##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period From  To
 Commission File Number 333-150888
 T3 MOTION, INC.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-4987549(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)2990 Airway Avenue, Suite A
    
    92626Costa Mesa, California
    
    (Zip Code)(Address of principal executive offices)
 (714) 619-3600
(Registrants telephone number, including area code)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



T3 MOTION, INC.  INDEX TO FORM 10-Q  March 31, 2010
 PagePART I. FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of March 31, 2010 (unaudited) and December
31, 2009
    
    
    3Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three
Months Ended March 31, 2010 and 2009 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31,
2010 and 2009 (unaudited)
    
    
    5Notes to the Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    31Item 4T. Controls and Procedures
    
    
    31PART II. OTHER INFORMATION
    
    
    33Item 1. Legal Proceedings
    
    
    33Item 1A. Risk Factors
    
    
    33Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults upon Senior Securities
    
    
    33Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    35Signatures
    
    
    35EX-10.1EX-10.2EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 T3 MOTION, INC
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    937,888
    
    
    $
    2,580,798Accounts receivable, net of reserves of $37,000 and $37,000, respectively
    
    
    937,140
    
    
    
    747,661Related party receivable
    
    
    35,790
    
    
    
    35,658Inventories
    
    
    1,288,957
    
    
    
    1,169,216Prepaid expenses and other current assets
    
    
    553,486
    
    
    
    161,997Total current assets
    
    
    3,753,261
    
    
    
    4,695,330Property and equipment, net
    
    
    803,148
    
    
    
    868,343Deposits
    
    
    495,596
    
    
    
    495,648Total assets
    
    $
    5,052,005
    
    
    $
    6,059,321LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable
    
    $
    877,747
    
    
    $
    872,783Accrued expenses
    
    
    840,308
    
    
    
    1,064,707Related party payables
    
    
    
    
    
    
    104,931Derivative liabilities
    
    
    11,584,128
    
    
    
    11,824,476Related party notes payable, net of debt discounts
    
    
    2,157,704
    
    
    
    1,836,837Total liabilities
    
    
    15,459,887
    
    
    
    15,703,734Commitments and contingenciesStockholders deficit:Series A convertible preferred stock, $0.001 par value; 20,000,000 shares
authorized; 11,502,563 and 12,347,563 shares issued and
outstanding, respectively
    
    
    11,503
    
    
    
    12,348Common stock, $0.001 par value; 150,000,000 shares authorized;
48,538,462 and 44,663,462 shares issued and outstanding, respectively
    
    
    48,538
    
    
    
    44,664Additional paid-in capital
    
    
    25,944,642
    
    
    
    23,356,724Accumulated deficit
    
    
    (36,416,795
    )
    
    
    (33,062,174
    )Accumulated other comprehensive income
    
    
    4,230
    
    
    
    4,025Total stockholders deficit
    
    
    (10,407,882
    )
    
    
    (9,644,413
    )Total liabilities and stockholders deficit
    
    $
    5,052,005
    
    
    $
    6,059,321
 See accompanying notes to condensed consolidated financial statements
 3




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T3 MOTION, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS (UNAUDITED)
 Three Months Ended March 31,2010
    
    
    2009Net revenues
    
    $
    1,149,426
    
    
    $
    1,205,037Cost of revenues
    
    
    1,127,449
    
    
    
    1,466,267Gross profit (loss)
    
    
    21,977
    
    
    
    (261,230
    )Operating Expenses:Sales and marketing
    
    
    427,654
    
    
    
    546,404Research and development
    
    
    320,506
    
    
    
    301,448General and administrative
    
    
    1,029,413
    
    
    
    1,241,520Total operating expenses
    
    
    1,777,573
    
    
    
    2,089,372Loss from operations
    
    
    (1,755,596
    )
    
    
    (2,350,602
    )Other income (expense):Interest income
    
    
    903
    
    
    
    1,615Other income, net
    
    
    755,555
    
    
    
    165,809Interest expense
    
    
    (681,801
    )
    
    
    (512,612
    )Total other income (expense), net
    
    
    74,657
    
    
    
