant fines, penalties and additional taxes being imposed
    on us;
    pricing pressure that we may experience internationally;
    laws and business practices favoring local companies;
    longer payment cycles;
    difficulties in maintaining consistency with our internal
    guidelines;
    difficulties in enforcing agreements and collecting receivables
    through certain foreign legal systems; and
    difficulties in enforcing or defending intellectual property
    rights.    The
    use, misuse or off-label use of our products may harm our image
    in the marketplace or result in injuries that lead to product
    liability suits, which could be costly to our business or result
    in FDA sanctions if we are deemed to have engaged in such
    promotion.
    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.
   23




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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.
       24




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If we
    need additional funding, we may be unable to raise capital when
    needed, which would force us to delay, reduce, eliminate or
    abandon our commercialization efforts or product development
    programs.
    
    expand the commercialization of our products;
    fund our operations and clinical trials;
    continue our research and development;
    defend, in litigation or otherwise, any claims that we infringe
    third-party patents or other intellectual property rights;
    address FDA or other governmental, legal/enforcement actions and
    remediate underlying problems;
    commercialize our new products, if any such products receive
    regulatory clearance or approval for commercial sale; and
    acquire companies and in-license products or intellectual
    property.    
    market acceptance of our products;
    availability of adequate coverage and reimbursement for
    hospitals and surgeons;
    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.     25




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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.
    We
    face the risk of product liability or other claims and may not
    be able to obtain sufficient insurance coverage, if at
    all.
   26




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If our
    independent contract manufacturers fail to timely deliver to us
    sufficient quantities of some of our products and components in
    a timely manner, our operations may be harmed.
    
    inadequate capacity of the manufacturers facilities;
    financial difficulties experienced by manufacturers due to the
    current economic recession;
    interruptions in access to certain process technologies; and
    reduced control over product availability, quality, delivery
    schedules, manufacturing yields and costs.         27




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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.
    Current
    challenges in the commercial and credit environment may
    adversely affect our business and financial
    condition.
    Our
    future operating results are difficult to predict and may vary
    significantly from quarter to quarter, which may negatively
    impact our stock price in the future.
    
    market acceptance of our products;
    availability of adequate coverage and reimbursement for
    hospitals and surgeons;
    the conduct and results of clinical trials;
    the timing and expense of obtaining future regulatory approvals;
    fluctuations in our expenses associated with expanding our
    operations;
    the introduction of new products by our competitors; and
    changes in our pricing policies or in the pricing policies of
    our competitors or suppliers.     28




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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.
   29




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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.
    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.
   30




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
    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.       31




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We may
    be subject to or otherwise affected by federal and state
    healthcare laws, including fraud and abuse and health
    information privacy and security laws, and could face
    substantial penalties if we are unable to fully comply with such
    laws.
    
    the federal Anti-Kickback Law, which constrains our marketing
    practices and those of our independent sales agents and
    distributors, educational programs, pricing policies, and
    relationships with healthcare providers, by prohibiting, among
    other things, soliciting, receiving, offering or providing
    remuneration, intended to induce the purchase or recommendation
    of an item or service reimbursable under a federal healthcare
    program (such as the Medicare or Medicaid programs);
    federal false claims laws which prohibit, among other things,
    knowingly presenting, or causing to be presented, claims for
    payment from Medicare, Medicaid, or other third-party payors
    that are false or fraudulent;
    the federal Health Insurance Portability and Accountability Act
    of 1996, or HIPAA, and its implementing regulations, which
    created federal criminal laws that prohibit executing a scheme
    to defraud any healthcare benefit program or making false
    statements relating to healthcare matters and which also imposes
    certain regulatory and contractual requirements regarding the
    privacy, security and transmission of individually identifiable
    health information; and
    state laws analogous to each of the above federal laws, such as
    anti-kickback and false claims laws that may apply to items or
    services reimbursed by any third-party payor, including
    commercial insurers, and state laws governing the privacy of
    certain health information, many of which differ from each other
    in significant ways and often are not preempted by HIPAA, thus
    complicating compliance efforts.  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.
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Any
    lawsuit, whether initiated by us to enforce our intellectual
    property rights or by a third party against us alleging
    infringement, may cause us to expend significant financial and
    other resources, and may divert our attention from our business
    and adversely affect our business, operating results and
    prospects.
       33




