##### 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, 2009
 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
(State or other jurisdiction of incorporation or organization)
    
    20-4987549
(I.R.S. Employer Identification No.)
 2990 Airway Avenue, Suite A 
Costa Mesa, California
(Address of principal executive offices)
    
    92626
(Zip Code)
 (714) 619-3600
(Registrants telephone number, including area code)
 þ o
 o þ
  Large accelerated filer oAccelerated filer oNon-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, 2009
 PagePART I. FINANCIAL INFORMATION
    
    
    3Item 1.
    
    Financial Statements
    
    
    3Condensed Consolidated Balance Sheets as of March 31, 2009 (unaudited) and December
31, 2008
    
    
    3Condensed Consolidated Statements of Operations and Other Comprehensive Loss for the
Three Months Ended March 31, 2009 and 2008 (unaudited)
    
    
    4Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31,
2009 and 2008 (unaudited)
    
    
    5Notes to the Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4.
    
    Controls and Procedures
    
    
    27Item 4T.
    
    Controls and Procedures
    
    
    27PART II. OTHER INFORMATION
    
    
    29Item 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    29Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3.
    
    Defaults upon Senior Securities
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    30Item 5.
    
    Other Information
    
    
    30Item 6.
    
    Exhibits
    
    
    30Signatures
    
    
    31EX-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, 312009
    
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    184,515
    
    
    $
    1,682,741Accounts receivable, net of reserves of $27,000 and $27,000,
respectively
    
    
    1,046,684
    
    
    
    1,447,004Related party receivable
    
    
    28,902
    
    
    
    33,248Inventories
    
    
    2,067,791
    
    
    
    1,814,469Prepaid expenses and other current assets
    
    
    368,358
    
    
    
    612,795Total current assets
    
    
    3,696,250
    
    
    
    5,590,257Property and equipment, net
    
    
    1,107,543
    
    
    
    1,197,170Intangible assets, net
    
    
    625,000
    
    
    
    625,000Deposits
    
    
    495,545
    
    
    
    491,761Total assets
    
    $
    5,924,338
    
    
    $
    7,904,188LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable
    
    $
    2,276,377
    
    
    $
    2,381,487Accrued expenses
    
    
    900,658
    
    
    
    785,494Related party payables
    
    
    12,463
    
    
    
    2,034,734Derivative liability
    
    
    6,932,903
    
    
    
    Related party notes payable, net of debt discount
    
    
    1,771,067
    
    
    
    986,598Total current liabilities
    
    
    11,893,468
    
    
    
    6,188,313Long-term liabilities:Related party notes payable
    
    
    
    
    
    
    1,000,000Total liabilities
    
    
    11,893,468
    
    
    
    7,188,313Commitments and contingenciesStockholders (deficit) equity:Common
stock, $0.001 par value; 100,000,000 shares authorized; 44,563,460
and 43,592,428 shares issued and outstanding, respectively
    
    
    44,564
    
    
    
    43,593Additional paid-in capital
    
    
    23,055,345
    
    
    
    25,043,452Accumulated deficit
    
    
    (29,053,755
    )
    
    
    (24,375,827
    )Accumulated other comprehensive income (loss)
    
    
    (15,284
    )
    
    
    4,657Total stockholders (deficit) equity
    
    
    (5,969,130
    )
    
    
    715,875Total liabilities and stockholders (deficit) equity
    
    $
    5,924,338
    
    
    $
    7,904,188
 See accompanying notes to condensed consolidated financial statements
 3




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T3 MOTION, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
 OTHER COMPREHENSIVE LOSS (UNAUDITED)
 Three Months Ended March 31,2009
    
    
    2008Total Revenues
    
    $
    1,205,037
    
    
    $
    1,502,101Cost of revenues
    
    
    1,466,267
    
    
    
    2,051,741Gross loss
    
    
    (261,230
    )
    
    
    (549,640
    )Operating Expenses:Sales and marketing
    
    
    546,404
    
    
    
