<PAGE>

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

[Mark One]

     |X| ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended December 31, 2003

     |_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

                             TTR TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)



Delaware                            0-22055                 11-3223672
(State or Other Jurisdiction        Commission File         IRS Employer
of Incorporation)                   Number)                 Identification No.)

                                4424 16TH AVENUE
                            BROOKLYN, NEW YORK 11204
                    (Address of Principal Executive Offices)


                                  718-851-2881
              (Registrant's Telephone Number, including Area Code)

       SECURITIES REGISTERED UNDER SECTION 12(B) OF THE EXCHANGE ACT: None

         SECURITIES REGISTERED UNDER SECTION 12(G) OF THE EXCHANGE ACT:
                 Common Stock, par value $0.001(Title of Class)


     Check whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. |X| Yes
|_| No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). |_ | Yes |X| No

     As of March 29, 2004, the registrant had outstanding 16,440,330 shares of
Common Stock, $0.001 par value per share.

                       DOCUMENTS INCORPORATED BY REFERENCE

The information called for in Items 10, 11, 12, 13 and 14 in Part III will be
contained in the registrant's definitive proxy statement which the registrant
intends to file within 120 days after the end of the registrant's fiscal year
ended December 31, 2003 and such information is incorporated herein by
reference.

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                           FORWARD LOOKING STATEMENTS

     CERTAIN STATEMENTS MADE IN THIS ANNUAL REPORT ON FORM 10K ARE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY
TERMINOLOGY SUCH AS "MAY", "WILL", "SHOULD", "EXPECTS", "INTENDS",
"ANTICIPATES", "BELIEVES", "ESTIMATES", "PREDICTS", OR "CONTINUE" OR THE
NEGATIVE OF THESE TERMS OR OTHER COMPARABLE TERMINOLOGY. BECAUSE FORWARD-LOOKING
STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, THERE ARE IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED
BY THESE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED
TO, THE COMPETITIVE ENVIRONMENT GENERALLY, COMPANY'S DIFFICULTY IN RAISING
CAPITAL, PROSPECTIVE TAX TREATMENT UNDER U.S. AND OTHER LAW RELATING TO THE SALE
OF THE COPY PROTECTION BUSINESS, COMPANY'S NET OPERATING LOSS CARRYFORWARDS,
POTENTIAL INDEMNIFICATION PAYMENTS UNDER THE PURCHASE AGREEMENT WITH MACROVISION
CORPORATION, COMPANY'S FUTURE PLANS, SUFFICIENCY OF CASH RESERVES, INEXPERIENCE
IN OPERATING A NEW LINE OF BUSINESS, INSUFFICIENCY OF CAPITAL TO OPERATE A NEW
LINE OF BUSINESS, THE AVAILABILITY OF AND THE TERMS OF FINANCING, DILUTION OF
THE COMPANY'S STOCKHOLDERS, THE COMPANY'S PAST FINANCIAL HISTORY, INFLATION,
CHANGES IN COSTS AND AVAILABILITY OF GOODS AND SERVICES, ECONOMIC CONDITIONS IN
GENERAL AND IN THE COMPANY'S SPECIFIC MARKET AREAS, DEMOGRAPHIC CHANGES, CHANGES
IN FEDERAL, STATE AND /OR LOCAL GOVERNMENT LAW AND REGULATIONS; CHANGES IN
OPERATING STRATEGY OR DEVELOPMENT PLANS; THE ABILITY TO ATTRACT AND RETAIN
QUALIFIED PERSONNEL; AND CHANGES IN THE COMPANY'S ACQUISITIONS AND CAPITAL
EXPENDITURE PLANS. ALTHOUGH THE COMPANY BELIEVES THAT EXPECTATIONS REFLECTED IN
THE FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CANNOT GUARANTEE FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS. MOREOVER, NEITHER THE COMPANY NOR ANY
OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY AND COMPLETENESS OF THESE
FORWARD-LOOKING STATEMENTS. THE COMPANY IS UNDER NO DUTY TO UPDATE ANY
FORWARD-LOOKING STATEMENTS AFTER THE DATE OF THIS REPORT TO CONFORM SUCH
STATEMENTS TO ACTUAL RESULTS.


                                       (i)
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                                     PART I

ITEM 1. BUSINESS.

OVERVIEW / RECENT SALE TRANSACTION

     Since its inception in 1994 through the period immediately preceding the
date on which the Purchase Agreement discussed below was entered into, TTR
Technologies, Inc. (hereinafter, the "Company" or "TTR") was primarily engaged
in the business of designing and developing digital security technologies that
provide copy protection for electronic content distributed on optical media and
the internet (the "Copy Protection Business").

     On November 4, 2002, the Company and its wholly-owned subsidiary TTR
Technologies, Ltd. ("TTR Ltd."), entered into an Asset Purchase Agreement dated
as of November 4, 2002, (the "Purchase Agreement") with Macrovision Corporation
("Macrovision"), then one of the Company's largest stockholders and Macrovision
Europe, Ltd., an affiliate of Macrovision (collectively, the "Purchaser"),
pursuant to which the Company agreed to sell to the Purchaser all of the assets
that were utilized in operating the Copy Protection Business. On May 28, 2003,
the Company consummated the sale of the Copy Protection Business to the
Purchaser for a cash sales price of $5,050,000 and return for cancellation
1,880,937 shares of the Company's common stock, par value $0.001 (the "Common
Stock") that Macrovision purchased in January 2000 for $4.0 million. The Company
recorded a gain on sale of $5.7 million in its statement of operations for the
year ended December 31, 2003 consisting of $5,050,000 in cash and $658,328
representing the value of the common stock returned for cancellation to the
Company based on the closing price of the stock on May 28, 2003. Under the
Purchase Agreement, certain indemnification obligations relating to the
Company's title to the assets sold, compliance with laws and certain matters
relating to taxes continue through November 2004.

     As a result of the sale of the Copy Protection Business, the Company ceased
all activities in the only business that it had ever actively engaged in.
Following the sale of the copy protection business, the Company's only
significant asset became cash and cash equivalents and a net operating loss
carry forward (NOL) that may be available to offset future taxable income.

                             COMPANY'S NEW BUSINESS

OVERVIEW

     Following the sale of the Company's Copy Protection Business, the Company's
then existing management considered several possible alternatives regarding the
Company's strategic direction, including, the acquisition, development or
investment in new lines of business. The Company announced on January 14, 2004
that it and Lucent Technologies, Inc. ("Lucent") entered into the Development
and Licensing Agreement, effective as of January 6, 2004, as subsequently
amended as of January 16, 2004 (the "Development and Licensing Agreement"),
pursuant to which Lucent has agreed to develop for and license to the Company
next-generation management and routing technologies and equipment designed to
provide Fiber-to-the-Premises (FTTP) capabilities for voice, video, data, and
voice-over-Internet protocol (VoIP) services. The Development and Licensing
Agreement contemplates that Lucent deliver to the Company design models of
specified equipment designed to enable the provision of very rapid broadband
access to a range of communication services directly to the consumer's facility
(collectively, the "Equipment"). The Equipment includes optical fiber based
advanced communication technologies designed and developed at Lucent's Bell Labs
division in New Jersey. The Board unanimously voted on January 6, 2004 to
approve the Transaction and enter into the Development and Licensing Agreement,
subject to the approval of the Company's stockholders.

                                       -1-
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     On February 10, 2004, the Company filed with the Securities and Exchange
Commission ("SEC") a definitive proxy statement (the "Proxy Statement")
soliciting stockholder approval to enter into the transactions contemplated by
the Development and Licensing Agreement (collectively, the "Transaction"). A
special meeting of the stockholders was scheduled for and held on March 4, 2004,
at which the Company's stockholders approved the Transaction. Reference is made
to the Proxy Statement for a description of the reasons underlying the Board's
decision to enter into the Transaction and other background information relating
to the Transaction.

     Following stockholder approval of the Transaction, the Company has
commenced operations to provide and market products in the field of advanced
telecommunication equipment. In connection with its new business direction, the
Company has retained a new Chief Executive Officer with significant experience
in this and related fields. See "MANAGEMENT RESTRUCTURE."

INDUSTRY OVERVIEW (TELECOMMUNICATIONS)

     During the past several years, the amount of voice and data transmitted
over communication networks has increased significantly. This growth is
primarily attributed to the rapid growth and popularity of data intensive
applications, such as Internet access, web hosting, real-time data backup,
e-mail, video conferencing, multimedia file transfers and the movement of large
blocks of stored data across networks. To meet this demand, communication
service providers upgraded their communication networks to expand capacity,
which greatly reduced transmission costs per bit. This cost reduction has, in
turn, further increased the demand for and usage of communication networks,
which has enabled the growth in voice and data traffic across networks.

     This increased bandwidth created with broadband access has enabled users
previously connecting at 28.8 Kbps, or up to 56 Kbps over their analog phone
lines, to access the Internet at speeds of up to 1.5 Mbps, enabling voice, data,
music, Internet based multiplayer gaming and video transfers over the Internet.
Even in the current economic climate, the number of users and the use of digital
voice, video, music and graphics has continued to increase due to affordable
higher speed processors, the cost effectiveness of Fast Ethernet (100 Mbps)
networking, the emergence of affordable Gigabit Ethernet products and the
standardization of the Internet as a form of communication for businesses and
consumers.

EVOLUTION OF NETWORK INFRASTRUCTURE

     Communication networks were originally designed to handle voice traffic.
The infrastructure of existing prior generation, or legacy, networks consists of
copper cabling along which voice communications are transmitted in the form of
electronic signals. While copper cabling is generally a reliable transmission
medium, its ability to transmit large volumes of data at high speed is limited,
and it is prone to electromagnetic interference, or EMI, from nearby electronic
equipment and other sources. EMI interferes with the transmission of a signal
and degrades signal quality.

     To overcome the limitations of the legacy copper cable infrastructure and
meet increasing demand for high capacity and high-speed voice and data
transmission, communication service providers are adopting optical fiber optic
technology in their networks. Fiber optic technology involves the transmission
of data over fiber optic cable via digital pulses of light, which allows for
greater bandwidth over longer distances than copper cable and higher quality
transmissions that are not subject to EMI.

     Communication by means of light waves guided through glass fibers offers a
number of advantages over conventional means of transmitting information through
metallic conductors. Glass fibers carry significantly more information
(bandwidth) than metallic conductors but, unlike metallic conductors, are not
subject to electromagnetic or radio frequency interference.

                                       -2-
<PAGE>

Signals of equal strength can be transmitted over much longer distances through
optical fibers than through metallic conductors and require the use of fewer
repeaters (devices which strengthen a signal). Furthermore, fiber-optic cables,
which typically consist of numerous optical fibers encased in one or more
plastic sheaths, are substantially smaller and lighter than metallic conductor
cables of the same capacity, so they can be less expensive and more easily
installed, particularly in limited conduit or duct spaces.

ULTRA-BROADBAND ACCESS AND THE 'LAST MILE'

     Given its superior bandwidth capability, ease of maintenance, improved data
integrity and network reliability, fiber optic cable has become the
communication medium of choice for wide-area networks and most metro service
areas and is increasingly used for broadband network access applications. Today,
high-speed connections operate at data transmission rates from 155 Mbps to 2.5
gigabits per second (Gbps) in metro service areas and up to 10 Gbps in long haul
networks.

     Regardless of the selected communications medium or data transmission rate,
the movement of all voice and data traffic throughout the telecommunications
network requires the use of software intensive communications protocols that
govern how information is passed between network infrastructure equipment. Voice
and data traffic is transported and switched using two principal types of
switching techniques, circuit switching and packet switching, each employing
different communications protocols. Ethernet refers to such a protocol for
preparing and sending information from a computer to be sent into the outside
world.

     Circuit switching, the most common technique for transporting and switching
ordinary telephone calls throughout the telecommunications network today, does
not use bandwidth efficiently and is not easily scalable to handle significant
increases in network data traffic. In response to increased voice and data
traffic, service providers accelerated their deployment of network
infrastructure equipment that employs packet switching techniques to use more
efficiently the available bandwidth to accommodate voice and data traffic.
Packet switching transports and switches voice and data traffic that has been
segmented into individual frames, cells or packets across the network and
reassembles the individual frames, cells or packets at their final destination.
Service providers use multiple packet switching protocols, including frame relay
(for frame transfer), asynchronous transfer mode (ATM) (for cell transfer),
Internet protocol (IP) (for packet transfer), and multiprotocol label switching
(MPLS) (for frame, cell and/or packet transfer), in different communications
applications. The telecommunications network, including the Internet, has
evolved into a complex, hybrid series of digital and optical networks that
connect individuals and businesses globally.

     While the creation, storage, transmission and switching networks and
technology have advanced significantly over the last decade, the bottle-neck
that remains between multipoint users (home or office) and broadcast/server
based distributors (ISPs or MSOs) is this Last Mile. The Equipment provides a
solution to the widely discussed "last mile" problem, to wit a cost effective
solution to bridging the gulf between users at home or work and the available
information networks.

DESCRIPTION OF THE EQUIPMENT

     The Development and Licensing Agreement contemplates that Lucent deliver to
the Company through September 1, 2004, design models of the following management
and routing equipment:

          (i) customer premise equipment designed to be located at the user's
     home or office to enable ultra-broadband access. This component will be
     referred to throughout as the "Residential Gateway 5200" or "RG 5200".

                                       -3-
<PAGE>

          (ii) distributed access switch designed to be located (at several
     points) on telephone poles or in the field, for purposes of routing data to
     the end user. This component will be referred to throughout as the
     "Polecat".

          (iii) Gigabit Ethernet MPLS switch designed to be located at the
     Central Office/Head End of the service provider. This component will be
     referred to throughout as the "Jaguar"

     Together, these three components are designed to provide the communication
protocols, software and hardware to implement a service provider's "triple play"
(voice, video and data) service package using Gigabit Ethernet access
technology, as shown in Figure 1 below.




                                    [PICTURE]




     FIGURE 1 represents the 'last mile' solution that the Equipment is intended
to address. The Jaguar is the Gigabit Ethernet MPLS in the Central Office/Head
End of the service provider. It allows the data to be properly taken off, and
put on the communications networks in an aggregated form. Up stream it sends the
packets of data, with the correct format and quality of service, to the desired
destination of "The Global Network." Downstream it sends the data to a network
of Polecats (located on telephone poles or in the field), which are a
distributed switch that gets the data to the right user location, in the right
format, with the right quality of service. The Polecat also acts as an
aggregation point to get the individual data streams back up to the Central
Office Switch on a single pipe with the appropriate communications header
information to allow two way communication between "The Global Network" and the
end user in a cost efficient and technologically manageable way. Finally, the
downstream and upstream data is processed by the Residential Gateway 5200
(located at home or office) which enables the interoperability of the data
coming off "The Global Network" in the form of voice, data, or video over
Ethernet to be received by the communications devices in the home, such as PCs,
phones, and TVs.

     The Company contemplates that it will receive four (4) fully operational
design models and manufacturing files of the RG5200 by March 31, 2004, two (2)
fully operational design models and manufacturing files of the Polecat by June
30, 2004 and one (1) fully operational design model and manufacturing file of
the Jaguar by August 31, 2004. No assurance can however be provided that models
of the Equipment will be delivered in accordance with the agreed upon schedule
or will be delivered at all. See "Risk Factors."

