The cable that connects the gear change lever to the transmission is incorrectly adjusted. You will need to get it onto a hoist and adjust the cable until you can select all the gears. ideally you want a workshop manual for this as it will give you the exact details of how to adjust it. However you can probably do it by trial and error but it may take a while.
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SOURCE: HONDA BALLADE 160I CUTTING OUT AT 3500 RPM
The Nippon-Denzo Distributor's are known to have problems. I had the same issue for 3 months where it would cut out and sometimes, actually kill my car. Finally I spend the $200 and put a new Distributor in the car and it fixed my problems. there are 2 different Distributors for your car, make sure you get the right one or it will not work.
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