    444,482Research and development
    
    
    301,448
    
    
    
    311,283General and administrative
    
    
    1,241,520
    
    
    
    1,041,697Total operating expenses
    
    
    2,089,372
    
    
    
    1,797,462Loss from operations
    
    
    (2,350,602
    )
    
    
    (2,347,102
    )Other income (expense):Interest income
    
    
    1,615
    
    
    
    23,949Other income, net
    
    
    165,809
    
    
    
    49Interest expense
    
    
    (512,612
    )
    
    
    (365,118
    )Total other expense, net
    
    
    (345,188
    )
    
    
    (341,120
    )Loss before provision for income tax
    
    
    (2,695,790
    )
    
    
    (2,688,222
    )Provision for income tax
    
    
    800
    
    
    
    800Net loss
    
    
    (2,696,590
    )
    
    
    (2,689,022
    )Other comprehensive loss:Foreign currency translation loss
    
    
    (19,941
    )
    
    
    (135
    )Comprehensive loss
    
    $
    (2,716,531
    )
    
    $
    (2,689,157
    )Net loss per share:Basic
    
    $
    (0.06
    )
    
    $
    (0.07
    )Diluted
    
    $
    (0.06
    )
    
    $
    (0.07
    )Weighted average number of
common shares outstanding:Basic
    
    
    44,022,097
    
    
    
    39,260,128Diluted
    
    
    44,022,097
    
    
    
    39,260,128
 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 31,2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (2,696,590
    )
    
    $
    (2,689,022
    )Adjustments to reconcile net loss to net cash used in operating activities:Warranty expense
    
    
    39,423
    
    
    
    75,000Depreciation and amortization
    
    
    91,205
    
    
    
    74,560Investor relations expense
    
    
    80,000
    
    
    
    Stock compensation expense
    
    
    409,743
    
    
    
    320,746Change in fair value of derivative liability
    
    
    (165,797
    )Amortization of debt discount
    
    
    390,218
    
    
    
    303,685Change in operating assets and liabilities:Accounts receivables, net
    
    
    400,320
    
    
    
    (403,822
    )Inventories
    
    
    (253,322
    )
    
    
    25,265Prepaid expenses and other current assets
    
    
    244,436
    
    
    
    (164,147
    )Deposits
    
    
    (3,784
    )
    
    
    (3,242
    )Accounts payable and accrued expenses
    
    
    (16,905
    )
    
    
    254,385Net cash used in operating activities
    
    
    (1,481,053
    )
    
    
    (2,206,592
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of data license
    
    
    
    
    
    
    (1,000,000
    )Purchases of property and equipment
    
    
    (1,578
    )
    
    
    (200,578
    )Loans/advances to related parties
    
    
    
    
    
    
    (9,987
    )Repayment of loans/advances to related parties
    
    
    4,346
    
    
    
    Net cash provided by (used in) investing activities
    
    
    2,768
    
    
    
    (1,210,565
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from the sale of common stock and contributions from
stockholder, net
    
    
    
    
    
    
    5,809,950Payment of loans from related parties
    
    
    
    
    
    
    (1,549,902
    )Net cash provided by financing activities
    
    
    
    
    
    
    4,260,048Effect of exchange rate on cash
    
    
    (19,941
    )
    
    
    (135
    )NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (1,498,226
    )
    
    
    842,756CASH AND CASH EQUIVALENTS  beginning of period
    
    
    1,682,741
    
    
    
    4,932,272CASH AND CASH EQUIVALENTS  end of period
    
    $
    184,515
    
    
    $
    5,775,028
 See accompanying notes to condensed consolidated financial statements
 5




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T3 MOTION, INC.
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)  Continued
 Three Months Ended March 31,2009
    
    
    2008SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:Cash paid during the period for:Interest
    
    $
    
    
    
    $
    61,406Income taxes
    
    $
    800
    
    
    $
    Supplemental disclosure of non cash activities:Issuance of common stock for related party payables
    