     The design models will be developed to specified technical design
specifications and will meet specified technical testing and performance
standards. The Development and Licensing Agreement contemplates that the Company
will be able to commence the

                                       -4-
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manufacture, production and sale of installable units from the design models.

     The design of each of the RG-5200 and the Polecat is substantially
complete. These design models are currently undergoing extensive system level
testing (to determine interoperability at the system level), regulatory
compliance testing and manufacturing process related testing. The Jaguar is in
the design stage and is currently undergoing performance modeling testing.
Thereafter, the Jaguar design model will also undergo extensive system level
testing, regulatory compliance testing and manufacturing process related
testing.

     It is contemplated that each of the RG-5200, the Polecat and the Jaguar
will be comprised of off-the-shelf pre-existing hardware components (e.g. chips,
components and connectors) and pre-existing software modules used by Lucent in
its other product offerings. In addition, it may be necessary to develop
software modules or modify existing ones.

     The equipment design models being developed by Lucent under the development
and licensing agreement represent prototypes being developed for first-time
commercial use by the Company. As part of proof of concept trials, Lucent
previously designed prototype units of the RG-5200 for internal testing. Prior
to the work on the Development Project, no prototypes of either of the Polecat
and the Jaguar were ever developed.

     To the Company's best knowledge, based on discussions with Lucent
personnel, there has been no commercial deployment by Lucent of any of the
equipment or other products substantially similar to the Equipment.

LICENSE TO DEVELOP AND MARKET THE EQUIPMENT

     Under the Development and Licensing Agreement, subject to the payment by
the Company to Lucent of the Payments (as defined below), the Company has a
non-exclusive, worldwide and perpetual license to the Lucent patents
incorporated in the Equipment and the deliverables from the Development Project
to manufacture and market the Equipment and derivative products (hereinafter,
the "Licensed Products"). Subject to certain standard restrictions, the Company
is entitled to sublicense to third-parties rights to manufacture and sell the
Licensed Products. Lucent is not restricted from using pre-existing Lucent
technologies or information that is incorporated in the Equipment. Lucent has
agreed, through January 2014, not to use any new Joint Inventions (defined
below) for the purpose of developing or selling any products that may directly
compete with the Equipment. See also "RISK FACTORS."

     All technologies and information, including the object or source code, that
are developed as direct result of the development efforts taken under the
Development Project are jointly owned by Lucent and the Company (a "Joint
Invention"). Lucent, however, is the sole owner of all pre-existing Lucent
technologies incorporated in the Equipment.

PAYMENTS IN RESPECT OF THE EQUIPMENT

     In consideration for the development of the Equipment and Lucent's other
obligations under the Development and Licensing Agreement, including its
agreement to provide continuing technical and marketing assistance following the
development of the Equipment (discussed below), the Company has remitted to
Lucent as of March 4, 2004, $1.2 million. From March through June 2004, the
Company is obligated to pay to Lucent $50,000 a month. In respect of each of
July and August 2004, the Company is required to pay to Lucent $250,000 per
month. The above payments aggregate $1.9 million.

     The last two final Payments of $500,000 and $600,000 are due, respectively,
by December 2004 and March 2005; PROVIDED, that, if Lucent fails to deliver to
the Company by September 1, 2004 design models of all of the Equipment, then the
Company is entitled to delay each of these two last Payment by one year.
Notwithstanding the foregoing, if the

                                       -5-
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Company signs a revenue-generating contract valued at $10 million or more, then
it will remit these Payments. Should Lucent not deliver all Equipment design
models by November 15, 2004, then the Company shall have the right (but not the
obligation) to withhold the last two payments and only if the Company exercises
such right, then Lucent will not be required to continue with its development
obligations under the agreement. Lucent's other obligations under the
Development and Licensing Agreement, as well as the licenses granted to the
Company thereunder, continue in full force and effect.

     Under the Development and Licensing Agreement, Lucent is entitled to
royalties of 3.2% of revenues, if any, received by the Company from the sale or
license of the Equipment. Where Lucent has expended substantial sales efforts
(the extent and amount of such sales efforts being subject to mutual agreement),
then it is entitled to 7% of revenues received from such customer.

     The Company and Lucent agreed to share equally the payment of third party
licensing fees, estimated at $220,000 and also to share equally the payments
aggregating approximately $700,000 in respect of specified regulatory
specification and to satisfy certain customer driven requirements.

     The Company will need to raise at least an additional $3 million in the
next 12 months in order to satisfy its contractual obligations under the
Development and Licensing Agreement and in order to realize its business plans.
While management is actively investigating several options to raise capital, no
assurance can be given that the Company will be able to raise any funds on
commercially reasonable basis. If the Company is unable to secure such financing
on commercially reasonable terms, it may not be able to continue its operations.
Management anticipates that any successful financing that it may be able to
obtain will result in significant dilution to present stockholders. See "item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operation." See also "Risk Factors."

SALES AND MARKETING

     The Company's current strategy anticipates that it will try to generate
revenues from the sale or license of the Equipment. The current business plan
contemplates that the initial targets will be telecommunications carriers,
service providers, governments and municipalities around the globe. The
Company's business model contemplates that it will be marketing all of the three
units of the Equipment. However, the Company believes that each product can be
marketed as a stand-alone product. For example, the RG5200 can be utilized with
distribution switches from other vendors; the Polecat can be used as a
general-purpose aggregation switch; and the Jaguar can be used as a standalone
carrier-class Gigabit Ethernet switch with MPLS capability for applications
other than FTTP. Additionally, the Company believes that the Equipment can
interface with other vendors' equipment.

     Under the Development and Licensing Agreement, Lucent has agreed to make
available to the Company through January 2006 qualified personnel for up to an
average of 80 hours a month to provide specified technical and marketing
assistance, including interfacing with prospective customers of the Equipment
and with prospective third party manufacturers and assisting with installation
and testing of the Equipment. Lucent has also agreed to the use by the Company
of the Lucent logo in connection with the sale and marketing of the Equipment.
See also "RISK FACTORS."

     The Company presently has no agreement with any carrier or other party
respecting any revenue generating arrangement relating to the Equipment and no
assurance can be provided that the Company will in fact be able to enter into
such arrangements on terms that are commercially acceptable to it. The Company's
succes is subject to many risks. See "Risk Factors."

                                       -6-
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     The Company presently has very limited marketing capabilities and financial
resources and will not be able to effect its business plan without raising
significant capital. The Company currently has no commitments respecting
relating to such financing and no assurance can be provided that the Company
will be successful in obtaining financing on commercially acceptable terms. See
"Risk Factors."

     We do not own or operate facilities for device assembly and final test of
the Equipment or other products. Subject to raising capital, we expect to
outsource assembly and testing of our prospective products to independent,
third-party contractors.

COMPLIANCE WITH REGULATORY AND INDUSTRY STANDARDS

     The market for telecommunications equipment is characterized by a
significant number of laws, regulations and standards, both domestic and
international, some of which are evolving as new technologies are deployed. See
"Risk Factors."

     Under the Development and Licensing Agreement, Lucent is required to obtain
certain specified regulatory certifications and satisfy certain customer driven
requirements (collectively, the "Certifications"). It is anticipated that the
aggregate costs of these Certifications will be approximately $700,000 and is to
be equally shared by Lucent and the Company.

     The Company anticipates that the certification requirements will be
detailed in the Equipment specification documents to be prepared by the Lucent
team and that all certifications will be obtained by Lucent's engineering team.
No assurance can be given that the Certifications will in fact be obtained.
Failure to obtain the Certifications as contemplated under the Development and
Licensing Agreement may have a material adverse effect on the Company's
prospects and its proposed business.

COMPETITION

     The market for fiber optic subsystems and modules is highly competitive and
the Company expects competition to intensify in the future. The Company's
prospective primary competitors include Alcatel, Salira, Optical Solutions,
Wave7 Optics, World Wide Packets, AFC and Huawei. The Company will also face
indirect competition from public and private companies providing products that
address the same fiber optic network problems that our equipment is designed to
address. The development of copper based alternative solutions to fiber optic
transmission problems by competitors, particularly systems companies that also
manufacture modules, could significantly limit the Company's prospective and
harm its competitive position.

     Many of potential competitors have longer operating histories, greater name
recognition and significantly greater financial, technical, sales and marketing
resources than the Company will have. As a result, these competitors are able to
devote greater resources to the development, promotion, sale and support of
their products. In addition, these entities have large market capitalization or
cash reserves are in a much better position to acquire other companies in order
to gain new technologies or products. In addition, many of the Company's
competitors have much greater brand name recognition, more extensive customer
bases, more developed distribution channels and broader product offerings than
we do. These companies can use their broader customer bases and product
offerings and adopt aggressive pricing policies to gain market share.

     The Company expects competitors to introduce new and improved products with
lower

                                       -7-
<PAGE>

prices, and we will need to do the same to remain competitive. The Company may
not be able to compete successfully against either current or future competitors
with respect to new products.

GOVERNMENT REGULATION

     The telecommunications industry is subject to extensive regulation by
federal and state agencies, including the Federal Communications Commission (the
"FCC"), and various state public utility and service commissions. Regulations
affecting the availability of broadband access services generally, the terms
under which telecommunications service providers conduct their business, and the
competitive environment among service providers, for example, could have a
negative impact on the Company's new business.

RESEARCH & DEVELOPMENT/TECHNICAL SUPPORT

     The Company does not currently undertake any research and development
efforts. Three of the Company's employees currently provide sales, marketing,
customer service, product realization, overseeing the outsourcing and
manufacturing, customer deployment and service, project management, budget
expense management and internal infrastructure operations.

     Pending the receipt of the Equipment models, the raising of capital and the
commencement and operations of the Company's new business, the Company
anticipates that it may commence providing technical support and/or research and
development activities.

PROPRIETARY RIGHTS

     The Company currently relies on a combination of trade secret, patent,
copyright and trademark law, as well as non-disclosure agreements and
invention-assignment agreements, to protect the technologies used in the
Equipment and other proprietary information. However, such methods may not
afford complete protection and there can be no assurance that other competitors
will not independently develop such processes, concepts, ideas and
documentation. The Company is the licensee of the technologies under patents and
included in the Equipment. Lucent generally maintains, at its expense, U.S. and
foreign patent rights with respect to both the licensed technology and its own
technology and files and/or prosecutes the relevant patent applications in the
U.S. and foreign countries. The Company also relies upon trade secrets,
know-how, continuing technological innovations and licensing opportunities to
develop our competitive position. The Company intends to file additional patent
applications, when appropriate, relating to its technology, improvements to its
technology and to specific products it develops.

     The Company's policy is to require our employees, consultants, other
advisors, as well as software design collaborators, to execute confidentiality
agreements upon the commencement of employment, consulting or advisory
relationships. These agreements generally provide that all confidential
information developed or made known to the individual by us during the course of
the individual's relationship with the Company is to be kept confidential and
not to be disclosed to third parties except in specific circumstances. In the
case of employees and consultants, the agreements provide that all inventions
conceived by the individual in the course of their employment or consulting
relationship shall be our exclusive property. There can be no assurance,
however, that these agreements will provide meaningful protection or adequate
remedies for trade secrets in the event of unauthorized use or disclosure of
such information.

MANAGEMENT RESTRUCTURE

     In the course of 2003 and in connection with the Company's new business,
the Company's senior management was reorganized. Mr. Frank Galuppo, the
Company's Chief Executive Officer, was appointed to lead the Company immediately
following stockholder approval of the Transaction. Mr. Galuppo has nearly 40
years experience in the telecommunication and related fields. Mr. Galupoo has
also been appointed to the Company's Board of Directors.

     The Company's former Chief Executive Officer, Mr. Daniel C. Stein, who was
hired in May 2002 and oversaw the sale of the Company's Copy Protection
Business, resigned in October 2003 from his position and also from the Company's
board of directors (the "Board"). Between July and September 2003, a majority of
the Board's members were replaced through resignations and new appointments so
that only Mr. Sam Brill, the Company's Chief Operating Officer, is the only
current continuing director. Upon Mr. Stein's resignation, Mr. Judah Marvin
Feigenbaum, a new director appointed to the Company's Board of Directors in
August 2003, was appointed interim Chief Executive Officer. On January 28, 2004,
Mr. Feigenbaum resigned from the all positions held with the Company. Subsequent
to Mr. Feigenbaum's resignation and prior to Mr. Galuppo's appointment, Mr. Sam
Brill, the Company's Chief Operating Officer, supervised the day-to-day
management of the Company's business.

EMPLOYEES

                                       -8-
<PAGE>

     The Company employs four full-time employees, including its Chief Executive
Officer and the Chief Operating Officer.

     Subject to raising additional capital, the Company anticipates that it may
need to increase the number of its employees. The Company's future performance
will depend highly upon its ability to attract and retain experienced personnel.
The hiring of such personnel is competitive and there can be no assurance that
the Company will be able to attract and retain qualified personnel for the
development of its new business.

MINORITY SUBSIDIARY

     In July 2000, the Company purchased a 50% equity interest in ComSign Ltd.
"ComSign"), an Israeli based company which is the marketer in Israel and in the
territories controlled by the Palestinian Authority of VeriSign Inc.'s digital
authentication certificates and related services. The remaining 50% equity
interest in ComSign continued to be held by a private company based in Israel.
VeriSign, Inc. is a leading provider of Internet based trust services. The
agreement between ComSign and VeriSign provided ComSign with the rights to
market these services in the designated territory for a period of six years and
a sharing of revenues derived from these activities.

     The Company disclosed in its Form 10-K for the year ended December 31, 2002
that it wrote-off the remaining goodwill and the balance of its investment in
ComSign, Ltd. during the year ended 2002. During the year ended December 31,
2003, the Company sold its equity interest in ComSign, Ltd. for $40,000 to in
the original stockholder. Since the Company had previously written off this
entire investment, the $40,000 has been recorded as a gain on sale of its
investment in ComSign, Ltd. during the quarter ended June 30, 2003.

INACTIVE SUBSIDIARY

     The Company has a wholly-owned inactive Israeli subsidiary, TTR Ltd. The
Company currently conducts no business through such subsidiary. In the past when
the Company conducted its Copy Protection Business, it conducted its research
and development efforts through TTR Ltd.

COMPANY HISTORY AND BACKGROUND

     The Company was incorporated under Delaware law in July 1994. The principal
executive office of the Company is located at 4424 16th Avenue, Brooklyn, New
York 11204.

AVAILABLE INFORMATION

     The Company's Internet website is located at www.ttrtech.com. We make
available free of charge on our website Internet hyperlinks to our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and
amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Exchange Act, as soon as reasonably practicable after we
electronically file such material with, or otherwise furnish it to, the
Securities and Exchange Commission (the "SEC"). The reference to the Internet
website does not constitute incorporation by reference of the information
contained on or hyperlinked from the Internet website and should not be
considered part of this document.

     The public may also read and copy any materials we file with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549.
The public may obtain information on the operation of the Public Reference Rooms
by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC. The SEC's Internet
website is located at http://www.sec.gov.



                                  RISK FACTORS

                                       -9-
<PAGE>

     Our new business is subject to many risks. If any of these risks occurs,
our business, financial condition or operating results could be adversely
affected.

     THE COMPANY WILL NEED TO RAISE ADDITIONAL CAPITAL TO REALIZE ITS BUSINESS
PLAN.