    (345,188
    )Loss before provision for income taxes
    
    
    (1,680,939
    )
    
    
    (2,695,790
    )Provision for income taxes
    
    
    800
    
    
    
    800Net loss
    
    
    (1,681,739
    )
    
    
    (2,696,590
    )Deemed dividend to preferred stockholders
    
    
    (1,672,882
    )
    
    
    Net loss attributable to common stockholders
    
    $
    (3,354,621
    )
    
    $
    (2,696,590
    )Other comprehensive loss:Foreign currency translation income (loss)
    
    
    205
    
    
    
    (19,941
    )Comprehensive loss
    
    $
    (1,681,534
    )
    
    $
    (2,716,531
    )Net loss per share:Basic
    
    $
    (0.07
    )
    
    $
    (0.06
    )Diluted
    
    $
    (0.07
    )
    
    $
    (0.06
    )Weighted average number of common shares outstanding:Basic
    
    
    45,050,960
    
    
    
    44,022,097Diluted
    
    
    45,050,960
    
    
    
    44,022,097
 See accompanying notes to condensed consolidated financial statements
 4




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T3 MOTION, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three Months Ended March 31,2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (1,681,739
    )
    
    $
    (2,696,590
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    91,841
    
    
    
    91,205Warranty expense
    
    
    13,229
    
    
    
    39,423Share-based compensation expense
    
    
    292,461
    
    
    
    409,743Change in fair value of derivative liabilities
    
    
    (753,727
    )
    
    
    (165,797
    )Investor relations expense
    
    
    
    
    
    
    80,000Amortization of debt discounts
    
    
    554,851
    
    
    
    390,218Change in operating assets and liabilities:Accounts and other receivables
    
    
    (189,477
    )
    
    
    400,320Inventories
    
    
    (119,741
    )
    
    
    (253,322
    )Prepaid expenses and other current assets
    
    
    (391,490
    )
    
    
    244,436Security deposits
    
    
    51
    
    
    
    (3,784
    )Accounts payable and accrued expenses
    
    
    (232,665
    )
    
    
    (29,368
    )Related party payable
    
    
    (104,931
    )
    
    
    12,463Net cash used in operating activities
    
    
    (2,521,337
    )
    
    
    (1,481,053
    )CASH FLOWS FROM INVESTING ACTIVITIES:Loans/advances to related parties
    
    
    (1,607
    )
    
    
    Purchases of property and equipment
    
    
    (26,646
    )
    
    
    (1,578
    )Repayment of loans/advances to related parties
    
    
    1,475
    
    
    
    4,346Net cash (used in) provided by investing activities
    
    
    (26,778
    )
    
    
    2,768CASH FLOWS FROM FINANCING ACTIVITIES:Rescission of common stock
    
    
    (250,000
    )
    
    
    Proceeds from the sale of preferred stock
    
    
    1,155,000
    
    
    
    Net cash provided by financing activities
    
    
    905,000
    
    
    
    Effect of exchange rate on cash
    
    
    205
    
    
    
    (19,941
    )NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,642,910
    )
    
    
    (1,498,226
    )CASH AND CASH EQUIVALENTS  beginning of period
    
    
    2,580,798
    
    
    
    1,682,741CASH AND CASH EQUIVALENTS  end of period
    
    $
    937,888
    
    
    $
    184,515
 See accompanying notes to condensed consolidated financial statements
 5




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##### Table of Contents



T3 MOTION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  Continued
 Three Months Ended March 31,2010
    
    
    2009SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid during the period for:Interest
    
    $
    6,494
    
    
    $
    Income taxes
    
    $
    800
    
    
    $
    Supplemental disclosure of non cash activities:Issuance of common stock for related party payables
    
    $
    
    
    
    $
    1,536,206Conversion of related party payable to related party notes payable
    
    $
    
    
    
    $
    498,528Cumulative effect to retained earnings due to adoption of accounting standard
    
    $
    
    
    
    $
    1,981,338Cumulative effect to additional paid-in capital due to adoption of accounting standard
    
    $
    
    
    
    $
    4,013,085Cumulative effect to debt discount due to adoption of accounting standard
    
    $
    
    
    