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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 our Common Stock
  A sale
    of a substantial number of shares of our common stock may cause
    the price of our common stock to decline.
   34




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Our
    directors, officers and principal stockholders have significant
    voting power and may take actions that may not be in the best
    interests of our other stockholders.
    If
    securities or industry analysts do not publish research or
    reports about our business, if they change their recommendations
    regarding our stock adversely or if our operating results do not
    meet their expectations, our stock price and trading volume
    could decline.
    Trading
    in our stock over the last twelve months has been limited, so
    investors may not be able to sell as much stock as they want at
    prevailing prices.
    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; 35




---



##### Table of Contents




    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.    We do
    not anticipate declaring any cash dividends on our common
    stock.
    Item 1B.
    Unresolved
    Staff Comments.    Item 2.
    Properties.    Item 3.
    Legal
    Proceedings.    Item 4.
    Submission
    of Matters to a Vote of Security Holders.    36




---



##### Table of Contents



PART II  Item 5.
    Market
    for the Registrants Common Equity, Related Stockholder
    Matters and Issuer Purchases of Equity Securities  Price of
    Common Stock
    Price RangeHigh

LowFiscal 2009:Fourth quarter

$
5.00


$
3.26Third quarter


6.83



4.08Second quarter


8.74



5.65First quarter


7.66



4.55Fiscal 2008:Fourth quarter

$
9.54


$
5.82Third quarter


14.25



7.45Second quarter


15.74



9.93First quarter


17.24



8.96       Uses of
    Proceeds from Sale of Registered Securities
  Form S-1 No. 333-144802), Form S-1 No. 333-146753),
     37




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##### Table of Contents



Dividend
    Policy
    Securities
    Authorized For Issuance Under Equity Compensation
    Plans
  (c)Number of Securities(a)





Remaining AvailableNumber of


(b)


for Future IssuanceSecurities to be


Weighted-Average


Under EquityIssued Upon Exercise


Exercise Price of


Compensation Plansof Outstanding


Outstanding


(Excluding SecuritiesOptions, Warrants


Options, Warrants


Reflected in ColumnPlan Category

and Rights


and Rights


(a)Equity compensation plans approved by security holders


2,216,026


$
6.96



1,032,914Equity compensation plans not approved by security holders










Total


2,216,026


$
6.96



1,032,914  38




---



##### Table of Contents



Stock
    Price Performance Graph
    
  The material in the above performance graph does not
    constitute soliciting material and should not be deemed filed or
    incorporated by reference into any other Company filing, whether
    under the Securities Act of 1933, as amended, or the Securities
    Exchange Act of 1934, as amended, whether made on, before or
    after the date of this report and irrespective of any general
    incorporation language in such filing, except to the extent we
    specifically incorporate this performance graph by reference
    therein.
 39




---



##### Table of Contents



Item 6.
    Selected
    Financial Data.    Years Ended December 31,2009


2008


2007


2006


2005(In thousands, except share data)Consolidated Statements of Operations Data:Revenue

$
29,807


$
25,304


$
16,473


$
5,812


$
1,469Cost of revenue


5,687



4,315



3,042



1,580



386Gross profit


24,120



20,989



13,431



4,232



1,083Operating expensesResearch and development


6,439



4,081



3,885



3,816



2,100Sales and marketing


34,098



29,375



15,706



9,288



2,635General and administrative


7,184



7,116



3,801



1,596



1,637Total operating expenses


47,721



40,572



23,392



14,700



6,372Operating loss


(23,601
)


(19,583
)


(9,961
)


(10,468
)


(5,289
)Interest income


405



2,548



1,384



858



264Other income (expense)














131



(17
)Net loss

$
(23,196
)

$
(17,035
)

$
(8,577
)

$
(9,479
)

$
(5,042
)Net loss per common share - basic and diluted

$
(1.13
)

$
(0.84
)

$
(1.46
)

$
(3.91
)

$
(2.25
)Weighted average common shares outstanding  basic and
    diluted


20,603,600



20,288,711



5,872,008



2,423,223



2,243,018   December 31,2009

2008

2007

2006

2005Consolidated Balance Sheet Data:Cash, cash equivalents and short-term investments

$
55,251


$
77,266


$
93,921


$
14,962


$
25,994Working capital


63,467



84,174



98,351



17,448



26,696Total assets


68,991



90,491



102,856



20,004



28,013Preferred stock














40,089



40,089Common stock


2



2



2







Additional paid in capital


136,402



133,507



130,325



820



219Total stockholders equity/(deficit)