    $
    1,536,206
    
    
    $
    Conversion of related party apayble to related party note payable
    
    $
    498,528
    
    
    $
    Cummulative effect to retained earnings due to adoption of EITF 07-5
    
    $
    1,981,338
    
    
    $
    Cummulative effect to additional paid-in capital due to adoption of
EITF 07-5
    
    $
    4,013,085
    
    
    $
    Cummulative effect to debt discount due to adoption of EITF 07-5
    
    $
    859,955
    
    
    $
    Debt discount and derivative liability recorded upon issuance of
warrants
    
    $
    245,592
    
    
    $
    
 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
   Use of Estimates
  7




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Concentration of Risk
   Revenue Recognition
 SEC Revenue Recognition.
     Fair Value of Financial Instruments
  Segments
  8




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Three Months Ended March 31,2009
    
    
    2008Domestic
    
    $
    675,029
    
    
    $
    1,347,831International
    
    
    530,008
    
    
    
    154,270Total
    
    $
    1,205,037
    
    
    $
    1,502,101
 Recent Accounting Pronouncements
 Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active Fair Value Measurements,
 Effective Date of FASB Statement No. 157
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies Business Combinations Accounting for Contingencies
 NOTE 2  INVENTORIES
  March 31,
    
    
    December, 312009
    
    
    2008(unaudited)Raw materials
    
    $
    1,675,226
    
    
    $
    1,170,278Work-in-process
    
    
    303,753
    
    
    
    540,260Finished goods
    
    
    88,812
    
    
    
    103,931$
    2,067,791
    
    
    $
    1,814,469
 NOTE 3  PREPAID EXPENSES AND OTHER CURRENT ASSETS
 9




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March 31,
    
    
    December, 312009
    
    
    2008(unaudited)Prepaid inventory
    
    $
    120,000
    
    
    $
    355,720Prepaid expenses and
other current assets
    
    
    248,358
    
    
    
    257,075$
    368,358
    
    
    $
    612,795
 NOTE 4  INTANGIBLE ASSETS
    Estimated
    
    
    March 31,
    
    
    December, 31Useful Life
    
    
    2009
    
    
    2008(unaudited)Geolmmersive License Agreement
    
    2 Years
    
    $
    1,000,000
    
    
    $
    1,000,000Less: Accumulated amortization
    
    
    
    
    
    
    (375,000
    )
    
    
    (375,000
    )$
    625,000
    
    
    $
    625,000
 NOTE 5  DERIVATIVE LIABILITIES
 Determining Whether an
Instrument (or Embedded Feature) is Indexed to an Entitys Own Stock
 10




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Accounting for Derivative Instruments and Hedging Activities
    March 31,
    
    January 1,2009
    
    2009Annual dividend yield
    
    
    
    
    
    
    Expected life (years)
    
    
    0.75-5
    
    
    
    1-5Risk-free interest rate
    
    
    0.37% - 1.55%
    
    
    
    0.57% - 1.67%%Expected volatility
    
    
    104% - 155%
    
    
    
    104% - 159%
   11




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Level 3
    
    
    Level 3Carrying Value
    
    
    Carrying ValueMarch 31, 2009
    
    
    January 1, 2009(unaudited)Embedded Conversion Option
    
    $
    1,121,789
    
    
    $
    1,237,435Warrants
    
    $
    5,811,114
    
    
    $
    5,615,673$
    6,932,903
    
    
    $
    6,853,108Decrease in fair value included in other income
    
    $
    165,797
  Balance at December 31, 2008
    
    $
    Cummulative effect of EITF 07-5
    
    
    6,853,108Issuance of warrants
    
    
    245,592Change in fair value
    
    
    (165,797
    )Balance at March 31, 2009
    
    $
    6,932,903
 NOTE 6  RELATED PARTY NOTES PAYABLE
  12




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March 31, 2009
    
    
    December 31, 2008(unaudited)Note payable to Immersive Media Corp., 12%
interest rate, net of discount of $52,446 and $0,
respectively
    