    $
    859,955Conversion option of preferred stock and warrants issued with preferred stock
recorded as derivative liabilities
    
    $
    1,401,360
    
    
    $
    Reclassification of derivative liability to equity due to conversion of preferred stock
to common stock
    
    $
    1,121,965
    
    
    $
    Debt discount and warrant liability recorded upon issuance of warrants
    
    $
    233,984
    
    
    $
    245,592Amortization of preferred stock discount related to conversion feature and warrants
    
    $
    1,672,882
    
    
    $
    Conversion of preferred stock to common
    
    $
    4,000
    
    
    $
    
 See accompanying notes to condensed consolidated financial statements
 6




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T3 MOTION, INC.
 
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 NOTE 1  DESCRIPTION OF BUSINESS
  Interim Unaudited Condensed Consolidated Financial Statements
   Going Concern
   7




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Reclassification
  Use of Estimates
  Cash and Cash Equivalents
  Concentrations of Credit Risk
   Fair Value of Financial Instruments
  Revenue Recognition
   8




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Share Based Compensation
    Beneficial Conversion Features and Debt Discounts
  Loss Per Share
  9




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Three Months Ended March 31,2010
    
    
    2009(unaudited)Net loss
    
    $
    (1,681,739
    )
    
    $
    (2,696,590
    )Deemed preferred stock dividend
    
    
    (1,672,882
    )
    
    
    Net loss applicable to common stockholders
    
    $
    (3,354,621
    )
    
    $
    (2,696,590
    )Weighted average number of common shares outstanding:Basic and diluted
    
    
    45,050,960
    
    
    
    44,022,097Net loss per share:Basic and diluted
    
    $
    (0.07
    )
    
    $
    (0.06
    )
 Business Segments
  For the Three MonthsEnded March 31,2010
    
    
    2009(unaudited)Net revenues:T3 Domestic
    
    $
    1,066,579
    
    
    $
    675,029T3 International
    
    
    61,697
    
    
    
    530,008CT Domestic
    
    
    21,150
    
    
    
    Total net revenues
    
    $
    1,149,426
    
    
    $
    1,205,037
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NOTE 2  INVENTORIES
  March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)Raw materials
    
    $
    930,350
    
    
    $
    959,909Work-in-process
    
    
    218,505
    
    
    
    91,013Finished goods
    
    
    140,102
    
    
    
    118,294$
    1,288,957
    
    
    $
    1,169,216
 NOTE 3  PREPAID EXPENSES AND OTHER CURRENT ASSETS
  March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)Prepaid inventory
    
    $
    15,364
    
    
    $
    64,744Vendor Deposits
    
    
    424,109
    
    
    
    47,946Prepaid expenses and other current assets
    
    
    114,013
    
    
    
    49,307$
    553,486
    
    
    $
    161,997
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NOTE 4  RELATED PARTY NOTES PAYABLE
  March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)Note payable to Immersive Media Corp., 12%
interest rate, net of discount of $218,709
and $41,265, respectively
    
    $
    781,291
    
    
    $
    958,735Note payable to Vision Opportunity Master
Fund, Ltd., 10% interest rate, net of
discount of $2,123,587 and $2,621,898,
respectively
    
    
    1,376,413
    
    
    
    878,102$
    2,157,704
    
    
    $
    1,836,837
 Immersive Note
       12




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Vision Opportunity Master Fund, Ltd. Bridge Financing
  th
    13




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##### Table of Contents



Lock-Up Agreement
  NOTE 5  DERIVATIVE LIABILITIES
       14




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March 31,2010(unaudited)Annual dividend yield
    
    
    Expected life (years)
    
    
    0.75-5Risk-free interest rate
    
    
    0.41%-2.55
    %Expected volatility
    
    
    85%-117
    %
        15




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Level 3
    
    
    Level 3Carrying Value
    
    
    Carrying ValueMarch 31,
    
    
    December 31,2010
    
    
    2009(unaudited)Embedded conversion options
    
    $
    7,655,913
    
    
    $
    8,853,893Warrants
    
    
    3,928,215
    
    
    