     As of the filing of this Annual Report on Form 10-K, the Company's
available cash is approximately $1.5 million. Under the Development and
Licensing Agreement, the Company has remitted to Lucent $1.25 million as of the
filing of this annual report on Form 10-K and will be required to remit up to an
additional $2.1 million for fully operational models of all of the Equipment,
associated third party licensing fees and the obtaining of certain initial
regulatory approvals. The Company will need to raise at least $3 million within
the next 12 months in order to comply with its obligations under the Development
and Licensing Agreement and to begin effecting its business plan as currently
contemplated. These funds will be necessary to retain qualified personnel,
establish manufacturing arrangements, fulfill continuing obligations under the
Development and Licensing Agreement, purchase inventory and provide working
capital. The Company currently has no legally binding commitments from which it
expects to raise the necessary cash resources and no assurance can be provided
that the Company will be able to raise this amount on commercially acceptable
terms. The inability to raise such cash will have a materially adverse effect on
the Company's prospects and its proposed business. Additionally, it is
anticipated that any successful capital raise will result in substantial
dilution to the existing stockholders.

     The report of the independent auditors on the Company's financial
statements for the year ended December 31, 2003 includes an explanatory
paragraph relating to the uncertainty of the Company's ability to continue as a
going concern. The Company anticipates that the "going concern" qualification
will make it more difficult for the Company to raise additional capital.

     THE COMPANY MAY PAY TO LUCENT SIGNIFICANT AMOUNTS BEFORE RECEIVING FULLY
OPERATIONAL DESIGN MODELS OF THE EQUIPMENT.

     Under the Development and Licensing Agreement, Lucent has undertaken to
exercise reasonable commercial efforts to develop (in accordance with agreed
upon specifications) and deliver to the Company fully operational design models
of the Equipment by August 15, 2004. Subject to certain conditions, the Company
is required to make Payments periodically in agreed upon amounts in an amount
aggregating $1.9 million by specified dates. However, Lucent is not responsible
for any unforeseen contingencies that may delay delivery dates. Accordingly, the
Company may have paid out $1.9 million before receipt of design models of all,
or any, of the Equipment. Late delivery or non-delivery of design packages of
all of the Equipment may be an impediment to the conclusion by the Company of
sales or licensing contracts.

     No assurance can be provided that the Company will receive timely delivery
of all of the Equipment design packages. Late delivery or non-delivery of all of
the design packages as contemplated under the Development and Licensing
Agreement could have a material adverse effect on the Company's prospects and
its proposed business.

     LUCENT IS NOT INDEMNIFYING THE COMPANY FOR THIRD-PARTY PATENT OR COPYRIGHT
INFRINGEMENT CLAIMS RELATING TO THE EQUIPMENT.

     The Equipment include various and complex technologies. While Lucent has
represented to the Company that it has not received any notice of claim of
infringement of any patent, copyright or other intellectual property right of a
third party with reference to the technologies or other material or information
included or to be incorporated into the

                                       -10-
<PAGE>

Equipment, and that, to the best knowledge and belief of its employees actually
involved in the work contemplated by Development Project such technologies or
information or other materials do not infringe on any patent, copyright, or
other proprietary rights of a third party, no assurance can be given that the
Company will not be subject to intellectual property infringement claims that
are costly to defend and that could limit the Company's ability to market and
sell the Equipment or otherwise use the technologies included in such equipment.
Lucent is under no obligation to indemnify the Company in the event of such
suit. See "Principal Terms of the Development and Licensing Agreement - Claims
as to Infringement of a Third Party Patent or Copyright." The Company did not
perform a technical due diligence relating to the technologies included or to be
included in the Equipment.

     The telecommunications equipment field is characterized by significant
patent infringement litigation. The Company could be subject to litigation
alleging infringement of a third party's right. Litigation could be expensive,
lengthy and disruptive to management's attention and detract resources from
normal business operations. Adverse determinations could prevent the Company
from manufacturing or selling the Equipment or any future derivative products.
It may also subject the Company to significant liabilities and require that it
seek licenses from third parties. In such case, no assurance can be furnished
that licenses will be available on commercially reasonable terms, if at all,
from any third party that asserts intellectual property claims against the
Company. Any inability to obtain third party licenses required to manufacture or
sell the Equipment or derivative products could materially adversely affect the
Company's business and its prospects.

     THE SUCCESS OF THE COMPANY, AT LEAST INITIALLY, WILL BE DEPENDENT TO A
LARGE EXTENT ON LUCENT'S COOPERATION.

     The Company's current business model projects that Lucent will assist the
Company in identifying likely manufacturing sources and prospective customers.
However, Lucent is under no obligation to furnish the Company with such
assistance.

     Under the Development and Licensing Agreement, Lucent is required to
furnish to the Company designated technical, marketing and sales assistance only
through January 2006 in an aggregate amount of 80 person-hours per month. No
assurance can be provided that the Company will be successful in identifying an
appropriate replacement on commercially reasonable terms if Lucent if Lucent
does not furnish such services. The inability of the Company to find such
replacement could materially adversely affect the Company's prospects and its
business.

     Under a separate agreement entered into in connection with the Development
and Licensing Agreement, the Company is entitled to co-brand the Equipment using
the Lucent logo and to otherwise advise prospective customers that the
underlying technology was developed by Lucent. Management believes that the
Company's right to market the Equipment using the Lucent logo to be a material
element of a successful business plan. However, the agreement specifying the
Company's co-branding rights entitles Lucent, upon written notice, to terminate
the co-branding rights if, in Lucent's sole discretion, the Company's continued
use of the co-branding logo, adversely affects Lucent's rights to the mark. No
assurance can be provided that Lucent will not elect at some future date to
terminate the Company's use of the Lucent logo or the Company's ability to
advertise the origins of the underlying technology. Lucent's withdrawal of the
co-branding rights could have a material adverse effect on the Company's
prospects and its proposed business.

     THE COMPANY'S PROSPECTIVE MARKETS ARE HIGHLY COMPETITIVE.

     The market for fiber optic subsystems and modules is highly competitive and
the Company expects competition to intensify in the future. The Company's
prospective primary competitors include Alcatel, Salira, Optical Solutions,
Wave7 Optics, World Wide Packets,

                                      -11-
<PAGE>

AFC and Huawei. The Company will also face indirect competition from public and
private companies providing products that address the same fiber optic network
problems that our equipment is designed to address. The development of copper
based alternative solutions to fiber optic transmission problems by competitors,
particularly systems companies that also manufacture modules, could
significantly limit the Company's prospective and harm its competitive position.

     Many of potential competitors have longer operating histories, greater name
recognition and significantly greater financial, technical, sales and marketing
resources than the Company will have. As a result, these competitors are able to
devote greater resources to the development, promotion, sale and support of
their products. In addition, these entities have large market capitalization or
cash reserves are in a much better position to acquire other companies in order
to gain new technologies or products. In addition, many of the Company's
competitors have much greater brand name recognition, more extensive customer
bases, more developed distribution channels and broader product offerings than
we do. These companies can use their broader customer bases and product
offerings and adopt aggressive pricing policies to gain market share.

     The Company expects competitors to introduce new and improved products with
lower prices, and we will need to do the same to remain competitive. The Company
may not be able to compete successfully against either current or future
competitors with respect to new products.

     Additionally, under the Development and Licensing Agreement, the Company
has a non-exclusive, worldwide and perpetual license to develop and market the
Equipment. Lucent has agreed, through January 2014, not to use technologies
developed in the course of the Development Project for the purpose of developing
or selling any products that may directly compete with the Equipment. Lucent is
not restricted from using pre-existing Lucent technologies or information
contained in the Equipment. The Company can provide no assurance that Lucent
will not in fact design, develop and market technologies or products that serve
the same functionality as the Equipment. These products can effectively compete
with the Company's proposed business. The Company cannot predict the ease with
which Lucent would be able to develop and market products substantially similar
in function or design to the Equipment. See "Description of the Equipment" and
"Principal Terms of the Development and Licensing Agreement." If Lucent were to
successfully develop and market such similar products, then the Company's
prospects and proposed business would be materially adversely affected.

     THE COMPANY DEPENDS ON ATTRACTING AND RETAINING KEY PERSONNEL

     The Company is highly dependent on principal members of its management and
technology staff. The loss of the services of any of any of these personnel,
especially its Chief Executive Officer, Mr. Frank Galuppo, might significant
delay or prevent the achievement of development or strategic objectives. The
Company's success depends on its ability to retain key employees and to attract
additional qualified employees. The Company cannot assure you that it will be
able to retain existing personnel or attract and retain highly qualified
employees in the future.

     THE COMPANY MAY INVEST A SIGNIFICANT AMOUNT OF ITS RESOURCES TO DEVELOP,
MARKET AND SELL THE EQUIPMENT AND MAY NOT REALIZE ANY RETURN ON THIS INVESTMENT.

     If the Equipment does not quickly achieve market acceptance, it may become
obsolete before enough revenue has been generated from the sales or license of
these products to realize a sufficient return on investment. Furthermore, the
rapidly changing technological environment in which the Company expects to
operate if Stockholders approve the

                                      -12-
<PAGE>

Transaction can require the frequent introduction of new products, resulting in
short product lifecycles. Under the Development and Licensing Agreement, Lucent
is not required to modernize or enhance the Equipment. If the Company incurs
substantial development, sales, marketing and inventory expenses that it is
unable to recover, and is unable to compensate for such expenses, the Company's
prospects and proposed could be materially and adversely affected.

     In addition, the Company has not undertaken a comprehensive due diligence
examination or study of the technologies contained in the Equipment, including,
without limitation, an investigation as to proprietary title to the technologies
being used. Under the Development and Licensing Agreement, the Company is
receiving from Lucent limited warranties as to the performance of the Equipment.
No assurance can be provided that the Equipment will operate as contemplated.

     THE COMPANY IS ENGAGED IN A HEAVILY REGULATED INDUSTRY.

     The jurisdiction of the FCC extends to the entire communications industry,
including potential customers for the Equipment. Future FCC regulations
affecting the broadband access industry may harm the Company's new business. For
example, FCC regulatory policies affecting the availability of data and Internet
services may impede the penetration of the Equipment into certain markets or
affect the prices that may be charged in such markets. In addition,
international regulatory bodies are beginning to adopt standards and regulations
for the broadband access industry. These domestic and foreign standards, laws
and regulations address various aspects of Internet, telephony and broadband
use, including issues relating to liability for information retrieved from or
transmitted over the Internet, online context regulation, user privacy,
taxation, consumer protection, security of data, access by law enforcement,
tariffs, as well as intellectual property ownership, obscenity and libel.
Changes in laws, standards and/or regulations, or judgments in favor of
plaintiffs in lawsuits against service providers, e-commerce and other Internet
companies, could adversely affect the development of e-commerce and other uses
of the Internet. This, in turn, could directly or indirectly materially
adversely impact the broadband telecommunications and data industry in which our
customers operate. To the extent our customers are adversely affected by laws or
regulations regarding their business, products or service offerings, this could
result in a material and adverse effect on our business, financial condition and
results of operations.

     In addition, many of the Company's potential customers will require that
the Company's products be designed to interface with their customers' existing
networks, each of which may have different specifications, utilize multiple
protocol standards and contain multiple generations of products from different
vendors. If our products cannot operate in such an environment, they may not
achieve market acceptance and our ability to generate revenue would be seriously
impaired.

     THE TELECOMMUNICATIONS EQUIPMENT MARKET IS HIGHLY CYCLICAL.

     The Company is engaged in the telecommunications equipment industry, which
is cyclical and subject to rapid technological change. Recently, the industry
has begun to emerge from a significant downturn characterized by diminished
product demand, accelerated erosion of prices and excess production capacity.
The current downturn and future downturns in the industry may be severe and
prolonged. Future downturns in the telecommunications equipment industry, or any
failure of this industry to fully recover from its recent downturn, could
seriously impact the Company's proposed business plan and harm its prospects and
proposed business. This industry also periodically experiences increased demand
and production capacity constraints, which may affect the Company's ability to
ship Equipment or other products in future periods.

     AS THE COMPANY EXPECTS TO DEPEND UPON A SMALL NUMBER OF

                                      -13-
<PAGE>

OUTSIDE CONTRACTORS TO MANUFACTURE THE EQUIPMENT, ITS OPERATIONS COULD BE
DELAYED OR INTERRUPTED IF IT ENCOUNTERS PROBLEMS WITH ANY OF THESE CONTRACTORS.

     The Company does not intend on establishing internal manufacturing
capabilities, and expects to rely upon a small number of outside contractors to
manufacture the Equipment and any future products that it may market. This
reliance involves a number of risks, including the possible absence of adequate
capacity and reduced control over component availability, delivery schedules,
manufacturing yields and costs. If any of the Company's prospective
manufacturers are unable or unwilling to continue manufacturing the Equipment or
other products in required volumes and at high quality levels, the Company will
have to identify, qualify and select acceptable alternative manufacturers. It is
possible that an alternate source may not be available to the Company when
needed or may not be in a position to satisfy production requirements at
commercially reasonable prices and quality. Any significant interruption in
manufacturing may require the Company to reduce the supply of products to its
customers, which in turn could have a material adverse effect on customer
relations, business, financial condition and results of operations.

     UNDER THE PURCHASE AGREEMENT WITH MACROVISION, THE COMPANY MAY BE REQUIRED
TO PAY SIGNIFICANT AMOUNTS TO MACROVISION WITH RESPECT TO INDEMNITIES.

     Under the Purchase Agreement respecting the sale of the Copy Protection
Business, the Company undertook to indemnify Macrovision for certain losses as
set forth in the Purchase Agreement. The Company's indemnification obligations
are limited by an overall cap of $5.25 million, except with respect to matters
relating to any bulk sales laws, fraudulent conveyance laws, or certain pre-sale
contractual liabilities. The payment of any such indemnification obligations may
adversely impact the Company's cash resources and materially adversely affect
its business and prospects.

     THE COMPANY'S COMMON STOCK HAS EXPERIENCED IN THE PAST, AND IS EXPECTED TO
EXPERIENCE IN THE FUTURE, SIGNIFICANT PRICE AND VOLUME VOLATILITY, WHICH
SUBSTANTIALLY INCREASE THE RISK OF LOSS TO PERSONS OWNING THE COMPANY'S COMMON
STOCK.

     Because of the limited trading market for the Company's Common Stock, and
because of the possible price volatility, a stockholder may not be able to
purchase or sell shares of the Company's Common Stock when he/she/it desires to
do so. The inability to sell shares in a rapidly declining market may
substantially increase an investor's risk of loss because of such illiquidity
and because the price for the Company's Common Stock may suffer greater declines
because of its price volatility.

     THERE MAY BE SIGNIFICANT LIMITATIONS TO THE UTILIZATION OF NET OPERATING
LOSSES TO OFFSET FUTURE TAXABLE INCOME.

     Management estimates that the Company has a net operating loss
carry-forward (NOL) of approximately $20 million, which will be available to
offset future U.S. taxable income subject to limitations under Section 382 of
the Internal Revenue Code pertaining to changes in stock ownership. TTR Ltd.,
the Company's wholly owned Israeli subsidiary, has a net operating loss
carryforward of approximately $6 million available to offset future taxable
income in Israel.

     No assurance can be provided that under prevailing law all, or even any
part, of the NOL will be available to offset future income.

     IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE THE COMPANY.

                                      -14-
<PAGE>

     Provisions of Delaware law could make it more difficult for a third party
to acquire the Company, even if it would be beneficial to the Company's
stockholders.