    $
    947,554
    
    
    $
    1,000,000Note payable to Vision Opportunity Master Fund,
Ltd., 10% interest rate, net of discount of
$1,706,734 and $1,213,402, respectively
    
    
    493,266
    
    
    
    986,598Note payable to Ki Nam, 10% interest rate, net
of discount of $168,281
    
    
    330,247
    
    
    
    $
    1,771,067
    
    
    $
    1,986,598
 Immersive Note
    Vision Opportunity Master Fund, Ltd. Bridge Financing
   13




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##### Table of Contents



Share-Based Payment
 Ki Nam Note
  Accounting for Derivative Instruments and Hedging Activities, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys
Own Stock, Accounting for Convertible Securities with Beneficial
Conversion Features or Contingently Adjustable Conversion Ratios Application of
Issue No. 98-5 to Certain Convertible Instruments.
  NOTE 7  INCOME TAXES
 14




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Accounting for Uncertainty
in Income Taxes Accounting for Income Taxes
 ,
  NOTE 8  LOSS PER SHARE
  NOTE 9  STOCK OPTIONS AND WARRANTS
 Common Stock Options
  15




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Three Months Ended March 31,2009
    
    
    2008Stock compensation expense 
cost of revenue
    
    $
    32,963
    
    
    $
    36,664Stock compensation expense 
sales and marketing
    
    
    86,456
    
    
    
    63,554Stock compensation expense 
research and development
    
    
    51,242
    
    
    
    49,107Stock compensation expense 
general and administrative
    
    
    239,082
    
    
    
    171,421Total stock compensation expense
    
    $
    409,743
    
    
    $
    320,746
  RemainingNumber of
    
    
    Weighted Average
    
    
    Contractual
    
    
    AggregateShares
    
    
    Exercise Price
    
    
    Life (in years)
    
    
    Intrinsic ValueOptions outstanding as of
January 1, 2009
    
    
    6,468,167
    
    
    $
    0.76Options granted
    
    
    160,000
    
    
    
    1.40Options exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (116,438
    )
    
    
    0.91Options cancelled
    
    
    
    
    
    
    Options outstanding as of
March 31, 2009
    
    
    6,511,729
    
    
    $
    0.77
    
    
    
    8.86
    
    
    $
    5,734,965Options exercisable as of
March 31, 2009
    
    
    3,614,830
    
    
    $
    0.64
    
    
    
    8.70
    
    
    $
    3,668,072Options vested and
expected to vest as of
March 31, 2009
    
    
    6,435,953
    
    
    $
    0.77
    
    
    
    8.86
    
    
    $
    5,680,583Options available for
grant under the Plan as of
March 31, 2009
    
    
    938,271
  16




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##### Table of Contents



Options Outstanding
    
    
    Options ExercisableWeighted AverageNumber of
    
    
    Remaining Contractual
    
    
    Weighted Average
    
    
    Number of
    
    
    Weighted AverageExercise Prices
    
    Shares
    
    
    Life (in years)
    
    
    Exercise Price
    
    
    Shares
    
    
    Exercise Price$0.60
    
    
    4,369,729
    
    
    
    8.71
    
    
    $
    0.60
    
    
    
    2,864,830
    
    
    $
    0.60$0.77
    
    
    1,000,000
    
    
    
    8.70
    
    
    $
    0.77
    
    
    
    750,000
    
    
    $
    0.77$1.40
    
    
    1,067,000
    
    
    
    9.55
    
    
    $
    1.40
    
    
    
    
    
    
    $
    $1.70
    
    
    75,000
    
    
    
    9.42
    
    
    $
    1.70
    
    
    
    
    
    
    $
    6,511,729
    
    
    
    8.86
    
    
    $
    0.77
    
    
    