    2,970,583$
    11,584,128
    
    
    $
    11,824,476Decrease in fair value
    
    $
    753,727
 16




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Balance at January 1, 2010
    
    $
    11,824,476Issuance of warrants and conversion option
    
    
    1,635,344Reclassification to equity due to conversion of preferred stock
    
    
    (1,121,965
    )Change in fair value
    
    
    (753,727
    )Balance at March 31, 2010
    
    $
    11,584,128
 NOTE 6  EQUITY
 Series A Convertible Preferred Stock
      17




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Common Stock
  NOTE 7  STOCK OPTIONS AND WARRANTS
 Common Stock Options
  The Three Months EndedMarch 31,2010
    
    
    2009Stock compensation expense  cost of revenue
    
    $
    25,310
    
    
    
    32,963Stock compensation expense  sales and marketing
    
    
    45,833
    
    
    
    86,456Stock compensation expense  research and development
    
    
    45,831
    
    
    
    51,242Stock compensation expense  general and administrative
    
    
    175,487
    
    
    
    239,082Total stock compensation expense
    
    $
    292,461
    
    
    $
    409,743
  18




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Weighted-Weighted-
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateNumber of
    
    
    Exercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Life
    
    
    ValueOptions outstanding  January 1, 2010
    
    
    6,033,188
    
    
    
    0.77Options granted
    
    
    
    
    
    
    Options exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (349,060
    )
    
    
    0.88Options cancelled
    
    
    
    
    
    
    Total options outstanding  March 31, 2010
    
    
    5,684,128
    
    
    $
    0.76
    
    
    
    7.85
    
    
    $
    Options exercisable  March 31, 2010
    
    
    4,944,502
    
    
    $
    0.71
    
    
    
    7.79
    
    
    $
    Options vested and expected to vest  March 31, 2010
    
    
    5,664,727
    
    
    $
    0.76
    
    
    
    7.85
    
    
    $
    Options available for grant under the Plan at March 31, 2010
    
    
    1,765,872
  Options Outstanding
    
    
    Options ExercisableWeighted Average
    
    
    WeightedRemaining
    
    
    AverageContractual
    
    
    Exercise
    
    
    
    
    
    
    Weighted AverageExercise
Prices
    
    Number of Shares
    
    
    Life
    
    
    Price
    
    
    Number of Shares
    
    
    Exercise Price(In years)$0.60
    
    
    3,770,335
    
    
    
    7.71
    
    
    $
    0.60
    
    
    
    3,490,249
    
    
    $
    0.60$0.77
    
    
    1,000,000
    
    
    
    7.70
    
    
    $
    0.77
    
    
    
    1,000,000
    
    
    $
    0.77$1.40
    
    
    854,418
    
    
    
    8.61
    
    
    $
    1.40
    
    
    
    426,128
    
    
    $
    1.40$1.70
    
    
    59,375
    
    
    
    8.43
    
    
    $
    1.70
    
    
    
    28,125
    
    
    $
    1.705,684,128
    
    
    
    7.85
    
    
    $
    0.76
    
    
    
    4,944,502
    
    
    $
    0.71
 19




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Warrants
  Weighted-
    
    
    Weighted-AverageExercise
    
    
    Contractual
    
    
    Aggregate IntrinsicNumber of Shares
    
    
    Price
    
    
    Life
    
    
    Value(In years)Warrants outstanding  January 1, 2010
    
    
    10,746,143
    
    
    $
    0.87
    
    
    
    4.89Warrants granted (See Notes 4 and 6)
    
    
    3,307,639
    
    
    $
    0.70Warrants exercised
    
    
    
    
    
    
    Warrants cancelled
    
    
    (947,639
    )
    
    $
    0.93Warrants outstanding and exercisable-March
31, 2010
    
    
    13,106,143
    
    
    $
    0.80
    
    
    
    4.54
    
    
    $
    
 NOTE 8  COMMITMENTS AND CONTINGENCIES
 Warranties
   20




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2010
    
    
    2009Beginning balance, January 1,
    
    $
    235,898
    
    
    $
    362,469Charged to cost of revenues
    
    
    13,229
    
    
    
