<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

To the Shareholders of
Comsign Ltd.

We have audited the accompanying balance sheet of Comsign Ltd. ("the Company")
as of December 31, 2000 and the related statement of operations and changes in
shareholders' equity for the period from May 31, 2000 (date of commencement of
operations) to December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by the Company's management, as well as evaluating
the overall financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.

In our opinion, the aforementioned financial statements present fairly, in all
material respects, the financial position of the Company as of December 31,
2000, and its results of operations and changes in shareholders' equity for the
period from May 31, 2000 (date of commencement of operations) to December 31,
2000, in conformity with accounting principles generally accepted in the United
States of America.

Brightman Almagor & Co.
Certified Public Accountants (Israel)
A member of Deloitte & Touche

Tel Aviv, Israel
February 27, 2001


                                       1
<PAGE>

                                  COMSIGN LTD.

                                  BALANCE SHEET

                                                                    December 31,
                                                                      2 0 0 0
                                                                        US$
                                                                    ----------

ASSETS

Current assets
 Cash and cash equivalents                                           1,329,094
 Trade accounts receivable                                              35,672
 Other receivables (Note 3)                                            126,761
                                                                    ----------
    Total current assets                                             1,491,527
                                                                    ----------

Property and equipment (Note 4)
 Cost                                                                   26,883
 Less - Accumulated depreciation                                         1,348
                                                                    ----------
                                                                        25,535
                                                                    ----------

Other assets, net (Note 5)                                           2,241,980
                                                                    ----------
                                                                     3,759,042
                                                                    ==========

 LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
 Trade accounts payable                                                 34,311
 Other payables (Note 6)                                                25,302
 VeriSign- short term                                                1,164,560
                                                                    ----------
                                                                     1,224,173
                                                                    ----------

Long term liabilities
VeriSign- long term                                                    873,420
                                                                    ----------

Shareholders' equity
 Share capital (Note 7)
  Ordinary shares of NIS 1 par value
  (Authorized - 50,000,000 shares, issued and
  outstanding - 200 shares as at December 31, 2000)                         50
 Additional paid-in capital                                          1,879,714
 Foreign currency translation adjustment                                18,698
 Accumulated deficit                                                  (237,013)
                                                                    ----------
                                                                     1,661,449
                                                                    ----------
                                                                     3,759,042
                                                                    ==========

    The accompanying notes are an integral part of the financial statements.

<PAGE>

                                  COMSIGN LTD.

                             STATEMENT OF OPERATIONS

                                                                  For the seven
                                                                  months ended
                                                                  December 31,
                                                                     2 0 0 0
                                                                       US$
                                                                  ------------

Revenues                                                             176,912

Operating expenses (Note 9)                                          431,686
                                                                    --------

Operating loss                                                       254,774

Financial income, net                                                 17,761
                                                                    --------

Loss for the period                                                   237,013
                                                                    =========

    The accompanying notes are an integral part of the financial statements.

<PAGE>

                                  COMSIGN LTD.

                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                       Foreign
                                                   Additional          Currency
                                         Share      paid-in           translation     Accumulated      Comprehensive
                                        capital     capital            adjustment       deficit             loss            Total
                                         -----     ----------          ----------      ---------          ---------      ----------
                                          US$          US$                 US$            US$                US$             US$
                                         -----     ----------           --------       ---------          ---------      ----------
<S>                                         <C>     <C>                   <C>           <C>                <C>            <C>
Changes in the seven months
  from May 31, 2000
  to December 31, 2000:

Issuance of shares                          50      1,879,714 (*)                               -                         1,879,764

Loss for the period                                                                     (237,013)          (237,013)       (237,013)
Foreign currency translation
  adjustment                                                              18,698                             18,698          18,698
                                         -----     ----------           --------       ---------          ---------      ----------
Comprehensive loss                                                                                         (218,315)
Balance at December 31, 2000                50      1,879,714             18,698        (237,013)                         1,661,449
</TABLE>

(*) Net of issuance expenses of US$ 99,950.