    3,614,830
    
    
    $
    0.64
  Warrants
  Weighted AverageNumber of
    
    
    Weighted Average
    
    
    Remaining Contractual
    
    
    AggregateShares
    
    
    Exercise Price
    
    
    Life (in years)
    
    
    Intrinsic ValueWarrants outstanding as of
January 1, 2009
    
    
    5,380,408
    
    
    $
    1.48Warrants granted
    
    
    200,909
    
    
    $
    2.00Warrants exercised
    
    
    
    
    
    $
    Warrants forfeited
    
    
    
    
    
    $
    Warrants cancelled
    
    
    
    
    
    $
    Warrants outstanding and
exercisable as of March 31, 2009
    
    
    5,581,317
    
    
    $
    1.50
    
    
    
    4.15
    
    
    $
    1,150,416
 NOTE 10  COMMITMENTS AND CONTINGENCIES
 Warranties
  17




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Beginning balance, January 1, 2009
    
    $
    362,469Charged to cost of revenues
    
    
    39,423Usage
    
    
    (116,447
    )Ending balance, March 31, 2009
    
    $
    285,445
 Legal Contingency
  Indemnities and Guarantees
  18




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NOTE 11  RELATED PARTY TRANSACTIONS
 Notes
    
    
    
    
    
    
    Related partyreceivable/
    
    
    Related party
    
    
    notesadvances
    
    
    payables
    
    
    payableBalance at December 31, 2008
    
    $
    33,248
    
    
    $
    2,034,734
    
    
    $
    1,986,598Borrowings
    
    
    
    
    
    
    
    
    
    
    Payments
    
    
    (4,346
    )
    
    
    
    
    
    
    Issuance of stock
    
    
    
    
    
    
    (1,536,206
    )
    
    
    Amortization of discount on debt
    
    
    
    
    
    
    
    
    
    
    390,218Accrued interest
    
    
    
    
    
    
    12,463
    
    
    
    Conversion of related party payable to note
    
    
    
    
    
    
    (498,528
    )
    
    
    498,528Debt discount
    
    
    
    
    
    
    
    
    
    
    (245,592
    )Cummulative effect of EITF 07-5  debt discount
    
    
    
    
    
    
    
    
    
    
    (858,685
    )Balance at March 31, 2009
    
    $
    28,902
    
    
    $
    12,463
    
    
    $
    1,771,067
 Accounts Receivable/Advances
   Prepaid Inventory
  Related Party Payables
    19




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Interest Expense
   Related Party Notes Payables
  NOTE 12- EQUITY
  NOTE 13- SUBSEQUENT EVENTS
  20




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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 most recently filed Annual Report on Form 10-K for the year ended December 31, 2008.
 OVERVIEW
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  Going Concern
  21




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Revenue Recognition
 Revenue Recognition.
     Fair Value of Financial Instruments
  22




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Loss Per Share
  Commitments and Contingencies
  Segments
  Three Months Ended March 31,2009
    
    
    2008Domestic
    
    $
    675,029
    
    
    $
    1,347,831International
    
    
    530,008
    
    
    
    154,270Total
    
    $
    1,205,037
    
    
    $
    1,502,101
 Warrant Liability
 
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Recent Accounting Pronouncements
 Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active Fair Value Measurements,
 Effective Date of FASB Statement No. 157
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies Business Combinations Accounting for Contingencies
 RESULTS OF OPERATIONS
 Three Months Ended March 31, 2009 and 2008
  24




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##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008Total Revenues
    
    
    1,205,037
    
    
    
    1,502,101Cost of revenues
    
    
    1,466,267
    
    
    
    2,051,741Gross loss
    
    
    (261,230
    )
    
    
    (549,640
    )Operating Expenses:Sales and marketing
    
    
    546,404
    
    
    
    444,482Research and development
    
    
    301,448
    
    
    
    311,283General and administrative
    
    
    1,241,520
    
    
    
    1,041,697Total operating expenses
    
    
    2,089,372
    
    
    