    39,423Usage
    
    
    (33,978
    )
    
    
    (116,447
    )Ending balance, March 31
    
    $
    215,149
    
    
    $
    285,445
 Legal Contingency
 Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim
  21




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Indemnities and Guarantees
  NOTE 9  RELATED PARTY TRANSACTIONS
  Accounts Receivable
   Related Party Payables
  Notes Payable  see Note 4
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Item 2.
Managements Discussion and Analysis of Financial Condition and Results of Operations.
 This quarterly report on Form 10-Q contains certain statements that may be deemed to be
forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included in this report are forward-looking statements. When
used in this report, the words may, will, should, would, anticipate, estimate,
expect, plan, project, continuing, ongoing, could, believe, predict, potential,
intend, and similar expressions are intended to identify forward-looking statements.
Forward-looking statements are subject to risks and uncertainties that could cause actual results
to differ materially from those projected. These risks and uncertainties include, but are not
limited to, changes in sales or industry trends, competition, retention of senior management and
other key personnel, availability of materials or components, ability to make continued product
innovations, casualty or work stoppages at the Companys facilities, adverse results of lawsuits
against the Company and currency exchange rates. Forward-looking statements are based on
assumptions and assessments made by the Companys management in light of their experience and their
perception of historical trends, current conditions, expected future developments and other factors
they believe to be appropriate. Readers of this report are cautioned not to place undue reliance on
these forward-looking statements, as there can be no assurance that these forward-looking
statements will prove to be accurate. Management undertakes no obligation to update any
forward-looking statements. This cautionary statement is applicable to all forward-looking
statements contained in this report. Readers should carefully review the risks described in other
documents we file from time to time with the Securities and Exchange Commission (SEC), including
the recently filed Annual Report on Form 10-K for the year ended December 31, 2009.
 Overview
  Critical Accounting Policies and Estimates
   Going Concern
   23




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Cash and Cash Equivalents
  Concentrations of Credit Risk
   Fair Value of Financial Instruments
  Revenue Recognition
   24




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Business Segments
  For the Three MonthsEnded March 31,2010
    
    
    2009(unaudited)Net revenues:T3 Domestic
    
    $
    1,066,579
    
    
    $
    675,029T3 International
    
    
    61,697
    
    
    
    530,008CT Domestic
    
    
    21,150
    
    
    
    Total net revenues
    
    $
    1,149,426
    
    
    $
    1,205,037
 Derivative Liability
       25




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Loss Per Share
   Three Months Ended March 31,2010
    
    
    2009(unaudited)Net loss
    
    $
    (1,681,739
    )
    
    $
    (2,696,590
    )Deemed preferred stock dividend
    
    
    (1,672,882
    )
    
    
    Net loss applicable to common stockholders
    
    $
    (3,354,621
    )
    
    $
    (2,696,590
    )Weighted average number of common shares outstanding:Basic and diluted
    
    
    45,050,960
    
    
    
    44,022,097Net loss per share:Basic and diluted
    
    $
    (0.07
    )
    
    $
    (0.06
    )
 Commitments and Contingencies
  26




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Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim
  27




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Result of Operations
  Three Months Ended March 31,2010
    
    
    2009(unaudited)Net revenues
    
    $
    1,149,426
    
    
    $
    1,205,037Cost of revenues
    
    
    1,127,449
    
    
    
    1,466,267Gross profit (loss)
    
    
    21,977
    
    
    
    (261,230
    )Operating Expenses:Sales and marketing
    
    
    427,654
    
    
    
    546,404Research and development
    
    
    320,506
    
    
    
    301,448General and administrative
    
    
    1,029,413
    
    
    
    1,241,520Total operating expenses
    
    
    1,777,573
    
    
    
    2,089,372Loss from operations
    
    
    (1,755,596
    )
    
    
    (2,350,602
    )Other income (expense):Interest income
    
    
    903
    
    
    
    1,615Other income, net
    
    
    755,555
    
    
    
    165,809Interest expense
    
    
    (681,801
    )
    
    
    (512,612
    )Total other income (expense), net
    
    
    74,657
    
    
    