     PENNY STOCK REGULATIONS ARE APPLICABLE TO INVESTMENT IN SHARES OF THE
COMPANY'S COMMON STOCK.

     Broker-dealer practices in connection with transactions in "penny stocks"
are regulated by certain penny stock rules adopted by the Securities and
Exchange Commission. Penny stocks generally are equity securities with a price
of less than $5.00 (other than securities registered on certain national
securities exchanges or quoted on the Nasdaq system, provided that current
prices and volume information with respect to transactions in such securities
are provided by the exchange or system). The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules generally require that prior to a transaction in a penny
stock the broker-dealer make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser's
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules. Many brokers will not deal
with penny stocks; this restricts the market.

ITEM 2. PROPERTIES.

     The Company maintains office premises in Brooklyn, New York, for its
executive and administrative activities. The Company also maintains office space
at Lucent's premises in Holmdel, New Jersey. Management believes that the
Company will be able to either continue the present arrangement with Lucent or
obtain suitable replacement facilities as the Company grows.

     Subject to raising additional capital, the Company anticipates that it will
be consolidating and leasing appropriate offices spaces in fiscal 2004.

ITEM 3. LEGAL PROCEEDINGS.

     The Company is or has been involved in the following legal proceedings:

     (i) On or about June 20, 2003, the Company initiated litigation in the
Supreme Court of the State of New York, County of Westchester, against Ripp
Entertainment Group, Inc. ("Ripp"), seeking the sum of $130,000 on a defaulted
promissory note. Ripp removed the case to Federal Court and filed an answer with
two counterclaims against the Company, seeking (a) compensatory damages in
excess of $1,000,000 and punitive damages in the amount of $3,000,000 for
allegedly fraudulently inducing Ripp to enter into a certain Consulting
Agreement with the Company, and (b) damages in excess of $210,000 for the
Company's alleged failure to pay Ripp for services rendered under the Consulting
Agreement. In November 2003, a settlement was reached pursuant to which the
Company's claims and Ripp's counterclaims were dismissed with prejudice.
Pursuant to the settlement, Ripp surrendered to the Company the 150,000 stock
options which it had obtained under the Consulting Agreements dated June 27,
2001 and September 25, 2000.

     (ii) On August 14, 2002, nine purported stockholders of the Company filed a
complaint against the Company, eight of its current or former officers and
several third parties in the United States District Court for the Southern
District of New York. The action, which is

                                      -15-
<PAGE>

known as EILENBERG ET AL. V. KRONITZ ET AL. (02 Civ. 6502), alleges, among other
things, that the Company issued a series of false and misleading statements,
including press releases, that misled the plaintiffs into purchasing the
Company's common stock (hereinafter, the "Eilenberg Action"). The complaint
seeks relief under federal securities laws and common law, and demands
compensatory damages of $7 million or more, and punitive damages of $50 million
or more. The Company believes it has meritorious defenses to this lawsuit. The
Company and most of its current or former officers have filed a motion based
upon the federal securities laws to dismiss the complaint for failure to state a
claim and to plead with particularity under Rule 9(b) of the Federal Rules of
Civil Procedure. After hearing arguments on November 26, 2002, the Court granted
defendants' motion to dismiss the complaint based on Rule 9(b). Plaintiffs filed
an amended complaint, and the Court held a settlement conference on June 24,
2003. Following this settlement conference, the Court adjourned the time for the
Company and all defendants to respond to the amended complaint without date in
order to facilitate settlement negotiations.

     (iii) Counsel for the EILENBERG plaintiffs filed a second action against
the Company and several of its current or former officers in the same court on
August 21, 2002, this time on behalf of three additional purported stockholders
as plaintiffs. This action, which is known as STURM ET AL. V. TOKAYER ET AL.
(602 Civ. 6672), alleged, among other things, that the Company had violated the
federal securities laws by distributing false and misleading materials in
connection with the annual shareholder meeting scheduled for August 26, 2002,
and that several officers and directors had breached duties to the Company and
committed acts of waste and mismanagement by paying excessive salaries to
themselves and others (the Sturm Action"). Plaintiffs promptly moved for a
temporary restraining order to enjoin the annual shareholder meeting from being
conducted on August 26, 2002. The Court denied this motion. The Company believes
it has meritorious defenses to this lawsuit. The Company and the other
defendants thereafter moved to dismiss the complaint for failure to state a
claim for relief. In response, the plaintiffs filed an amended complaint, which
deleted the prior claims concerning violations of the federal securities laws,
but continued to assert derivative claims for waste and mismanagement. The Court
denied defendants' motion to dismiss the latter claims but directed that
plaintiffs submit a more detailed verification to the amended complaint and
correct an allegation concerning one of the defendants. Plaintiffs have served
their Second Verified and Amended Complaint. Subsequent to the filing of this
Second Amended and Verified Complaint, and following a June 24, 2003 conference
with the Court, the Court adjourned the time for the Company and all defendants
to respond to the amended complaint without date in order to facilitate
settlement discussions.

     The Company notified the insurer that issued a directors and officers'
liability policy to the Company covering the period in which the filing of the
Eilenberg and Sturm actions occurred. The Company is seeking, among other
things, to recover its costs of defense to the extent provided in the policy.

     On November 17, 2003, The Company and the plaintiffs in each of the
Eilenberg Action and the Sturm Action entered into a settlement agreement (the
"Settlement Agreement") pursuant to which (i) the Company paid the plaintiffs in
the aggregate approximately $333,000 to the plaintiffs in the Eilenberg Action,
the parties exchanged mutual releases and (iii) the insurer made certain payment
to the plaintiffs. Under the Settlement Agreement, the Company and each of the
other named defendants in each of the Sturm Action and the Eilenberg Action
denied any violation of federal or state laws. By consent of the parties, on
December 1, 2003, United States District Court for the Southern District of New
York entered an order dismissing the each of the Eilenberg Action and the Sturm
Action with prejudice and without costs.

     (iv) The Company's former attorneys commenced an action in state court in
New York in January 2003 seeking unpaid legal fees in the approximate amount of
$324,000. The Company's answer denies the complaint's material allegations and
alleges as defenses that it was over-billed in unreasonable amounts and
otherwise damaged by the law firm's failure to

                                      -16-
<PAGE>

advise properly in the Sturm Action. While conducting discovery, the parties
engaged in settlement negotiations. On October 29, 2003, the parties executed a
Settlement Agreement agreeing to resolve all outstanding claims with regard to
the dispute. Under the terms of the Settlement Agreement, the Company's former
attorneys dismissed all outstanding claims in the action with prejudice and the
Company agreed to pay the Company's former attorneys $133,898.54 with respect to
its invoices in the Sturm Action, $73,748.32 with respect to its invoices in the
Eilenberg Action, and $42,353.14 with respect to general Company matters. The
parties also exchanged mutual general releases.

     From time to time the Company has been involved in other disputes and legal
actions arising in the ordinary course of business. In management's opinion,
none of these other disputes and legal actions is expected to have a material
impact on the Company's business or cash flow.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to the Company's stockholders during the three
months ended December 31, 2003. PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

PRICE RANGE OF COMMON STOCK

     As of January 8, 2003, the Company's common stock, par value $0.001 per
share (the "Common Stock") began to be quoted on the OTC Electronic Bulletin
Board under the symbol "TTRE". From February 6, 2001 through January 7, 2003,
the Common Stock was quoted on the NASDAQ National Market. Prior to its
quotation of the NASDAQ National Market, the Company's Common Stock, commencing
October 23, 2000 through February 5, 2001, was quoted on the NASDAQ SmallCap
Market. Prior to the NASDAQ SmallCap listing, the Common Stock was quoted on the
OTC Electronic Bulletin Board.

     The following table sets forth the range of high and low bid prices for the
Common Stock as reported on the relevant NASDAQ National Market System, the
NASDAQ SmallCap Market and the OTC Electronic Bulletin Board by the National
Association of Securities Dealers, Inc., Automated Quotations System for the
periods indicated.

                                  Common Stock
Quarter Ended                                                 High         Low

2003
December 31                                                   $.34        $.13
September 30                                                  $.46        $.16
June 30                                                       $.50        $.30
March 31                                                      $.49        $.14

2002
December 31                                                   $.29        $.12
September 30                                                  $.57        $.10
June 30                                                       $1.32       $.22
March 31                                                      $1.84       $.81

     The foregoing represent inter-dealer prices, without retail mark-up,
mark-down or commission, and may not necessarily represent actual transactions.

     As of March 23, 2004, there were approximately 133 record holders of the
Common

                                      -17-
<PAGE>

Stock of the Company. The Company believes that there are a significant number
of shares of Common Stock held either in nominee name or street name brokerage
accounts and consequently, the Company is unable to determine the number of
beneficial owners of the Common Stock.

DIVIDEND POLICY

     The Company has paid no dividends on its Common Stock and does not expect
to pay cash dividends in the foreseeable future. It is the present policy of the
Board to retain all earnings to provide funds for the growth of the Company. The
declaration and payment of dividends in the future will be determined by the
Board based upon the Company's earnings, financial condition, capital
requirements and such other factors as the Board may deem relevant. The Company
is not under any contractual restriction as to its present or future ability to
pay dividends.

EQUITY COMPENSATION PLAN INFORMATION

     The following table sets forth, as of December 31, 2003, certain required
information relating to the shares of Common Stock issuable on an aggregated
basis under the Company's 1996 Stock Option Plan, the 2000 Equity Incentive
Plan, the 1998 Directors' Plan and the 2002 Non-Employee Directors' Stock Option
Plan.

<TABLE>
<CAPTION>
                                               EQUITY COMPENSATION PLAN INFORMATION

            Plan Category                  Number of       Weighted-          Number of
                                         securities to      average           securities
                                           be issued    exercise price of     remaining
                                             upon          outstanding      available for
                                          exercise of       options,           future
                                          outstanding       warrants          issuance.
                                           options,        and rights
                                         warrants and
                                            rights
                                              (a)             (b)                 (c)
<S>                                      <C>               <C>               <C>
Equity compensation plans approved by
           security holders                2,000,175         $3.50             2,564,391

Equity compensation plans not approved
         by security holders                 500,000         $7.50                 -
                                          ----------                           ---------
               Total                       2,500,175         $4.30             2,564,391
                                          ==========                           =========
</TABLE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.

     The following table sets forth the Company's consolidated financial data
for the five years ended December 31, 2003. The selected consolidated financial
data for the years ended December 31, 1999, 2000, 2001 and 2002 are derived from
the Company's consolidated financial statements for such years, which have been
audited by Brightman Almagor & Co., a member of Deloitte Touche Tohmatsu, the
Company's previous independent auditors. The selected consolidated financial
data for the years ended December 31, 2003 are derived from the Company's
consolidated financial statements for such year, which have been audited by
Marcum & Kliegman, the Company's independent auditors for the year ended
December 31, 2003. The consolidated financial data set forth below should be
read in conjunction with the Company's Consolidated Financial Statements and
related Notes and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included elsewhere in this report.

                                      -18-
<PAGE>
<TABLE>
<CAPTION>

                                                                                                             From inception
                                               Year Ended December 31,                                       (July 14,1994)
                                                                                                               to December
Income Statement Data:       1999          2000            2001            2002           2003
<S>                       <C>           <C>              <C>             <C>            <C>                    <C>
Revenues                    $68,803       $1,999           $--             $--            $--                    $125,724
Total expenses             $7,944,252     $5,107,978       $5,153,724      $4,107,986     $1,942,650          $34,736,338
Operating loss            ($7,875,449)   ($5,105,979)     ($5,153,724)    ($4,107,986)   ($1,942,650)        ($34,610,614)
Net Income (loss)         ($13,072,237)  ($4,796,693)     ($5,498,637)    ($5,244,751)    $3,466,602         ($36,903,827)

Net Income (loss) per share ($2.07)       ($0.30)          ($0.31)         ($0.29)        $0.20
Weighted average shares
Outstanding                 6,321,719     16,006,403       17,560,013      17,827,893     17,186,233


                                               Year Ended December 31,
                         1999          2000             2001             2002          2003
Balance Sheet Data:
  Working  capital
    (deficiency)      ($494,744)    $8,122,456       $4,495,617        $193,308      $3,064,797
  Total assets         $467,867    $10,348,713       $6,550,947        $814,944      $3,253,968
  Total liabilities    $798,863       $351,756       $1,134,730        $558,909        $186,871
  Total stockholders'
   equity (deficit)   ($330,996)    $9,996,957       $5,416,217        $256,035      $3,067,097
</TABLE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.

Overview

     From its inception in 1994 through the period immediately preceding the
date on which the Purchase Agreement relating to the sale of the Company's Copy
Protection Business was entered into, TTR was primarily engaged in the business
of designing and developing digital security technologies that provide copy
protection for electronic content distributed on optical media and the internet.
Following the consummation of the sale of the Copy Protection Business in May
2003 and the obtaining of stockholder approval for the Company to enter into the
transaction with Lucent in March 2004, the Company embarked on its new in the
field of telecommunication equipment.

     The Company has not had any significant revenues to date. As of December
31, 2003, the Company had an accumulated deficit of approximately $37 million.
The Company's expenses related primarily to expenditures on research and
development, marketing, recruiting and retention of personnel, costs of raising
capital and operating expenses incurred while it was engaged in the Copy
Protection Business.

CRITICAL ACCOUNTING POLICIES

     The Company's consolidated financial statements and accompanying notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the Company's management to make estimates, judgments and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses. The
Company continually evaluates the accounting policies and estimates it uses to
prepare the consolidated financial statements. The Company bases its estimates
on historical experience and assumptions believed to be reasonable under current
facts and circumstances. Actual amounts and results could differ from these
estimates made by management.

     The Company does not participate in, nor has it created, any off-balance
sheet special purpose entities or other off-balance sheet financing. In
addition, the Company does not enter into any derivative financial instruments
for speculative purposes and uses derivative

                                      -19-
<PAGE>

financial instruments primarily for managing its exposure to changes in interest
rates.


RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2003 COMPARED TO YEAR ENDED DECEMBER 31, 2002

     There were no revenues in 2003 or 2002.

     There were no research and development expenses in 2003, as the Company
consummated the sale of the Copy Protection Business in May 2003. Research and
development costs in 2002 were $701,629 and related primarily to the Company's
prior Copy Protection Business.

     There were no sales and marketing expenses in 2003, as the Company
consummated the sale of the Copy Protection Business in May 2003. Sales and
marketing costs in 2002 were $159,486 and related primarily to the Company's
prior Copy Protection Business.

     General and administrative expenses in 2003 were $1,936,600 as compared to
$3,050,620 in 2002. The 2003 expenses, compared to those in 2002, decreased
primarily because the Company no longer had any material operations due to the
consummation of the sale of the Copy Protection Business in May 2003. General
and administrative expenses in 2003 are attributable to executive compensation,
the legal and other fees associated with the Company's litigation concluded in
2003, and settlement costs associated with the various litigation matters.

     Stock-based compensation for the year ended 2003 was $6,050 as compared to
$35,251 for the year ended 2002. The decrease in stock-based compensation
expense is attributable to a reduction in remaining deferred compensation that
was incurred in previous years. In addition, during 2003 the Company did not
issue any stock options that would have required the Company to recognize
additional significant deferred compensation.