65,280



85,586



99,439



(21,529
)


(12,654
)  40




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations    Overview
    start-up
       41




---



##### Table of Contents



Financial
    Operations
  Revenue
    Cost
    of Revenue
    Research
    and Development
    Sales
    and Marketing
    General
    and Administrative
    Interest
    Income
  available-for-sale
 42




---



##### Table of Contents



Results
    of Operations
  Comparison
    of the Years Ended December 31, 2009, 2008 and
    2007
  Revenue.
  Cost of Revenue.
  Research and Development.
  Sales and Marketing.
 43




---



##### Table of Contents



General and Administrative.
  Other and Interest Income (Expense).
  Liquidity
    and Capital Resources
  Sources
    of Liquidity
      Cash
  Cash
  Cash
    Flows
  Net Cash Used in Operating Activities.
 44




---



##### Table of Contents



Net Cash Provided by (Used In) Investing
    Activities.
  Net Cash Provided by Financing Activities.
  Operating
    Capital and Capital Expenditure Requirements
    Contractual
    Obligations
    Payments Due by YearLess Than





After 5Contractual Obligations

Total

1 Year

1-3 Years

3-5 Years

Years( In thousands)Operating leases(1)

$
4,128


$
374


$
695


$
735


$
2,324     (1)
    
    We rent office space under an operating lease which expires in
    2019.  Off-Balance
    Sheet Arrangements
    Critical
    Accounting Policies and Estimates
   45




---



##### Table of Contents



Revenue Recognition. and/or
  Accounts Receivable and Allowances.
    Inventory. first-in,
  Accounting for Income Taxes.
  Stock-Based Compensation. Share-Based Payment
 46




---



##### Table of Contents



Recent
    Accounting Pronouncements
  New
    Accounting Standards
  No. FAS 157-2,
  Form 10-K
      Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk     47




---



##### Table of Contents



Item 8.
    Consolidated
    Financial Statements and Supplementary Data.    Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure.    Item 9A.
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
  Rules 13a-15(e) 15d-15(e)
  Internal
    Control Over Financial Reporting
  Managements annual report on internal control over
    financial reporting.
  Changes in Internal Control over Financial
    Reporting. Rules 13a-15(f) 15d-15(f)
  Item 9B.
    Other
    Information.   PART III  Item 10.
    Directors,
    Executive Officers and Corporate Governance.    Item 11.
    Executive
    Compensation.   48




---



##### Table of Contents



Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters.    Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence.    Item 14.
    Principal
    Accounting Fees and Services.   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules.      PageManagement Report on Internal Control Over Financial Reporting


52Report of Independent Registered Public Accounting Firm


53Consolidated Balance Sheets


54Consolidated Statements of Operations


55Consolidated Statements of Stockholders Equity (Deficit)


56Consolidated Statements of Cash Flows


57Notes to Consolidated Financial Statements


58(2) Financial Statement Schedule:
    Schedule II  Valuation Accounts


71     (3) Exhibits


72   Form 10-K
 49




---



##### Table of Contents



SIGNATURES    TranS1 Inc.
  By:
    /s/  Richard
    Randall       POWER OF
    ATTORNEY
  Form 10-K,
    Signature

Title

Date/s/  Richard
    RandallRichard
    Randall

President and Chief Executive Officer (Principal Executive
    Officer)

March 12, 2010/s/  Michael
    LuetkemeyerMichael
    Luetkemeyer

Chief Financial Officer
    (Principal Financial and Accounting Officer)

March 12, 2010/s/  Michael
    CarusiMichael
    Carusi

Director

March 12, 2010/s/  Mitchell
    DannMitchell
    Dann

Director

March 12, 2010/s/  Paul
    LaViolettePaul
    LaViolette

Director

March 12, 2010/s/  Jonathan
    OsgoodJonathan
    Osgood

Director

March 12, 2010/s/  James
    ShapiroJames
    Shapiro

Director

March 12, 2010/s/  Joseph
    SlatteryJoseph
    Slattery

Director

March 12, 2010  50




---



##### 



TranS1
    Inc.