    1,797,462Loss from operations
    
    
    (2,350,602
    )
    
    
    (2,347,102
    )Other income (expense):Interest income
    
    
    1,615
    
    
    
    23,949Other (expense) income
    
    
    165,809
    
    
    
    49Interest expense
    
    
    (512,612
    )
    
    
    (365,118
    )Total other expense, net
    
    
    (345,188
    )
    
    
    (341,120
    )Loss before provision for
income tax
    
    
    (2,695,790
    )
    
    
    (2,688,222
    )Provision for income tax
    
    
    800
    
    
    
    800Net loss
    
    
    (2,696,590
    )
    
    
    (2,689,022
    )Other comprehensive loss:Foreign currency translation
income (loss)
    
    
    (19,941
    )
    
    
    (135
    )Comprehensive loss
    
    $
    (2,716,531
    )
    
    $
    (2,689,157
    )Net loss per share  basic and
diluted
    
    $
    (0.06
    )
    
    $
    (0.07
    )Weighted average number of
common shares outstanding:Basic and diluted
    
    
    44,022,097
    
    
    
    39,260,128
 Revenues.
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##### Table of Contents



Domestic Revenues.
 International Revenues
 Cost of revenues.
 Gross loss.
 Sales and marketing expense.
 Research and development.
 General and administrative.
 Total other expense
 Net Loss
 26




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
    Cash Flows
 For the Three Months Ended March 31, 2009 and 2008
   
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
  
 Item 4T. Controls and Procedures.
   27




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28




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##### Table of Contents



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.
  
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  If we are unable to continue as a going concern, our securities will have little or no value.
  29




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##### Table of Contents



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 None
 
 Item 3. Defaults Upon Senior Securities.
 None
 
 Item 4. Submission of Matters to a Vote of Security Holders.
 None
 
 Item 5. Other Information.
 None
 
 Item 6. Exhibits.
 3.1
    
    Amended and Restated Certificate of Incorporation, as currently in effect (incorporated by
reference to Exhibit 3.1 to Registration Statement onForm S-1filed July 14, 2008,
Registration No. 333-150888)3.2
    
    Bylaws of the registrant, as currently in effect (incorporated by reference to Exhibit 3.2 to
Registration Statement onForm S-1filed July 14, 2008, Registration No. 333-150888)10.1
    
    Form of 10% Secured Convertible Debenture**10.2
    
    Form of Series D Common Stock Purchase Warrant**10.3
    
    Subsidiary Guarantee, dated December 30, 2008**10.4
    
    Security Agreement dated as of December 30, 2008**10.5
    
    Form of Lock-Up Agreement**10.6
    
    Distribution Agreement between the registrant and Spear Distribution Co. dated on or about
March 2009+31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley of 2002 *
 30




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##### Table of Contents



32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S. C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
 *
    
    Incorporated by reference to exhibits to the Companys Form 8-K filed in January 2009.+
    
    Incorporated by reference to exhibits to the Companys Form 8-K filed in January 2009. 
   Date: May 15, 2009
    T3 MOTION, INC.(Registrant)By:
    /s/ Ki NamKi NamChairman of the Board and Chief Executive OfficerDate: May 15, 2009
    T3 MOTION, INC.(Registrant)By:
    /s/ Kelly AndersonKelly AndersonExecutive Vice President and Chief Financial Officer 31




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##### Table of Contents



Exhibit No.
    
    Descripition3.1
    
    Amended and Restated Certificate of Incorporation, as currently in effect (incorporated by
reference to Exhibit 3.1 to Registration Statement on Form S-1 filed July 14, 2008,
Registration No. 333-150888)3.2
    
    Bylaws of the registrant, as currently in effect (incorporated by reference to Exhibit 3.2 to
Registration Statement on Form S-1 filed July 14, 2008, Registration No. 333-150888)31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002 *31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley of 2002 *32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S. C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
 
 *
    
    Filed herewith. 32