     The Company reported a $5.7 million gain on the sale of the Copy Protection
Business during the year ended 2003, consisting of $5.05 million in cash and
$658,328 in value for return and cancellation of the Macrovision Stock. The
details of the transactions surrounding the sale and consummation of the sale of
the Copy Protection Business are more fully described in Item 1 of Part I of
this annual report on Form 10-K. Interest income for the year ended 2003 was
$23,506 compared to $37,808 for the year ended 2002. The decrease for the period
is attributable to the lower available cash and cash equivalent balances for the
first half of 2003 and lower interest rates during the 2003 period. The Company
reported net income for the year-ended 2003 of $3,466,602 or $0.20 per share on
a basic and diluted basis as compared to a net loss of $(5,244,751) or $(.29)
per share on a basic and diluted basis, for the year ended 2002. Net income for
the year-ended 2003 was due to the consummation of the sale of the Copy
Protection Business in May 2003.

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

     There were no revenues in 2002 or 2001.

     Research and development costs in 2002 were $701,629 compared to $949,766
in 2001, which included the costs incurred in the development of SAFEAUDIO. The
decrease is primarily attributable to the Company's decision in October 2002 to
terminate all research and

                                      -20-
<PAGE>

development activities at TTR Ltd. due to the anticipated sale of the
intellectual property related to its Copy Protection Business. Research and
development costs in 2002 and 2001 related primarily to the enhancement of
SAFEAUDIO features undertaken by both TTR and Macrovision, the development and
expansion of copy protection technology to CD-Rs and digital rights management.
Commencing June 2001 and continuing through May 2002, the Company agreed to pay
to Macrovision, on a monthly basis, $20,000 to partially cover unanticipated
expenses incurred in the development of SAFEAUDIO.

     Sales and marketing expenses in 2002 were $159,486 as compared to $399,523
in 2001. The decrease is primarily due to Macrovision's assumption of a
significant portion of the sales and marketing expenses for SAFEAUDIO, as
provided for in the Alliance Agreement, and the Company's decision to terminate
all sales and marketing expenses in November 2002 based on the anticipated sale
of the Copy Protection Business.

     General and administrative expenses in 2002 were $3,050,620 as compared to
$2,894,616 in 2001. The 2002 expenses, compared to those in 2001, include an
increase in officers' compensation costs and related benefits as a result of the
restructuring of senior management of the Company, professional fees incurred in
connection with the negotiation and execution of the Purchase Agreement, the
defense and prosecution of various litigation matters and, termination and
settlement costs associated with the TTR Ltd Wind-down, the Company's Israeli
subsidiary.

     Stock-based compensation for the year ended 2002 was $35,251 as compared to
$909,819 for the year ended 2001. The decrease in stock-based compensation
expense is attributable to a reduction in remaining deferred compensation that
was incurred in previous years. In addition, during 2002 the Company did not
issue any significant stock options that would have required the Company to
recognize additional significant deferred compensation.

     During 2002, the Company recorded bad debt expense of $161,000 in
connection with the non-payment of a note receivable upon its maturity in July
2002 and certain uncollectable employee advances. Although management believes
collection of the full amount due under the promissory note is doubtful, it
intends to pursue recovery.

     The Company's then affiliate, ComSign Ltd., commenced operations in July
2000. ComSign served as VeriSign Inc.'s principal affiliate in Israel and the
Palestinian Authority and exclusive marketer of VeriSign's digital
authentication certificates and related services. Based on management's view
that the value of the investment was impaired, the Company wrote-off, during the
year ended 2002, the amount of $748,690, representing the remaining goodwill and
the balance of its investment. During 2003, the Company sold its equity interest
in ComSign to the original stockholder for $40,000.

     Interest income for the year ended 2002 was $37,808 compared to $276,179
for the year ended 2001. The decrease is attributable to the lower cash and cash
equivalent balances, primarily resulting from the expenditure of cash to finance
Company operations and management restructuring as well as lower interest rates
on invested balances.

     The Company reported a net loss for the year-ended 2002 of $(5,244,751) or
$(.29) per share on a basic and diluted basis as compared to a net loss of
$(5,498,637) or $(.31) per share on a basic and diluted basis, for the year
ended 2001.

LIQUIDITY AND CAPITAL RESOURCES

     From its inception, the Company has financed its operations through the
issuance of its securities and from the sale of its Copy Protection Business in
May 2003.

     At December 31, 2003, the Company had cash and cash equivalents of
$3,031,090, representing an increase of approximately $2.4 million over December
31, 2002. The increase

                                      -21-
<PAGE>

is primarily attributable to the consummation of the sale of the Company's Copy
Protection Business in May 2003.

     Cash used by operating activities during 2003 was approximately $2.7
million compared to roughly $4.1 million during 2002.

     Following stockholder approval of the Lucent Transaction in March 2004 and
as of the filing of this annual report on Form 10-K, the Company remitted to
Lucent approximately $1.25 million. The Company is required to remit up to an
additional $2.1 million by February 15, 2005 under the Development and Licensing
Agreement in respect of the delivery of the Equipment and the obtaining of
certain regulatory permits and approvals.

     The Company will need to raise an additional $3 million within the next six
months in order to meet its obligations under the Lucent Transaction, maintain
its operations and to realize its business plans in its new business. The
auditors report on the financial statements accompanying this report for the
year ended December 31, 2003, include an explanatory paragraph relating to the
uncertainty of the Company's ability to continue as a going concern, which may
make it more difficult for the Company to raise additional capital. At the
present time, the Company has no commitments for any such financing, and there
can be no assurance that additional capital will be available to the Company on
commercially acceptable terms. If the Company is unable to raise such financing
on commercially reasonable terms, it may no longer be able to remain in
business. Furthermore, it is anticipated that any successful financing will have
a significant dilutive effect on existing stockholders. The inability to obtain
such financing will have a material adverse effect on the Company, its condition
and prospects.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In January 2003 and revised in December 2003, Financial Accounting
Standards Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), an interpretation of Accounting Research
Bulletin No. 51. FIN 46 expands upon and strengthens existing accounting
guidance that addresses when a company should include in its financial
statements the assets, liabilities and activities of another entity. A variable
interest entity is any legal structure used for business purposes that either
does not have equity investors with voting rights or has equity investors that
do not provide sufficient financial resources for the entity to support its
activities. FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January 31, 2003.
The consolidation requirements apply to older entities in the first fiscal year
or interim period beginning after June 15, 2003. The adoption of FIN 46 did not
have a significant impact on the Company's financial statements.

     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity." SFAS
No. 150 addresses certain financial instruments that, under previous guidance,
could be accounted for as equity, but now must be classified as liabilities in
statements of financial position. These financial instruments include: 1)
mandatorily redeemable financial instruments, 2) obligations to repurchase the
issuer's equity shares by transferring assets, and 3) obligations to issue a
variable number of shares. SFAS No. 150 generally is effective for all financial
instruments entered into or modified after May 31, 2003, and otherwise effective
at the beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 did not have a significant impact on the Company' financial
statements.

CONTRACTUAL OBLIGATIONS

                                      -22-
<PAGE>

     As of the filing of this Annual Report on Form 10-K, the Company has no
lease obligations. The only material obligations that the Company has are
employment agreements. The Company's aggregate annual commitments under the
existing employment agreements are approximately $547,500 and $323,750 during
2004 and 2005. In addition, each of the employment agreements provides for
payments through the term of the employment agreement under certain
circumstances.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

INTEREST RATE RISK

     To date, the Company has not utilized derivative financial instruments or
derivative commodity instruments. The Company invests its cash primarily in
money market funds and certificates of deposit, which are subject to minimal
credit and market risk. The Company has no long-term debt.

FOREIGN CURRENCY RISK

     The Company is exposed to foreign exchange rate fluctuations as they relate
to operating expenses as the financial results of foreign subsidiaries are
translated into U.S. dollars in consolidation. All of the Company cash balances
are held in dollar-based accounts. As exchange rates vary, these results, when
translated, may vary from expectations and adversely impact overall expected
profitability. The effect of foreign exchange rate fluctuations on the Company
in 2003 was not material.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATE.

     The information called for by this Item 8 is included following the "Index
to Financial Statements" contained in this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     On July 22, 2003, Brightman Almagor & Co., certified public accountants
based in Israel and a member of Deloitte Touche Tohmatsu ("Brightman"), advised
the Company in writing that as it has effectively terminated all of our research
and design activities in the State of Israel, it declines to stand for
re-election as the Company's auditor for the year ending December 31, 2003,
which action was taken by mutual agreement. As Brightman verbally informed the
Company of its intentions prior to its letter dated July 22, 2003, the audit
committee (the "Audit Committee") of the Company's board of directors, on June
11, 2003, appointed Marcum & Kliegman principal auditors to audit the Company's
financial statements for the year ending December 31, 2003.

     During the fiscal years ended December 31, 2001 and 2002 and the period
between January 1, 2003, up to and including the day of its declination to stand
for re-election, there were no disagreements between the Company and Brightman
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures which if not resolved to Brightman's
satisfaction would have caused them to make reference in connection with their
opinion to the subject matter of the disagreement. Brightman's report on our
financial statements for such fiscal years indicated that substantial doubt
exists regarding the Company's ability to continue as a going concern.

ITEM 9A. CONTROLS AND PROCEDURES

     The Company maintains disclosure controls and procedures that are designed
to ensure

                                      -23-
<PAGE>

that information required to be disclosed in the Company's Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, and that
such information is accumulated and communicated to the Company's management, as
appropriate, to allow timely decisions regarding required disclosure. In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.

     As of the end of the period covered by this report, the Company carried out
an evaluation, under the supervision and with participation of management,
including the Chief Executive Officer and the Principal Financial Officer, of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based on the foregoing, the Chief Executive Officer and
Principal Financial Officer concluded that the Company's disclosure controls and
procedures were effective.

     CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING . During the quarter
ended December 31, 2003, there have been no changes in the Company's internal
controls over financial reporting that have materially affected, or are
reasonably likely to materially affect, these controls.

                                    PART III

     The information called for by items 10, 11, 12, 13 and 14 will be contained
in the Company's definitive proxy statement which the Company intends to file
within 120 days after the end of the Company's fiscal year ended December 31,
2003 and such information is incorporated herein by reference.

     The Company has adopted a code of conduct and ethics applicable to all of
senior executive officers and senior financial officers, including the Chief
Executive Officer and the Chief Operating Officer. A copy of such code of
conduct and ethics is filed as Exhibit 14.1 to the Annual Report on Form 10-K.
If the Company makes any substantive amendments to the code of conduct and
ethics or grant any waiver, including implicit waiver, from a provision of the
code of conduct and ethics to its senior executive officers and senior financial
officers, it will disclose the nature of such amendment or waiver on its website
or in a current report on Form 8-K.

                                     PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

     (a) The following documents are filed as part of this report:

1.   FINANCIAL STATEMENTS

                                                                      PAGE
Independent Auditors' Report                                          F-1, F-2
Consolidated Balance Sheets                                           F-3
Consolidated Statements of Income                                     F-4
Consolidated Statements of Stockholders' Equity and
  Comprehensive Income                                                F-5, F-6
Consolidated Statements of Cash Flows                                 F-7
Notes to Consolidated Financial Statements                            F-8

                                      -24-
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                             <C>
2.     EXHIBITS AND REPORTS ON FORM 8-K

       (A) EXHIBITS

3.1    Certificate of Incorporation of TTR dated July 14, 1994 and Certificate of Amendment to the Certificate of Incorporation of
       TTR dated August 17, 1994(2)
3.2    Certificate of Amendment to the Certificate of Incorporation of TTR, dated January 30, 1999(3)
3.3    Certificate of Amendment to the Certificate of Incorporation of TTR, dated December 21, 1999(3) 3.4 Certificate of Amendment
       to the Certificate of Incorporation of TTR, dated July 15, 2000. (4)
3.4    By-Laws of TTR, as amended(2)
4.1    Specimen Common Stock Certificate(1)
4.2.3  Form of Class A Warrant between TTR and certain private investors(3)
4.2.4  Form of Agent Warrant between TTR and certain entities(3)
4.2.6  Warrant dated October 2, 2000 between TTR and Mantle International Investment Ltd(4)
10.1   1996 Incentive and Non-Qualified Stock Option Plan, as amended (2)
10.2   Employment Agreement between TTR and Sam Brill dated as of November 5, 2001 +(5)
10.3   Amended 2000 Equity Incentive Plan (5)
10.4   Amended Non-Executive Directors Stock Option Plan(5)
10.5   2002 Non-Employee Directors Stock Option Plan (6)
10.6   Amended and Restated Employment Agreement between TTR and Samuel Brill dated as of May 27, 2002 +(7)
10.7   Asset Purchase Agreement among TTR, TTR Technologies, Ltd. Macrovision Corporation and Macrovision Europe Ltd., dated as of
       November 4, 2002. (8)
10.8   Termination and Settlement Agreement dated as of January 28, 2004 between TTR and Judah Marvin Feigenbaum *
10.9   Stock Option Agreement dated as of Janaury 28, 2004 between TTR and Judah Marvin Feigenbaum*
10.10  Development and Licensing Agreement dated as of January 6, 2004 between TTR and Lucent Technologies Inc. (9)
10.11  Amendment to the Development and Licensing Agreement between TTR and Lucent Technologies, Inc. (9)
10.12  Employment Agreement between TTR and Frank Galuppo dated as of March 3, 2004 *+
14.1   Code of Business Conduct *
21.1   Subsidiaries of TTR: TTR Technologies, Ltd., an Israeli corporation, wholly-owned by TTR.
23.1   Consent of Marcum & Kliegman, LLP *
23.2   Consent of Brightman Almagor & Co., a member of Deloitte Touche Tohmatsu *
31.1   Certification of Chief Executive officer pursuant to Section 302 of Sarbanes-Oxley Act *
31.2   Certification of Principal Financial officer pursuant to Section 302 of Sarbanes-Oxley Act *
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 Principal 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.
+ Management Agreement.

(1)  Filed as an Exhibit to the Registrant's Registration Statement on Form SB-2, No. 333-11829, and incorporated herein by
     reference.

(2)  Filed as an Exhibit to the Registrant's Annual Report on Form 10-KSB filed for the year ended December 31, 1998 and
     incorporated herein by reference.

(3)  Filed as an Exhibit to TTR's Registration Statement on Form S-1, No. 33-32662 and incorporated herein by reference.

(4)  Filed as an Exhibit to TTR's Report on Form 10-K filed for the year ended December 31, 2000 and incorporated herein by
     reference.

(5)  Filed as an Exhibit to TTR's Report on Form 10-K filed for the year ended December 31, 2001 and incorporated herein by
     reference.
</TABLE>

                                      -25-
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                             <C>
(6)  Filed as an Exhibit to TTR's Revised Definitive Proxy Statement on Form DEFRA 14-A for the 2002 Annual meeting of Stockholders,
     and incorporated herein by reference.

(7)  Filed as an Exhibit to TTR's Report on Form 10-Q for the second quarter of 2002 and incorporated herein by reference.

(8)  Filed as an Exhibit to the Registrant's Proxy Statement on Form 14-A, and incorporated herein by reference.

(9)  Filed as an Exhibit to TTR's Definitive Proxy Statement on Form DEF 14-A filed on February 10, 2004 for a special meeting of
     Stockholders, and incorporated herein by reference.

        (b) Reports on Form 8-K

TTR filed a report on Form 8-K on October 10, 2003 announcing management changes


                                                             SIGNATURES

       In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                                       TTR TECHNOLOGIES, INC.