Index to
    Consolidated Financial Statements   
 PageManagement Report on Internal Control Over
    Financial Reporting


52Report of Independent Registered Public
    Accounting Firm


53Consolidated Balance Sheets


54Consolidated Statements of Operations


55Consolidated Statements of Stockholders
    Equity (Deficit)


56Consolidated Statements of Cash Flows


57Notes to Consolidated Financial Statements


58   51




---



##### Table of Contents



Management
    Report on Internal Control Over Financial Reporting      Internal Control  Integrated
    Framework
   52




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm          
    53




---



##### Table of Contents



TranS1
    Inc.Consolidated Balance Sheets
  December 31,2009


2008(In thousands, except share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
29,298


$
42,051Short-term investments


25,953



35,215Accounts receivable, net


3,926



4,812Inventory


7,325



6,369Prepaid expenses and other assets


676



632Total current assets


67,178



89,079Property and equipment, net


1,813



1,412Total assets

$
68,991


$
90,491LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
2,442


$
2,896Accrued expenses


1,269



2,009Total current liabilities


3,711



4,905Commitments (Note 5)Stockholders equity:Common stock, $0.0001 par value; 75,000,000 shares
    authorized, 20,648,447 and 20,538,333 shares issued and
    outstanding at December 31, 2009 and 2008,respectively


2



2Preferred stock, $0.0001 par value; 5,000,000 shares
    authorized, none issued and outstanding at December 31,
    2009 and 2008.






Additional paid-in capital


136,402



133,507Accumulated other comprehensive income


(5
)


Accumulated deficit


(71,119
)


(47,923
)Total stockholders equity


65,280



85,586Total liabilities and stockholders equity

$
68,991


$
90,491    54




---



##### Table of Contents



TranS1
    Inc.
  Consolidated
    Statements of Operations
  Year Ended December 31,2009


2008


2007(In thousands, except per share amounts)Revenue

$
29,807


$
25,304


$
16,473Cost of revenue


5,687



4,315



3,042Gross profit


24,120



20,989



13,431Operating expenses:Research and development


6,439



4,081



3,885Sales and marketing


34,098



29,375



15,706General and administrative


7,184



7,116



3,801Total operating expenses


47,721



40,572



23,392Operating loss


(23,601
)


(19,583
)


(9,961
)Interest income


405



2,548



1,384Net loss

$
(23,196
)

$
(17,035
)

$
(8,577
)Net loss per common share  basic and diluted

$
(1.13
)

$
(0.84
)

$
(1.46
)Weighted average common shares outstanding  basic and
    diluted


20,604



20,289



5,872    55




---



##### Table of Contents



TranS1
    Inc.
  Consolidated
    Statements of Stockholders Equity (Deficit)
  Accumulated





TotalAdditional





Other





StockholdersCommon Stock


Paid-In


Notes


Comprehensive


Accumulated


EquityNumber


Amount


Capital


Receivable


Income


Deficit


(Deficit)(In thousands, except share data)Balance at December 31, 2006


2,435,484


$



$
820


$
(38
)

$



$
(22,311
)

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


290,292







123















123Issuance of common stock from initial public offering


6,325,000



1



86,658















86,659Conversion of preferred stock to common stock


10,793,165



1



40,088















40,089Stock based compensation










2,636















2,636Repayment of note receivable














38











38Net loss






















(8,577
)


(8,577
)Balance at December 31, 2007


19,843,941



2



130,325











(30,888
)


99,439Issuance of common stock from exercised options


694,392







203















203Stock based compensation










2,979















2,979Net loss






















(17,035
)


(17,035
)Balance at December 31, 2008


20,538,333



2



133,507











(47,923
)


85,586Issuance of common stock from exercised options


110,114







96















96Stock based compensation










2,799















2,799Other comprehensive income


















(5
)






(5
)Net loss






















(23,196
)


(23,196
)Balance at December 31, 2009


20,648,447


$
2


$
136,402


$



$
(5
)

$
(71,119
)

$
65,280    56




---



##### Table of Contents



TranS1
    Inc.
  Consolidated
    Statements of Cash Flows
  Year Ended December 31,2009


2008


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

$
(23,196
)

$
(17,035
)

$
(8,577
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation


909



804



540Stock-based compensation


2,799



2,979



2,636Allowance for excess and obsolete inventory


505



400



306Provision for bad debts


80



101



95Changes in operating assets and liabilities:(Increase) decrease in accounts receivable


806



(1,688
)


(1,700
)Increase in inventory


(1,461
)


(2,744
)