    (345,188
    )Loss before provision for income taxes
    
    
    (1,680,939
    )
    
    
    (2,695,790
    )Provision for income taxes
    
    
    800
    
    
    
    800Net loss
    
    
    (1,681,739
    )
    
    
    (2,696,590
    )Deemed dividend to preferred stockholders
    
    
    (1,672,882
    )
    
    
    Net loss attributable to common stockholders
    
    $
    (3,354,621
    )
    
    $
    (2,696,590
    )Other comprehensive loss:Foreign currency translation income (loss)
    
    
    205
    
    
    
    (19,941
    )Comprehensive loss
    
    $
    1,681,534
    
    
    $
    (2,716,531
    )Net loss per share:Basic
    
    $
    (0.07
    )
    
    $
    (0.06
    )Diluted
    
    $
    (0.07
    )
    
    $
    (0.06
    )Weighted average number of common shares outstanding:Basic
    
    
    45,050,960
    
    
    
    44,022,097Diluted
    
    
    45,050,960
    
    
    
    44,022,097
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Net revenues.
 Cost of revenues.
 Gross income (loss).
 Sales and marketing.
 Research and development.
 General and administrative.
 Other income (expense).
 Interest expense.
 Net loss.
 29




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LIQUIDITY AND CAPITAL RESOURCES
    Cash Flows
 For the three months ended March 31, 2010 and 2009
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Off-Balance Sheet Arrangements
  Warrants
    
 Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4T.
Controls and Procedures.
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Remediation of Material Weaknesses
  Changes in Internal Control over Financial Reporting
  
    
    We have hired additional professional accounting resources to assist with the review of
accounting policies and procedures and financial reporting with knowledge, experience and
training in the application of GAAP.
  
    
    We are in the process of further enhancing, the supervisory procedures that will
include additional levels of analysis and quality control reviews within the accounting and
financial reporting functions.
    
    We are in the process of strengthening our internal policies and enhancing our
processes for ensuring consistent treatment and recording of reserve estimates and that
validation of our conclusions regarding significant accounting policies and their
application to our business transactions are carried out by personnel with an appropriate
level of accounting knowledge, experience and training.
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PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
 Preproduction Plastics, Inc. v. T3 Motion., Inc. Ki Nam and Jason Kim
  
 Item 1A. Risk Factors
 Risks Related to Our Company and Our Industry
  
 Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
       
 Item 3.
Defaults Upon Senior Securities.
 None
 
 Item 5.
Other Information.
  33




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##### Table of Contents



Employment Agreement
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##### Table of Contents



Item 6.
Exhibits.
 INDEX TO EXHIBITS
 ExhibitNumber
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation, as currently in effect(1)3.2
    
    Bylaws(1)3.3
    
    Amendment to Bylaws, dated January 16, 2009(2)3.4
    
    Amendment to Certificate of Incorporation(3)3.5
    
    Certificate of Designation of Preferences, Rights and Limitations of Series
A Convertible Preferred Stock(3)10.1
    
    Amendment No. 2 to Immersive Media Promissory Note*10.2
    
    Employment agreement with  Kelly
Anderson May 17, 2010 (Portions of the exhibit has been omitted
pursuant to the request for confidential treatment)*31.1
    
    Section 302 Certificate of Chief Executive Officer*31.2
    
    Section 302 Certificate of Chief Financial Officer*32.1
    
    Section 906 Certificate of Chief Executive Officer*32.2
    
    Section 906 Certificate of Chief Financial Officer*
 
 *
    
    Filed herewith.(1)
    
    Filed with the Companys Registration Statement on Form S-1 filed on May 13, 2008.(2)
    
    Filed with the Companys Current Report on Form 8-K filed on January 20, 2009.(3)
    
    Filed with the Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2009 and filed on November 16, 2009. 
   Date: May 17, 2010
    T3 MOTION, INC.(Registrant)By:
    /s/ Ki NamKi NamChairman of the Board and Chief Executive
OfficerDate: May 17, 2010
    T3 MOTION, INC.(Registrant)By:
    /s/ Kelly AndersonKelly AndersonExecutive Vice President and Chief
Financial Officer 35