                                                        BY: /S/ FRANK GALUPPO
                                                                FRANK GALUPPO,
                                                        CHIEF EXECUTIVE OFFICER

Date: March 29, 2004

       Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following
person on behalf of the Company and in the capacities so indicated.


Signature                                               Title                                       Date

/s/ Frank Galuppo                               Chief Executive Officer, Director               March 29, 2004
Frank Galuppo

/s/ Sam Brill                                   Chief Operating Officer,                        March 29, 2004
Sam Brill                                       Principal Financial Officer, Director

/s/ Juan Mendez                                 Chairman of the Board of Directors              March 29, 2004
Juan Mendez

/s/ Richard Rosenblum                           Director                                        March 29, 2004
Richard Rosenblum
</TABLE>

                                      -26-
<PAGE>

                             TTR TECHNOLOGIES, INC.

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            Page

Report of Marcum & Kliegman, Independent Auditors                           F-1

Report of Brightman Almagor & Co, a member of Deloitte Touche Tohmatsu,
Independent Auditors                                                        F-2

Consolidated Financial Statements

Balance Sheets as of December 31, 2003 and 2002                             F-3

Statements of Operations for the years ended December 31, 2003,
  2002 and 2001 and the period from July 14, 1994 (inception)
  to December 31, 2003                                                      F-4

Statements of Comprehensive Loss for the years ended December 31, 2003,
  2002 and 2001 and the period from July 14, 1994 (inception) to
  December 31, 2003                                                         F-5

Statements of Stockholders' Equity (Deficiency) for the period from
  July 14, 1994 (inception) to December 31, 2003                            F-6

Statements of Cash Flows for the years ended December 31, 2003, 2002
  and 2001 and the period from July 14, 1994 (inception) to
  December 31, 2003                                                         F-7

Notes to the Consolidated Financial Statements                              F-8


                                       (i)

<PAGE>

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Audit Committee of the Board of Directors of TTR Technologies, Inc. and
its Subsidiary:

We have audited the accompanying consolidated balance sheet of TTR Technologies,
Inc. and Subsidiary (a development stage company) as of December 31, 2003, and
the related consolidated statements of operations, comprehensive loss,
stockholders' equity (deficiency), and cash flows for the year then ended and
for the period from July 14, 1994 (Inception) to December 31, 2003. 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 audit.

The consolidated financial statements of the Company for the period from July
14, 1994 (Inception) to December 31, 2002 were audited by other auditors whose
report, dated March 20, 2003, expressed an unqualified opinion on those
statements and included and explanatory paragraph regarding the Company's
ability to continue as a going concern. The consolidated financial statements
for the period from July 14, 1994 (Inception) to December 31, 2002 reflect a net
loss of $40,370,429 of the total inception to date net loss of $36,903,827. The
other auditors' report has been furnished to us, and our opinion, insofar as it
related to the amounts included for such prior periods, is based solely on the
report of such other auditors.

We conducted our audit 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 management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditors, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of TTR Technologies, Inc. and its
Subsidiary as of December 31, 2003, and the results of their operations and
their cash flows for the year then ended and for the period from July 14, 1994
(Inception) to December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 12 to
the financial statements, the Company has significant cash commitments relating
to an agreement entered into and consummated on March 4, 2004. This condition
raises substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding this matter also is described in Note 1.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

New York, NY
February 25, 2004
(except for Note 1 and Note 12, which are dated March 4, 2004)

/s/ Marcum & Kliegman, LLP


                                       F-1
<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders of
TTR Technologies, Inc.

We have audited the accompanying consolidated balance sheets of TTR
Technologies, Inc. ("the Company") (a development-stage company) and its
subsidiary at December 31, 2002, and the related consolidated statements of
operations, comprehensive loss, stockholders' equity (deficit) and cash flows
for the two years ended December 31, 2002 and for the period from July 14, 1994
(date of inception) to December 31, 2002. These consolidated 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 consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the
Company and its subsidiary at December 31, 2002, and the consolidated results of
their operations, comprehensive loss, stockholders' equity (deficit) and their
cash flows for the two years ended December 31, 2002 and for the period from
July 14, 1994 (date of inception) to December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the company's recurring losses from operations raise
substantial doubt about its ability to continue as a going concern. Management's
plans concerning these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.

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

Tel-Aviv, Israel
March 20, 2003

                                       F-2
<PAGE>
<TABLE>
<CAPTION>

                                   TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
                                         (A DEVELOPMENT STAGE COMPANY)
                                          CONSOLIDATED BALANCE SHEETS


                                                                              December 31,     December 31,
                                                                                 2003              2002
                                                                                 ----              ----

                                                    ASSETS
<S>                                                                          <C>               <C>
Current assets
     Cash and cash equivalents                                               $   3,031,090     $     653,885
     Note receivable, officer                                                           -             33,333
     Prepaid expenses and other current assets                                     220,578            64,999
                                                                            ---------------   ---------------

     Total current assets                                                        3,251,668           752,217

Property and equipment - net                                                         2,300            23,093

Note receivable, officer                                                                 -            33,334
Other asset                                                                              -             6,300
                                                                            ---------------   ---------------

     Total assets                                                            $   3,253,968     $     814,944
                                                                            ===============   ===============


                                     LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities
     Accounts payable                                                        $      93,145     $     497,898
     Accrued expenses                                                               28,992            61,011
     Accrued severance pay                                                          64,734                 -
                                                                            ---------------   ---------------


     Total current liabilities                                                     186,871           558,909
                                                                            ---------------   ---------------

STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value;
   5,000,000 shares authorized; none issued and outstanding                              -                 -
Common stock, $.001 par value;
   50,000,000 shares authorized; 16,440,630 and 18,261,567
   issued and outstanding, respectively                                             16,441            18,262
Additional paid-in capital                                                      39,873,476        40,533,593
Other accumulated comprehensive income                                              81,007            84,270
Deficit accumulated during the development stage                               (36,903,827)      (40,370,429)
   Less: deferred compensation                                                           -            (9,661)
                                                                            ---------------   ---------------

     Total stockholders' equity                                                  3,067,097           256,035
                                                                            ---------------   ---------------

     Total liabilities and stockholders' equity                              $   3,253,968     $     814,944
                                                                            ===============   ===============

                                See Notes to Consolidated Financial Statements.
</TABLE>

                                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                                   TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
                                         (A DEVELOPMENT STAGE COMPANY)
                                     CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                                   From
                                                                                                Inception
                                                                Year                            (July 14,
                                                               Ended                             1994) to
                                                            December 31,                        December 31,
                                               2003             2002             2001              2003
                                               ----             ----             ----              ----

<S>                                         <C>             <C>              <C>               <C>
Revenue                                     $          -    $           -    $           -     $     125,724
                                           --------------  ---------------  ---------------   ---------------

Expenses
     Research and development (1)                      -          701,629          949,766         5,704,131
     Sales and marketing (1)                           -          159,486          399,523         4,457,457
     General and administrative (1)            1,936,600        3,050,620        2,894,616        13,008,040
     Stock-based compensation                      6,050           35,251          909,819        11,405,710
     Bad debt expense                                  -          161,000                -           161,000
                                           --------------  ---------------  ---------------   ---------------
Total expenses                                 1,942,650        4,107,986        5,153,724        34,736,338
                                           --------------  ---------------  ---------------   ---------------

Operating loss                                (1,942,650)      (4,107,986)      (5,153,724)      (34,610,614)
                                           --------------  ---------------  ---------------   ---------------

Other (income) expense
     Legal settlement                            333,333                -                -           565,833
     Loss on investment                                -                -                -            17,000
     Other income                                      -                -                -           (75,000)
     Net losses of affiliate                           -          369,409          618,090         1,196,656
     Impairment loss on investment in
       affiliate                                       -          748,690                -           748,690
     Gain on sale of copy protection
       business                               (5,708,328)               -                -        (5,708,328)
     Gain on sale of investment in affiliate     (40,000)               -                -           (40,000)
     Loss on disposition of fixed assets          29,181                -                -            29,181
     Amortization of deferred financing
       costs                                           -                -                -         4,516,775
     Interest income                             (23,506)         (37,808)        (276,179)         (923,741)
     Interest expense                                 68           56,474            3,002         1,966,147
                                           --------------  ---------------  ---------------   ---------------

Total other (income) expenses                 (5,409,252)       1,136,765          344,913         2,293,213
                                           --------------  ---------------  ---------------   ---------------

Net income (loss)                           $  3,466,602    $  (5,244,751)   $  (5,498,637)    $ (36,903,827)
                                           ==============  ===============  ===============   ===============

Per share data:

     Basic and diluted                      $       0.20    $       (0.29)   $       (0.31)
                                           ==============  ===============  ===============

Weighted average number
    of common shares used in
    basic and diluted loss per share          17,186,233       17,827,893       17,560,013
                                           ==============  ===============  ===============


(1) Excludes non-cash, stock-based compensation expense as follows:

     Research and development               $          -    $           -    $           -     $     456,239
     Sales and marketing                               -           30,587          261,463         5,336,558
     General and administrative                    6,050            4,664          648,356         5,612,913
                                           --------------  ---------------  ---------------   ---------------

                                            $      6,050    $      35,251    $     909,819     $  11,405,710
                                           ==============  ===============  ===============   ===============


                                See Notes to Consolidated Financial Statements.
</TABLE>

                                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                                   TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
                                         (A DEVELOPMENT STAGE COMPANY)
                                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


                                                                                                   From
                                                                                                Inception
                                                                Year                            (July 14,
                                                               Ended                             1994) to
                                                            December 31,                        December 31,
                                               2003             2002             2001              2003
                                               ----             ----             ----              ----

<S>                                         <C>             <C>              <C>               <C>
Net income (loss)                           $  3,466,602    $  (5,244,751)   $  (5,498,637)    $ (36,903,827)

Other comprehensive income (loss)
     Foreign currency translation
       adjustments                                (3,263)          47,336           (9,312)           81,007
                                           --------------  ---------------  ---------------   ---------------

            Comprehensive income (loss)     $  3,463,339    $  (5,197,415)   $  (5,507,949)    $ (36,822,820)
                                           ==============  ===============  ===============   ===============


                                See Notes to Consolidated Financial Statements.
</TABLE>

                                                      F-5

<PAGE>
<TABLE>
<CAPTION>

                                              TTR TECHNOLOGIES, INC. AND ITS SUBSIDIARY
                                                    (A DEVELOPMENT STAGE COMPANY)
                                     CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)


                                                                                              Common Stock       Additional
                                                                   Common Stock               Subscribed           Paid-in
                                              Shares           Amount           Shares            Amount           Capital
                                              ------           ------           ------            ------           -------
<S>                                         <C>            <C>                 <C>            <C>              <C>
Balances at July 14, 1994 (date of
  inception)                                           -   $            -               -     $           -    $             -

Issuances of common stock, par value $.001
   Services rendered                           1,200,000            1,200
   Cash                                        1,200,000            1,200                                               23,800

Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 1994                  2,400,000            2,400               -                 -             23,800

Common stock contributed                        (561,453)            (561)                                                 561
Issuances of common stock, par value $.001
   Services rendered                             361,453              361                                               17,712
Stock options and warrants granted                                                                                         600
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------

Balances at December 31, 1995                  2,200,000            2,200               -                 -             42,673

Issuances of common stock, par value $.001
   Cash, net of offering costs of $11,467        850,000              850                                              362,683
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 1996                  3,050,000            3,050               -                 -            405,356

Common stock contributed                        (135,000)            (135)                                                 135

Issuances of common stock, par value $.001
   Cash, net of offering costs of $832,551       908,000              908                                            5,000,440
   Services rendered                              74,000               74                                              832,551
   Exercise of options                           374,548              375                                                3,370
Common stock subscriptions                                                          16,000           100,000
Sale of Underwriters warrants                                                                                               80
Stock options and warrants granted                                                                                   1,875,343
Amortization of deferred compensation
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 1997                  4,271,548            4,272           16,000           100,000         8,117,275

Common stock subscriptions                        16,000               16          (16,000)         (100,000)           99,984
Common Stock forfeited                        (1,000,000)          (1,000)                                               1,000
Transfer of temporary equity to permanent
  capital                                         15,000               15                                               77,141
Issuances of common stock, par value $.001
   Cash                                           41,667               42                                               24,958
   Services rendered                             244,000              244                                              620,344
Stock options and warrants granted
  (cancelled)                                                                                                         (255,992)
Discount relating to shares and warrants
  issued                                         156,111              156                                              486,307
Amortization of deferred compensation
Warrant exchange                                 432,000              432                                                 (432)
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
                                                                                        -                 -
Balances at December 31, 1998                  4,176,326            4,177                                            9,170,585

Issuances of common stock, par value $.001
   Cash                                          314,774              315                                              225,140
   Services rendered                           1,227,000            1,227                                            1,669,548
   Exercise of option                          1,714,952            1,715                                            1,401,660
Stock options granted  (cancelled)                                                                                   4,449,015
Conversion of debt into common stock           3,220,508            3,221                                            3,376,748
Fair value of warrants associated with
  financing agreement                                                                                                3,845,400
Amortization of deferred compensation
Value assigned to beneficial conversion
  feature of convertible notes                                                                                         572,505
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 1999                 10,653,560           10,654               -                 -         24,710,602

Issuances of common stock, par value $.001
   Cash, net of offering costs of $730,000     3,680,937            3,681                                           13,266,319
   Services rendered                              16,269               16                                              114,609
   Exercise of options and warrants            3,005,574            3,006                                              220,716
Stock options granted                                                                                                2,028,720
Amortization of deferred compensation
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 2000                 17,356,340           17,357               -                 -         40,340,966

Issuances of common stock, par value $.001
   Exercise of options and warrants              237,556              238                                               17,012
Stock options granted                                                                                                  168,604
Amortization of deferred compensation
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 2001                 17,593,896           17,594               -                 -         40,526,583

Issuances of common stock, par value $.001
   Exercise of options and warrants              667,671              668                                                1,314
Stock options granted                                                                                                    5,696
Amortization of deferred compensation
Foreign currency translation adjustment
Net loss
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 2002                 18,261,567 $         18,262               -   $             -  $      40,533,593 $

Issuances of common stock, par value $.001
   Exercise of options and warrants               60,000               60
Stock options granted (forfeited)                                                                                       (3,611)
Amortization of deferred compensation
Macrovision sale                              (1,880,937)          (1,881)                                            (656,506)
Foreign currency translation adjustment
Net income
                                           --------------  ---------------  ---------------   ---------------  ----------------
Balances at December 31, 2003                 16,440,630   $       16,441                -    $            -   $    39,873,476
                                           ==============  ===============  ===============   ===============  ================

(CONTINUED)

                                                               Deficit
                                               Foreign        Accumulated
                                              Currency         During
                                             Translation      Development   Deferred
                                             Adjustment         Stage      Compensation   Total
                                             ----------         -----      ------------   -----
Balances at July 14, 1994 (date of
  inception)                               $            -    $         -   $        -  $         -

Issuances of common stock, par value $.001
   Services rendered                                                                         1,200
   Cash                                                                                     25,000

Net loss                                                         (42,085)                  (42,085)
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 1994                           -        (42,085)           -      (15,885)

Common stock contributed
Issuances of common stock, par value $.001
   Services rendered                                                                        18,073
Stock options and warrants granted                                                             600
Foreign currency translation adjustment             22,652                                  22,652
Net loss                                                        (896,663)                 (896,663)
                                           ----------------  ------------  ----------  ------------