(2,251
)Increase in prepaid expenses


(44
)


(35
)


(367
)Increase (decrease) in accounts payable


(454
)


1,265



788Increase (decrease) in accrued liabilities


(745
)


223



1,185Net cash used in operating activities


(20,801
)


(15,730
)


(7,345
)Cash flows from investing activities:Purchase of property and equipment


(1,310
)


(1,128
)


(516
)Purchases of investments


(50,872
)


(55,761
)


(30,687
)Sales of investments


60,134



49,791



11,370Net cash provided by (used in) investing activities


7,952



(7,098
)


(19,833
)Cash flows from financing activities:Proceeds from issuance of common stock


96



203



86,820Net cash provided by financing activities


96



203



86,820Net increase (decrease) in cash and cash equivalents


(12,753
)


(22,625
)


59,642Cash and cash equivalents, beginning of period


42,051



64,676



5,034Cash and cash equivalents, end of period

$
29,298


$
42,051


$
64,676Supplemental disclosure of noncash financing activities:Conversion of preferred stock to common stock

$



$



$
40,089    57




---



##### Table of Contents



TranS1
    Inc.
  Notes
    to Consolidated Financial Statements
  1.
    Organization  ® tm tm
    2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation
        Principles
    of Consolidation:
   58




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Use of
    Estimates
    Cash
    and Cash Equivalents
    Investments
  available-for-sale available-for-sale
  December 31,2009


2008(In thousands)Short-term investments:U.S. government securities

$
25,953


$
9,035Commercial paper






4,978Corporate debt securities






18,972Certificate of deposit






2,230Total short-term investments

$
25,953


$
35,215   Fair
    Value of Financial Instruments
    820-10
 59




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      Accounts
    Receivable
    December 31,2009


2008(In thousands)Gross accounts receivable

$
4,119


$
5,005Allowance for uncollectible accounts


(193
)


(193
)Total accounts receivable, net

$
3,926


$
4,812   Concentration
    of Credit Risk and Significant Customers
        Inventories
    December 31,2009


2008(In thousands)Raw materials

$
220


$
437Work-in-process


3,993



3,334Finished goods


3,112



2,598Total inventories

$
7,325


$
6,369   first-in,
 60




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated 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 Handling Costs
    Sales
    and Marketing Expenses
   61




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
  Research
    and Development Expenses
    Patent
    Costs
    Income
    Taxes
    Stock-Based
    Compensation
  Share-Based Payment Accounting for Stock Issued to Employees
  505-50 No. 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
   62




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Year Ended December 31,2009

2008

2007Weighted average stock options outstanding


2,110,689



1,915,687



1,928,495   Segment
    and Geographic Reporting
      Year Ended December 31,2009


2008


2007(In thousands)United States

$
28,045


$
23,322


$
15,085Europe


1,602



1,854



1,183Other


160



128



205$
29,807


$
25,304


$
16,473     Recently
    Issued Accounting Standards
  No. FAS 157-2,
  Form 10-K
   63




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    3.
    Property
    and Equipment    December 31,2009


2008(In thousands)Furniture and fixtures

$
210


$
186Equipment


2,620



2,061Computer software


410



415Leasehold improvements


380



380Tools


73



73Construction in process


588



144,281



3,129Less: accumulated depreciation and amortization


(2,468
)


(1,717
)$
1,813


$
1,412     4.
    Accrued
    Expenses    December 31,2009


2008(In thousands)Commissions

$
597


$
1,178Vacation


186



163Franchise taxes


122



121Consulting


120



66Legal and professional fees


90



69Travel & entertainment


50



50Bonus


10



270Clinical


10



20Other


84



72Total accrued expenses

$
1,269


$
2,009  64




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   5.
    Lease
    Obligations      Year ending December 31,2010

$
3742011


3322012


3632013


3632014 and after


2,696$
4,128     6.
    Stockholders
    Equity      7.
    Stock
    Incentive Plans and Stock-Based Compensation  2007
    Employee Stock Purchase Plan
       65




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
      2000
    and 2007 Stock Incentive Plans
      Number


PriceOutstanding as of December 31, 2008


2,247,733


$
7.12Options granted


495,500



6.53Options exercised


(110,114
)


0.91Options forfeited


(417,093
)


8.88Outstanding as of December 31, 2009


2,216,026


$
6.96     Weighted


WeightedAverage


Average


Number ofNumber


Contractual


Exercise


OptionsRange of Exercise Prices

Outstanding


Life (Years)