    The accompanying notes are an integral part of the financial statements.

<PAGE>

                                  COMSIGN LTD.

                        Notes to the Financial Statements

Note 1 - General

COMSIGN Ltd. (the "Company"), an Israeli company, was established in May 2000.
The Company is engaged in the distribution and delivery of digital
authentication certificates of VeriSign Inc. ("VeriSign"). In June 2000, the
Company entered into an International Affiliate Agreement with VeriSign whereby
it was designated as VeriSign's principal affiliate in Israel and the
territories administered by the Palestinian Authority, such continued exclusive
appointment being subject to certain conditions (see Note 5). The Company is
focusing on marketing the VeriSign web certificates and onsite enterprise
services. In July 2000, TTR Technologies Inc. purchased a 50% equity interest in
the Company.

Note 2 - Significant accounting policies

Use of estimates in preparation of financial statements

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.

Financial statements in U.S. dollars

The functional currency of the company is the NIS. The financial statements are
translated into dollars in accordance with the principles set forth in SFAS No.
52. Assets and liabilities have been translated at year-end exchange rates;
results of operations have been translated at average exchange rates. The
translation adjustments have been reported as a separate component of
shareholders' equity.

Cash equivalents

Cash equivalents consist of short-term, highly liquid investments that are
readily convertible into cash with original maturities when purchased of three
months or less.

<PAGE>

                                  COMSIGN LTD.

                        Notes to the Financial Statements

Note 2 - Significant accounting policies (contd.)

Property and equipment

Property and equipment are stated at cost. Depreciation is calculated using the
straight-line method over the estimated useful lives of assets, as follows:

       Computers and software                       3 years

In accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," management reviews
long-lived assets and certain identifiable intangibles for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable based on estimated future cash flows. An impairment loss
is recognized when the undiscounted future cash flows are less than the carrying
value of the assets. The loss recognized will be equal to the difference between
the carrying value and the fair value of the asset.

Deferred income taxes

Deferred income taxes are provided for temporary differences between the assets
and liabilities, as measured in the financial statements and for tax purposes,
at tax rates expected to be in effect when these differences reverse.

Fair value of financial instruments

The financial instruments of the Company consist mainly of cash and cash
equivalents, current accounts receivable, accounts payable and accruals. Due to
the relatively short period to maturity, the fair value of the financial
instruments included in the working capital of the Company approximates their
carrying amounts.

Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities"(amended in
June 2000 by SFAS 138). SFAS No. 133 is effective for all fiscal quarters of all
fiscal years beginning after June 15, 2000 (as amended by SFAS No. 137). SFAS
No. 133 requires that all derivative instruments be recorded on the balance
sheet at their fair value. Changes in the fair value of derivatives are recorded
each year in current earnings or other comprehensive income, depending on
whether a derivative is designed as part of a hedge transaction, and if it is
the type of hedge transaction. The Company does not expect the adoption of SFAS
No. 133 (as amended by SFAS 138) to have a material impact on its financial
statements. As of December 31, 2000, the Company has no derivative instruments.

<PAGE>

                                  COMSIGN LTD.

                        Notes to the Financial Statements

Note 3 - Other receivables

Consist of the following:

                                                                  December 31,
                                                                    2 0 0 0
                                                                  ------------
                                                                      US$
                                                                  ------------

 Government authorities                                              24,180
 VeriSign - Income to be received                                   102,581
                                                                   --------
                                                                    126,761
                                                                   ========

Note 4 - Property and equipment

                                                                  December 31,
                                                                    2 0 0 0
                                                                  ------------
                                                                      US$
                                                                  ------------

 Cost:
   Computers and software                                           26,883

 Accumulated depreciation:
   Computers and software                                            1,348
                                                                   -------
                                                                    25,535
                                                                   =======

Note 5 - Other  assets, net

                                                                   December 31,
                                                                     2 0 0 0
                                                                  ------------
                                                                       US$
                                                                  ------------

 Cost                                                               2,537,980

 Accumulated depreciation                                             296,000
                                                                   ----------
                                                                    2,241,980
                                                                   ==========

<PAGE>

                                  COMSIGN LTD.