Balances at December 31, 1995                       22,652      (938,748)           -     (871,223)

Issuances of common stock, par value $.001
   Cash, net of offering costs of $11,467                                                  363,533
Foreign currency translation adjustment             35,044                                  35,044
Net loss                                                      (1,121,211)               (1,121,211)
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 1996                       57,696    (2,059,959)           -   (1,593,857)

Common stock contributed                                                                         -

Issuances of common stock, par value $.001
   Cash, net of offering costs of $832,551                                               5,001,348
   Services rendered                                                        (500,000)      332,625
   Exercise of options                                                                       3,745
Common stock subscriptions                                                                 100,000
Sale of Underwriters warrants                                                                   80
Stock options and warrants granted                                        (1,875,343)            -
Amortization of deferred compensation                                        972,567       972,567
Foreign currency translation adjustment            (19,667)                                (19,667)
Net loss                                                      (4,119,612)               (4,119,612)
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 1997                       38,029    (6,179,571)  (1,402,776)     677,229

Common stock subscriptions                                                                         -
Common Stock forfeited                                                                             -
Transfer of temporary equity to permanent
  capital                                                                                   77,156
Issuances of common stock, par value $.001
   Cash                                                                                     25,000
   Services rendered                                                        (620,588)              -
Stock options and warrants granted
  (cancelled)                                                                255,992               -
Discount relating to shares and warrants
  issued                                                                                   486,463
Amortization of deferred compensation                                      1,173,139     1,173,139
Warrant exchange                                                                                   -
Foreign currency translation adjustment             41,386                                  41,386
Net loss                                                      (5,578,540)               (5,578,540)
                                           ----------------  ------------  ----------  ------------

Balances at December 31, 1998                       79,415   (11,758,111)   (594,233)   (3,098,167)

Issuances of common stock, par value $.001
   Cash                                                                                    225,455
   Services rendered                                                        (445,725)    1,225,050
   Exercise of option                                                                    1,403,375
Stock options granted  (cancelled)                                          (613,435)    3,835,580
Conversion of debt into common stock                                                     3,379,969
Fair value of warrants associated with
  financing agreement                                                                    3,845,400
Amortization of deferred compensation                                      1,374,518     1,374,518
Value assigned to beneficial conversion
  feature of convertible notes                                                             572,505
Foreign currency translation adjustment            (22,444)                                (22,444)
Net loss                                                     (13,072,237)              (13,072,237)
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 1999                       56,971   (24,830,348)   (278,875)     (330,996)

Issuances of common stock, par value $.001
   Cash, net of offering costs of $730,000                                              13,270,000
   Services rendered                                                                       114,625
   Exercise of options and warrants                                                        223,722
Stock options granted                                                      (2,028,720)             -
Amortization of deferred compensation                                      1,527,024     1,527,024
Foreign currency translation adjustment            (10,725)                                (10,725)
Net loss                                                      (4,796,693)               (4,796,693)
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 2000                       46,246   (29,627,041)   (780,571)    9,996,957

Issuances of common stock, par value $.001
   Exercise of options and warrants                                                         17,250
Stock options granted                                                       (168,604)              -
Amortization of deferred compensation                                        909,959       909,959
Foreign currency translation adjustment             (9,312)                                 (9,312)
Net loss                                                      (5,498,637)               (5,498,637)
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 2001                       36,934   (35,125,678)    (39,216)    5,416,217

Issuances of common stock, par value $.001
   Exercise of options and warrants                                                          1,982
Stock options granted                                                         (5,696)              -
Amortization of deferred compensation                                         35,251        35,251
Foreign currency translation adjustment             47,336                                  47,336
Net loss                                                      (5,244,751)               (5,244,751)
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 2002                       84,270 $ (40,370,429)$    (9,661)$     256,035

Issuances of common stock, par value $.001
   Exercise of options and warrants                                                             60
Stock options granted (forfeited)                                              3,611               -
Amortization of deferred compensation                                          6,050         6,050
Macrovision sale                                                                          (658,387)
Foreign currency translation adjustment             (3,263)                                 (3,263)
Net income                                                     3,466,602                 3,466,602
                                           ----------------  ------------  ----------  ------------
Balances at December 31, 2003              $        81,007   $(36,903,827) $       -   $ 3,067,097
                                           ================  ============  ==========  ============
</TABLE>

                                       F-6
<PAGE>
<TABLE>
<CAPTION>

                                              TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
                                                    (A DEVELOPMENT STAGE COMPANY)
                                                CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                                        From
                                                                                    Year                              Inception
                                                                                   Ended                           (July 14, 1994)
                                                                                December 31,                       to December 31,
                                                                  2003              2002             2001               2003
                                                                  ----              ----             ----               ----
<S>                                                             <C>              <C>               <C>              <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                            $ 3,466,602      $ (5,244,751)     $ (5,498,637)    $ (36,903,827)
   Adjustments to reconcile net loss
    to net cash used by operating activities:
     Depreciation and amortization                                    4,333            83,716            85,597           953,357
     Forgiveness of note receivable, officer                         66,667            33,333                -            100,000
     Loss from write-down of fixed assets                            33,181           162,192                -            195,373
     Bad debt expense                                                    -            161,000                -            161,000
     Amortization of note discount and finance costs                     -                 -                 -          4,666,225
     Translation adjustment                                              -                 -                 -             (1,528)
     Beneficial conversion feature of convertible debt                   -                 -                 -            572,505
     Stock, warrants and options issued for services and
      legal settlement                                                6,050            35,251           909,819        11,578,671
     Payment of common stock issued with guaranteed
      selling price                                                      -                 -                 -           (155,344)
     Net losses of affiliate                                             -            369,409           618,090         1,196,656
     Impairment loss on investment in affiliate                          -            748,690                -            748,690
     Gain on sale of Copy Protection Business                    (5,708,328)               -                 -         (5,708,328)
     Gain on sale of investment in affiliate                        (40,000)               -                 -            (40,000)
     Increase (decrease) in cash attributable
      to changes in assets and liabilities
        Accounts receivable                                              -                950               929               554
        Prepaid expenses and other current assets                  (155,513)           55,256           (57,063)         (250,236)
        Other assets                                                  6,300            (2,750)           (3,550)
        Accounts payable                                           (404,754)           (3,129)          105,120          (454,048)
        Accrued expenses                                            (37,380)          (80,778)          596,054         1,110,629
        Accrued severance pay                                        64,734          (400,704)          122,141           (57,629)
        Interest payable                                                 -                 -                 -            251,019
                                                             ---------------   ---------------  ----------------  ----------------

     Net cash used by operating activities                       (2,698,108)       (4,082,315)       (3,121,500)      (22,036,261)
                                                             ---------------   ---------------  ----------------  ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Proceeds from sales of fixed assets                                   -             31,022             2,837            68,594
   Purchases of property and equipment                              (16,067)         (111,665)          (86,931)       (1,002,602)
   Proceeds from sale of Copy Protection Business                 5,050,000                -                 -          5,050,000
   Proceeds from sale of investment in affiliate                     40,000                -                 -             40,000
   Investment in ComSign, Ltd.                                           -                 -                 -         (2,000,000)
   Increase in note receivable, officer                                  -           (100,000)               -           (100,000)
   Increase in note receivable                                           -                 -           (130,000)         (130,000)
   Increase in organization costs                                        -                 -                 -             (7,680)
                                                             ---------------   ---------------  ----------------  ----------------

     Net cash provided by (used in) investing activities          5,073,933          (180,643)         (214,094)        1,918,312
                                                             ---------------   ---------------  ----------------  ----------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from issuance of common stock                                -              1,982            17,250        21,177,354
   Stock offering costs                                                  -                 -                 -           (475,664)
   Deferred financing costs                                              -                 -                 -           (682,312)
   Proceeds from short-term borrowings                                   -                 -                 -          1,356,155
   Proceeds from long-term debt                                          -                 -                 -          2,751,825
   Proceeds from convertible debentures                                  -                 -                 -          2,000,000
   Repayment of short-term borrowings                                    -                 -                 -         (1,357,082)
   Repayments of long-term debt                                          -                 -                 -         (1,615,825)
                                                             ---------------   ---------------  ----------------  ----------------

     Net cash provided by financing activities                           -              1,982            17,250        23,154,451
                                                             ---------------   ---------------  ----------------  ----------------

Effect of exchange rate changes on cash                               1,380              (408)           (1,073)           (5,412)
                                                             ---------------   ---------------  ----------------  ----------------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                  2,377,205        (4,261,384)       (3,319,417)        3,031,090

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                    653,885         4,915,269         8,234,686                -
                                                             ---------------   ---------------  ----------------  ----------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                      $ 3,031,090         $ 653,885       $ 4,915,269       $ 3,031,090
                                                             ===============   ===============  ================  ================

SUPPLEMENTAL DISCLOSURES OF
   CASH FLOW INFORMATION
     Cash paid during the period for interest                          $ 68             $ 882       $     3,002       $   476,978
                                                             ===============   ===============  ================  ================

     Noncash investing transaction
        Common stock returned to the Company from the
        sale of Copy Protection Business                          $ 658,328            $   -        $         -        $   658,328
                                                             ===============   ===============  ================  ================

     Exchange of fixed assets for rent                            $   4,000            $   -        $         -        $     4,000
                                                             ===============   ===============  ================  ================


                                           See Notes to Consolidated Financial Statements.
</TABLE>

                                                                 F-7
<PAGE>

                    TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
                          (A Development Stage Company)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - DESCRIPTION OF BUSINESS

TTR Technologies, Inc ("TTR" or the "Company") was previously engaged in the
business of designing and developing digital security technologies that provide
copy protection for electronic content distributed on optical media and the
internet (the "Copy Protection Business"). Effective May 28, 2003, the Company
consummated the sale of its Copy Protection Business pursuant to an Asset
Purchase Agreement dated as of November 4, 2002, (the "Purchase Agreement") with
Macrovision Corporation ("Macrovision"), then one of the Company's largest
stockholders and Macrovision Europe, Ltd., an affiliate of Macrovision
(collectively, the "Purchaser"). See Note 3.

Following the sale of the Company's Copy Protection Business, then existing
management, considered several possible alternatives regarding the Company's
strategic direction, including, the acquisition, development or investment in
new lines of business. Subsequent to year end the Company entered into a
Development and Licensing Agreement with Lucent Technologies. See Note 12
"Subsequent Events."

GOING CONCERN AND MANAGEMENT'S PLAN

The accompanying financial statements have been prepared assuming that the
Company will continue as a going-concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. As
shown in the accompanying financial statements, the Company had net income of
$3,466,602 during the year ended December 31, 2003 primarily from the proceeds
of the sale of the Copy Protection Business, resulting in a cash balance of
$3,031,090 as of December 31, 2003. Upon the consummation of the Lucent
transaction on March 4, 2004, the Company had a cash balance of approximately
$1.5 million. As of March 4, 2004, the Company had remitted to Lucent $1.2
million and is obligated to remit to Lucent an additional $1.8 million through
February 15, 2005 and $350,000 required for specified regulatory specifications,
not including normal operating expenses.

The Company will need to raise capital or generating revenue in order to meet
its obligations under the transaction with Lucent, enter into its new business
and maintain its operations. The Company has no commitments in respect of the
raising of such capital nor does it have any revenue generating agreements.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. The accompanying financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. These financial
statements do not include any adjustments relating to the recovery of the
recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiary, TTR Ltd. TTR Ltd. has been inactive since December
2002. All significant inter-company accounts and transactions have been
eliminated in consolidation.

                                       F-8
<PAGE>

USE OF ESTIMATES

Management uses estimates and assumptions in preparing these financial
statements in accordance with accounting principles generally accepted in the
United States of America. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities and the reported revenues and expenses. Actual results could vary
from the estimates that were used.

CASH EQUIVALENTS

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

Substantially all of the Company's financial instruments, consisting primarily
of cash equivalents, current receivables, accounts payable and accrued expenses,
are carried at, or approximate, fair value because of their short-term nature or
because they carry market rates of interest.

STOCK BASED COMPENSATION
The Company accounts for stock-based compensation in accordance with APB Opinion
No. 25, "Accounting for Stock Issued to Employees." Accordingly, the Company
records deferred compensation for share options granted to employees at the date
of grant based on the difference between the exercise price of the options and
the market value of the underlying shares at that date. Deferred compensation is
amortized to compensation expense over the vesting period of the underlying
options. No compensation expense is recorded for fixed stock options that are
granted to employees and directors at an exercise price equal to the fair market
value of the common stock at the time of the grant.

Stock options and warrants granted to non-employees are recorded at their fair
value, as determined in accordance with Statement of Financial Accounting
Standards No. 123 ("SFAS 123") and Consensus No. 96-18, and recognized over the
related service period. The

Company has adopted the disclosure provisions
required by SFAS No. 148 "Accounting for Stock-Based Compensation-Transition and
Disclosure" which amends SFAS No. 123. Accordingly, see below for disclosures
required in accordance with SFAS No. 148.

<TABLE>
<CAPTION>
                                                            Year ended
                                                           December 31,
                                               2003            2002            2001
                                               ----            ----            ----
<S>                                          <C>           <C>             <C>
Net income (loss)
    As reported                              $3,466,602    $(5,244,751)    $(5,498,637)

Add: Stock-based employee compensation
   expense included in reported net income
   (loss), net of related tax effects            6,050          35,251         909,819

Deduct: Total stock-based employee
   compensation expense determined
   under fair value based method
   for all awards, net of related
   tax effects                                (610,045)       (494,124)     (1,393,060)
                                             ---------       ---------       ---------
    Pro forma                                $2,862,607    $(5,703,624)    $(6,627,561)
                                             =========       =========       =========

Net income (loss) per share, basic and diluted
    As reported                                 $ 0.20         $(0.29)         $(0.31)
                                                  ====           ====            ====
    Pro forma                                   $ 0.17         $(0.32)         $(0.38)
                                                  ====           ====            ====
</TABLE>

                                       F-9
<PAGE>

The fair value of each option granted in 2003, 2002 and 2001 is estimated on the
date of grant using the Black-Scholes option-pricing model with the following
weighted-average assumptions:


                                       2003           2002          2001
                                       ----           ----          ----

Risk free interest rates                N/A           3.45%         3.97%
Expected option lives                   N/A           3.14          3.26
Expected volatilities                   N/A         145.00%       106.00%
Expected dividend yields               None           None          None

FOREIGN CURRENCY TRANSLATIONS
The financial statements of TTR Ltd. have been translated into U.S. dollars in
accordance with Statement No. 52 of the Financial Accounting Standards Board
(FASB). Assets and liabilities have been translated at year-end (period-end)
exchange rates and expenses have been translated at average rates prevailing
during the year. The translation adjustments have been recorded as a separate
component in the consolidated statement of stockholders' equity (deficiency).

NET INCOME (LOSS) PER SHARE
Basic earnings (loss) per share, "EPS" is computed by dividing net income (loss)
applicable to common shares by the weighted-average of common shares outstanding
during the period.

Diluted earnings (loss) per share adjusts basic earnings (loss) per share for
the effects of convertible securities, stock options and other potentially
dilutive instruments, only in the periods in which such effect is dilutive. The
shares issuable upon exercise of stock options and warrants are excluded from
the calculation of net loss per share, as their effect would be antidilutive.