Price


Exercisable$ 0.11 - $ 2.00


569,756



5.5


$
0.81



539,862$ 2.01 - $ 6.00


689,770



8.1



5.69



255,923$ 6.01 - $10.00


385,375



8.4



8.78



174,175$12.00 - $13.00


380,084



7.9



12.39



186,875$14.00 - $20.00


191,041



7.7



15.36



129,2412,216,026



7.4



6.96



1,286,076  66




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Stock-Based
    Compensation for Non-employees
      Employee
    Stock-Based Compensation
      Expected Life.
  Volatility.
 67




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
    Risk-Free Interest Rate.
  Option Grant Year

Risk-Free Rate Range2009

1.79% to 2.52%2008

2.68% to 3.21%2007

4.58% to 4.92%   Dividend Yield.
  Forfeitures.
    8.
    Income
    Taxes      2009


2008(In thousands)Deferred tax assetsDomestic net operating loss carryforwards

$
20,707


$
14,350Inventory


272



200Fixed assets


532



242Other


638



485Research and development credit


1,031



716Total deferred tax assets


23,180



15,993Valuation allowance for deferred assets


(23,180
)


(15,993
)Deferred tax assets






Deferred tax liabilitiesFixed assets






Total deferred tax liabilities






Net deferred tax assets (liabilities)

$



$
  68




---



##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
        2009


2008


2007% of





% of





% ofAmount


Net Loss


Amount


Net Loss


Amount


Net Loss(In thousands)Tax at statutory rate

$
(8,119
)


35.0
%

$
(5,962
)


35.0
%

$
(3,002
)


35.0
%State taxes


(59
)


0.3
%


(447
)


2.6
%


(394
)


4.6
%Non deductible items


1,129



(4.9
)%


1,168



(6.9
)%


998



(11.6
)%Other


215



(0.9
)%


(470
)


2.8
%


53



(0.6
)%R&D credits


(486
)


2.1
%


(148
)


0.9
%


(115
)


1.3
%Change in valuation allowance


7,320



(31.6
)%


5,859



(34.4
)%


2,460



(28.7
)%Total

$




0.0
%

$




0.0
%

$




0.0
%     Balance at December 31, 2007

$
1,114Gross decreases related to current period tax positions


(227
)Balance at December 31, 2008


887Gross increases related to current period tax positions


13Balance at December 31, 2009

$
900    69




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##### Table of Contents



TranS1
    Inc.
  Notes to
    Consolidated Financial
    Statements  (Continued)
   9.
    Comprehensive
    Loss    Year Ended December 31,2009


2008


2007Net loss

$
(23,196
)

$
(17,035
)

$
(8,577
)Other comprehensive income (loss):Translation adjustments


(5
)






Total comprehensive loss

$
(23,201
)

$
(17,035
)

$
(8,577
)   10.
    Quarterly
    Data (Unaudited)    Year Ended December 31, 2009First

Second

Third

FourthQuarter

Quarter

Quarter

QuarterTotal revenues

$
8,678


$
7,938


$
6,912


$
6,279Gross profit


7,136



6,423



5,546



5,015Total operating expenses


12,517



13,293



11,171



10,740Net loss

$
(5,164
)

$
(6,759
)

$
(5,571
)

$
(5,702
)Basic and diluted net loss per common share

$
(0.25
)

$
(0.33
)

$
(0.27
)

$
(0.28
)   Year Ended December 31, 2008First

Second

Third

FourthQuarter

Quarter

Quarter

QuarterTotal revenues

$
5,978


$
5,951


$
6,021


$
7,354Gross profit


4,940



4,814



5,010



6,225Total operating expenses


8,319



10,801



10,363



11,089Net loss

$
(2,439
)

$
(5,299
)

$
(4,764
)

$
(4,533
)Basic and diluted net loss per common share

$
(0.12
)

$
(0.26
)

$
(0.23
)

$
(0.22
)  70




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##### Table of Contents



TRANS1
    INC.
  SCHEDULE II
  VALUATION
    AND QUALIFYING ACCOUNTS
 FOR THE
    YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007
  Balance at





Balance atBeginning of





End ofPeriod

Additions(1)

Deductions(2)