                        Notes to the Financial Statements

Note 5 - Other assets, net (contd.)

In June 2000, the Company signed an Affiliate Agreement (the "Agreement") with
VeriSign (see Note 1). In accordance with the Agreement, VeriSign appointed the
Company as an affiliate of VeriSign for the purpose of providing, in a defined
territory, the products and services made available by VeriSign for the
five-year term of the Agreement. In consideration for the Agreement, the Company
was committed to pay affiliate contract fees totaling US$2,537,980, to be paid
as follows: US$500,000 net 30 days from the effective date of the Agreement and
US$291,140 at the beginning of each seven remaining calendar quarters. The total
amount of the affiliate contract fees is presented as other assets depreciated
over the life of the agreement - five years.

In the framework of the Agreement, the Company is committed to install a
processing center in the territory not later than the first quarter of the third
year as of the Effective Date (June 2000). VeriSign will not appoint a
processing center affiliate (other than the Company) in the territory for a
period of 24 months as of the Effective Date. However, if during this period,
the market Territory requires the need for a processing center affiliate, then
VeriSign will give the Company a notice of refusal to become a processing center
affiliate. As of such notification from VeriSign, the Company will have six
months to purchase the processing center affiliate upgrade for US$1.2 million.
If the Company declines to purchase the processing center affiliate upgrade
within the six months notice period, the Company may lose principal affiliate
status and VeriSign would be free to appoint a new principal affiliate. If the
Company loses the principal affiliate status the Company may continue to operate
as a standard VeriSign affiliate.

Note 6 - Other payables

                                                                 December 31,
                                                                   2 0 0 0
                                                                 ------------
                                                                     US$
                                                                 ------------

Related party                                                       15,490
Other                                                                9,812
                                                                   -------
                                                                    25,302
                                                                   =======

Note 7 - Share capital

Issuance of shares

The Company was established in May 2000 as a fully owned subsidiary of Comda
(1985) Ltd., an Israeli company.

In June 2000, the Company issued 100 ordinary shares to TTR Technologies, Inc.
("TTR") in consideration for US$2,000 thousand. Following this transaction TTR
holds 50% of the outstanding shares of the Company.

<PAGE>

                                  COMSIGN LTD.

                        Notes to the Financial Statements

Note 8 - Taxes on income

The Company is assessed under the provisions of the Israeli Income Tax Law
(Inflationary Adjustments) 1985, pursuant to which results for tax purposes are
measured in new Israeli shekels in real terms in accordance with changes in the
Israeli consumer price index.

Income is taxable at the ordinary corporate tax rate of 36%.

Deferred taxes

Under SFAS No. 109, deferred tax assets are to be recognized for the anticipated
tax benefits associated with net operating loss carryforwards and deductible
temporary differences, unless it is more likely than not that some or all of the
deferred tax assets will not be realized. The adjustment is made by a valuation
allowance.

Since the realization of the net operating loss carryforwards is less likely
than not, a valuation allowance has been established for the amounts of the
related tax benefits.

The main components of the Company's deferred tax assets are as follows:

                                                                 December 31,
                                                                   2 0 0 0
                                                                 ------------
                                                                     US$
                                                                 ------------

Net loss carryforwards                                              86,765
Less - valuation allowance                                          86,765
                                                                   -------
                                                                         -
                                                                   =======

Tax assessments

The Company has not been assessed for income tax purposes since incorporation.

Note 9 - Operating expenses

                                                                  For the seven
                                                                  months ended
                                                                  December 31,
                                                                    2 0 0 0
                                                                      US$

Salaries and related expenses                                        39,407
Depreciation                                                        297,348
         Sub-contractors                                             46,254
Others                                                               48,677
                                                                   --------
                                                                    431,686
                                                                   ========