Period(In thousands)Accounts Receivable Reserve:Year ended December 31, 2009

$
193


$
80


$
80


$
193Year ended December 31, 2008


110



101



18



193Year ended December 31, 2007


29



95



14



110   Balance at





Balance atBeginning of





End ofPeriod

Additions(3)

Deductions(4)

Period(In thousands)Inventory Reserve:Year ended December 31, 2009

$
397


$
505


$
321


$
581Year ended December 31, 2008


295



400



298



397Year ended December 31, 2007


57



306



68



295   Balance at





Balance atBeginning of





End ofPeriod

Additions

Deductions

Period(In thousands)Valuation Allowance for Deferred Tax Assets:Year ended December 31, 2009

$
15,993


$
7,559


$
372


$
23,180Year ended December 31, 2008


9,524



6,469







15,993Year ended December 31, 2007


8,121



2,460



1,057



9,524     (1)
    
    Amount represents customer balances deemed uncollectible.(2)
    
    Uncollectible accounts written-off.(3)
    
    Amount represents excess and obsolete reserve recorded to cost
    of sales.(4)
    
    Excess and obsolete inventory written-off against reserve. 71




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description3
.1

Amended and Restated Certificate of Incorporation of TranS1 Inc.
    (incorporated by reference to Exhibit 3.2 to the
    Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).3
.2

Amended and Restated Bylaws of TranS1 Inc. (incorporated by
    reference to Exhibit 3.4 to the Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).4
.1

Specimen common stock certificate (incorporated by reference to
    Exhibit 4.1 to the Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).10
.1

Amended and Restated 2000 Stock Incentive Plan (incorporated by
    reference to Exhibit 10.1 to the Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).*10
.2

Form of Stock Option Agreement under Amended and Restated 2000
    Stock Incentive Plan (incorporated by reference to
    Exhibit 10.2 to the Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).*10
.3

2007 Stock Incentive Plan, as amended (incorporated by reference
    to Appendix A to the Definitive Proxy Statement on
    Schedule 14A, as filed with the Commission on
    April 30, 2009.*10
.4

Form of Stock Option Agreement under 2007 Stock Incentive Plan
    (incorporated by reference to Exhibit 10.4 to the
    Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).*10
.5

2007 Employee Stock Purchase Plan (incorporated by reference to
    Exhibit 10.5 to the Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).*10
.6

Lease, dated July 30, 2009, between TranS1 Inc. and Market
    Place Group, LLC (incorporated by reference to Exhibit 10.1
    of TranS1s Current Report on
    Form 8-K
    filed with the Commission on March 11, 2010).10
.7

Form of Indemnification Agreement (incorporated by reference to
    Exhibit 10.7 to the Registration Statement on
    Form S-1,
    as amended (File
    No. 333-144802),
    and as declared effective on October 16, 2007).10
.7.1

Schedule of Parties to Indemnification Agreement.**10
.8

Offer Letter, dated December 11, 2009, between TranS1 Inc.
    and Kenneth Reali (incorporated by reference to
    Exhibit 10.1 of TranS1s Current Report on
    Form 8-K
    filed with the Commission on January 12, 2010).*10
.9

Separation Agreement, dated February 23, 2010, between
    TranS1 Inc. and Michael Luetkemeyer (incorporated by reference
    to Exhibit 10.1 of TranS1s Current Report on
    Form 8-K
    filed with the Commission on February 25, 2010).*23
.1

Consent of Independent Registered Public Accounting Firm.**24
.1

Power of Attorney (included in the signature page).31
.1

Certification of Chief Executive Officer Pursuant to
    Rule 13a-14(a)
    / 15d-14(a) of the Securities Exchange Act of 1934.**31
.2

Certification of Chief Financial Officer Pursuant to
    Rule 13a-14(a)
    / 15d-14(a) of the Securities Exchange Act of 1934.**32
.1

Certification of Chief Executive Officer Pursuant to
    Rule 13a-14(b)
    / 15d-14(b) of the Securities Exchange Act of 1934 and
    18 U.S.C. Section 1350.**32
.2

Certification of Chief Financial Officer Pursuant to
    Rule 13a-14(b)
    / 15d-14(b) of the Securities Exchange Act of 1934 and
    18 U.S.C. Section 1350.**     *
    
    These exhibits are identified as management contracts or
    compensatory plans or arrangements of the Registrant pursuant to
    Item 15(a)(3) of
    Form 10-K.  **
    
    Filed herewith. 72