Common stock equivalents have been excluded from the weighted-average shares for
the year ended 2003 and 2002, as inclusion is anti-dilutive. Potentially
dilutive options and warrants of 3,670,175 and 4,886,875 are outstanding at
December 31, 2003 and 2002, respectively.

DEPRECIATION AND AMORTIZATION
Furniture and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets, which range
from three to seven years. For leasehold improvements, amortization is provided
over the shorter of the estimated useful lives of the assets or the lease term.
During the year ended 2003, the majority of the Company's property and equipment
was either sold or written-off.

RESEARCH AND DEVELOPMENT COSTS
There were no research and development expenditures in the year ended 2003.

INCOME TAXES
The Company uses the liability method to determine its income tax expense. This
method requires the establishment of a deferred tax asset or liability for the
recognition of future deductible or taxable amounts and operating loss
carry-forwards. Deferred tax expense or benefit is recognized as a result of the
changes in the assets and liabilities during the year.

                                       F-10
<PAGE>

Valuation allowances are established when necessary, to reduce deferred tax
assets, if it is more likely than not that all or a portion of it will not be
realized.

CONCENTRATIONS
Cash and cash equivalents are, for the most part, maintained with major
financial institutions. Deposits held with these banks exceed the amount of
insurance provided on such deposits. Generally, these deposits may be redeemed
upon demand and therefore, bear minimal risk.

IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable from future undiscounted cash flows. Impairment losses are
recorded for the excess, if any, of the carrying value over the fair value of
the long-lived assets.

COMPREHENSIVE INCOME (LOSS)
In January 1998, the Company adopted SFAS 130, "Reporting Comprehensive Income,"
which establishes standards for reporting the components of comprehensive income
or loss. The foreign currency translation adjustment is the Company's only
component of comprehensive loss.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In January 2003 and revised in December 2003, Financial Accounting Standards
Board ("FASB") issued FASB Interpretation No. 46, "Consolidation of Variable
Interest Entities" ("FIN 46"), an interpretation of Accounting Research Bulletin
No. 51. FIN 46 expands upon and strengthens existing accounting guidance that
addresses when a company should include in its financial statements the assets,
liabilities and activities of another entity. A variable interest entity is any
legal structure used for business purposes that either does not have equity
investors with voting rights or has equity investors that do not provide
sufficient financial resources for the entity to support its activities. FIN 46
requires a variable interest entity to be consolidated by a company if that
company is subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's residual
returns or both. The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after June 15, 2003. The adoption of FIN 46 did not have a significant
impact on the Company's financial statements.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150
addresses certain financial instruments that, under previous guidance, could be
accounted for as equity, but now must be classified as liabilities in statements
of financial position. These financial instruments include: 1) mandatorily
redeemable financial instruments, 2) obligations to repurchase the issuer's
equity shares by transferring assets, and 3) obligations to issue a variable
number of shares. SFAS No. 150 generally is effective for all financial
instruments entered into or modified after May 31, 2003, and otherwise effective
at the beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS 150 did not have a significant impact on the Company's
financial statements.

NOTE 3 - CLOSING OF SALE TO MACROVISION CORPORATION
On May 28, 2003, the Company consummated the sale of its music copy protection
and digital rights management assets to Macrovision for a cash sales price of
$5,050,000 and return for cancellation 1,880,937 shares of the Company's Common
Stock that Macrovision

                                       F-11
<PAGE>

purchased in January 2000 for $4.0 million. The Company recorded a gain on sale
of $5.7 million in its statement of operations during the quarter ended June 30,
2003 consisting of $5,050,000 in cash and $658,387 representing the value of the
common stock returned for cancellation to the Company based on the closing price
of the stock on May 28, 2003.

Under this Agreement, the Company undertook to indemnify Macrovision for certain
losses as set forth in the Agreement. The Company's indemnification obligations
continue through November 2004 and are limited by an overall cap of $5.25
million, except with respect to matters relating to any bulk sales laws,
fraudulent conveyance laws, or certain pre-sale contractual liabilities.

NOTE 4 - NOTES RECEIVABLE
In July 2001, in connection with a consulting agreement, the Company advanced a
loan to a consultant in the amount of $130,000, evidenced by a promissory note.
The note bears interest at the rate of 8% per annum, and was due on June 27,
2002. As collateral for the loan, the consultant pledged 150,000 Company shares
of Common Stock issuable to him upon the exercise of 150,000 unexercised
options. Pursuant to consulting agreements, the consultant was granted 50,000
and 100,000 immediately vested options exercisable at $.35 and $6.00 per share,
respectively. On or about June 20, 2003, the Company initiated litigation in the
Supreme Court of the State of New York, County of Westchester, against Ripp
Entertainment Group, Inc. ("Ripp"), seeking the sum of $130,000 on a defaulted
promissory note. Ripp removed the case to Federal Court and filed an answer with
two counterclaims against the Company, seeking (a) compensatory damages in
excess of $1,000,000 and punitive damages in the amount of $3,000,000 for
allegedly fraudulently inducing Ripp to enter into a certain Consulting
Agreement with the Company, and (b) damages in excess of $210,000 for the
Company's alleged failure to pay Ripp for services rendered under the Consulting
Agreement. A settlement has been reached pursuant to which both the Company's
claims and Ripp's counterclaims were dismissed with prejudice.

In May 2002, in accordance with the terms of an employment agreement with its
then Chief Executive Officer, the Company loaned the officer $100,000 for a
three-year term with interest at the rate of four percent per annum. At the end
of each calendar year beginning December 31, 2002, the Company agreed to forgive
one-third of the loan and the related accrued interest thereon as additional
compensation, except under certain conditions where the officer resigns or his
employment is terminated by the Company for cause. In October 2003, the officer
executed a Termination and Settlement Agreement with the Company pursuant to
which he resigned from all positions with the Company. In consideration of his
waiver of certain claims under his employment agreement, the outstanding balance
of approximately $67,000 of the advance of $100,000 was extinguished and accrued
interest was forgiven.

NOTE 5 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

                                                     December 31,
                                                 2003           2002
                                                 ----           ----
Computer equipment                              $2,808        $30,097
Office equipment                                  --           16,258
Vehicles                                          --           27,579
                                                ------        -------
                                                 2,808         73,934
Less:  Accumulated depreciation                   (508)       (50,841)
                                                ------        -------
               Property and Equipment, net      $2,300        $23,093
                                                ======        =======

                                       F-12
<PAGE>

Depreciation expense was $4,333, $83,716 and $85,597 for the years ended
December 31, 2003, 2002 and 2001 respectively. During the year ended 2003, the
majority of the Company's property and equipment was either sold or written-off,
resulting in a loss of $33,181.

NOTE 6 - INVESTMENT IN COMSIGN, LTD.
During the year ended December 31, 2002, the Company wrote-off the remaining
goodwill and the balance of its investment in ComSign, Ltd.. During the year
ended December 31, 2003, the Company sold its equity interest in ComSign, Ltd.
for $40,000 to Comda, Ltd. the other stockholder in ComSign, Ltd. Since the
Company had previously written off this entire investment, the $40,000 has been
recorded as a gain on sale of its investment in ComSign, Ltd. during the year
ended December 31, 2003. Accordingly, the Company is no longer providing
summarized financial data for ComSign, Ltd.

NOTE 7 - INCOME TAXES
At December 31, 2003, the Company had available approximately $20 million of net
operating loss carryforwards for U.S. federal income tax purposes which expire
in the years 2014 through 2023, and approximately $6 million of foreign net
operating loss carryforwards with no expiration date. Due to the uncertainty of
their realization, no income tax benefit has been recorded by the Company for
these net operating loss carryforwards as valuation allowances have been
established for any such benefits. The use of the U.S. federal net operating
loss carryforwards is subject to limitations under Section 382 of the Internal
Revenue Code pertaining to changes in stock ownership.

Significant components of the Company's deferred tax assets for U.S. federal and
Israel income taxes are as follows:

                                                  December 31,
                                                  ------------
                                             2003                2002
                                             ----                ----
Net operating loss carryforwards         $8,878,622         $9,528,747
Stock based compensation                    352,050            833,763
Other                                       240,296            240,058
                                          ---------          ---------
      Total deferred tax assets           9,470,968         10,602,568
      Valuation allowance                (9,470,968)       (10,602,568)
                                         ----------          ---------
      Net deferred tax assets            $       --        $        --
                                          =========         ==========

The valuation allowance decreased $1,131,600 and increased $1,506,583 for the
years ended December 31, 2003 and 2002 respectively.

NOTE 8 - STOCKHOLDERS' EQUITY
STOCK OPTION PLANS
In July 1996, the Board of Directors adopted the Company's Incentive and
Non-qualified Stock Option Plan (the "Plan") and has reserved up to 450,000
shares of Common Stock for issuance thereunder. In December 1999, the Plan was
amended to increase the total number of shares available for grant to 1.5
million. As of December 31, 2003 a total of 714,566 options were outstanding
under the 1996 Plan and future grants have been discontinued.

In July 1998, the Board of Directors adopted the Non-Executive Directors Stock
Option Plan ("the Directors' Plan") and has reserved up to 25,000 shares of
common stock for issuance thereunder. In May 2001, the Plan was amended to
increase the total number of shares available for grant to 75,000. In August
2002, the Company adopted the 2002 Non-Employee

                                       F-13
<PAGE>

Directors' Plan (the "2002 Directors' Plan") which provides for 275,000 shares
available for grant. Both plans provide for the grant of options to directors
who are not otherwise employed by the Company. As of December 31, 2003,
outstanding options under the Directors' Plan and the 2002 Directors' Plan
totaled 0.

In July 2000, the Company adopted the 2000 Equity Incentive Plan (the "2000
Incentive Plan") and has reserved a total of 1.5 million shares of common stock
for issuance thereunder. In May 2001, the Plan was amended to increase the total
number of shares available for grant to 3,500,000. The 2000 Incentive Plan
provides for the grant of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock, bonus stock, awards in lieu of cash
obligations, other stock-based awards and performance units. The 2000 Incentive
Plan also permits cash payments under certain conditions. As of December 31,
2003, there were 1,285,609 options outstanding under the 2000 Incentive Plan.
The Compensation Committee of the Board of Directors is responsible for
determining the type of award, when and to whom awards are granted, the number
of shares and the terms of the awards and exercise prices. The options are
exercisable for a period not to exceed ten years from the date of grant. Vesting
periods range from immediately to five years.

OTHER OPTION GRANTS
In addition to the options granted under the Stock Option Plans, the Company has
issued options outside of the plans, pursuant to various agreements. Stock
option activity for 2001, 2002 and 2003 is summarized as follows:

<TABLE>
<CAPTION>
                                                                                                  Weighted
                                                                                                  Average
                                                                Options                           Exercise
                                                Plan            Non plan           Total           Price
                                                ----            --------           -----
<S>                                               <C>                <C>             <C>               <C>
Options outstanding, January 1, 2001              2,785,625          50,000          2,835,625         $3.18
Granted                                             575,000               0            575,000          3.53
Exercised                                          (80,000)        (50,000)          (130,000)          0.01
Forfeited                                           (4,000)               0            (4,000)          6.03
                                                    -------                            -------

Options outstanding, December 31, 2001            3,276,625               0          3,276,625          3.36
Granted                                             905,000               0            905,000          0.85
Exercised                                         (332,150)               0          (332,150)          0.01
Forfeited                                         (742,600)               0          (742,600)          3.30
                                                  ---------                          ---------

Options outstanding, December 31, 2002            3,106,875               0          3,106,875          2.81
Granted                                                   0               0                  0          0.00
Exercised                                          (60,000)               0           (60,000)          0.01
Forfeited                                       (1,046,700)               0        (1,046,700)          1.64
                                                -----------                        -----------

Options outstanding and exercisable,
December 31, 2003                                 2,000,175               0         2,000,175          $3.50
                                                  ----------             --         ---------

Shares of common stock available for
future grant under the plan                       2,564,391
                                                  ---------
</TABLE>

                                       F-14
<PAGE>

The following table summarizes information about stock options outstanding at
December 31, 2003:

<TABLE>
<CAPTION>
                                                                                  Options Exercisable
                                                  Weighted Average                                   Weighted
                                             Remaining                                                Average
                               Number       Contractual      Exercise             Number             Exercise
Ranges of Price             Outstanding        Life            Price           Exercisable             Price
---------------             -----------        ----            -----           -----------             -----
<S>                           <C>              <C>              <C>                 <C>           <C>
  $0.16                            50,000           8.77             0.16                50,000        0.16
$1.53-1.68                        293,300           7.87             1.66               293,300        1.66
$2.56-3.56                        324,941           6.29             3.25               324,941        3.25
$3.91-5.06                      1,323,934           6.47             4.08             1,323,934        4.08
$6.84-7.00                          8,000           4.41             6.93                 8,000        6.93
                                   ------          -----            -----                ------        ----

$0.16-$7.00                     2,000,175           6.69            $3.50             2,000,175       $3.50
                               ----------          -----           ------            ----------       -----

Weighted-average grant date fair value of options granted in 2003, 2002 and
2001, under the Black-Scholes option pricing model, was none, $0.69 and $2.18
per option, respectively.

WARRANTS
Warrant activity for 2001, 2002 and 2003 is summarized as follows:

                                                                             Weighted
                                                                             Average
                                                                             Exercise
                                                        Warrants              Price
                                                        --------              -----

Warrants outstanding, January 1, 2001                      2,224,458             $ 7.65
Granted                                                            0             $    -
Exercised                                                          0             $    -
Forfeited                                                          0             $    -
                                                    -----------------     --------------

Warrants outstanding, December 31, 2001                    2,224,458             $ 7.65
Granted                                                            0             $    -
Exercised                                                          0             $    -
Forfeited                                                   -444,458             $ 6.83
                                                    -----------------     --------------

Warrants outstanding, December 31, 2002                    1,780,000             $ 7.85
Granted                                                            0             $    -
Exercised                                                          0             $    -
Forfeited                                                   -110,000             $ 4.30
                                                    -----------------     --------------

Warrants outstanding and exercisable,
December 31, 2003                                          1,670,000             $ 8.08
                                                    -----------------     --------------

</TABLE>
                                       F-15
<PAGE>

There are an additional 495,000 warrants with an exercise price of $22.21 that
are issuable upon the exercise of certain warrants with an exercise price of
$8.84.

STOCK ISSUANCES

During the year ended December 31, 2001, the Company completed the following
common stock transactions:

The Company issued 237,556 shares of Common Stock from the exercise of various
outstanding stock options and warrants

During the year ended December 31, 2002, the Company completed the following
common stock transactions:

The Company issued 667,671 shares of Common Stock from the exercise and exchange
of various outstanding stock options and warrants.

During the year ended December 31, 2003, the Company completed the following
common stock transactions:

The Company issued 60,000 shares of Common Stock from the exercise of various
outstanding stock options.

NOTE 9 - COMMITMENTS AND CONTINGENCIES
LITIGATION
The Company is or has been involved in the following legal proceedings:

On or about June 20, 2003, the Company initiated litigation in the Supreme Court
of the State of New York, County of Westchester, against Ripp Entertainment
Group, Inc. ("Ripp"), seeking the sum of $130,000 on a defaulted promissory
note. Ripp removed the case to Federal Court and filed an answer with two
counterclaims against the Company, seeking (a) compensatory damages in excess of
$1,000,000 and punitive damages in the amount of $3,000,000 for allegedly
fraudulently inducing Ripp to enter into a certain Consulting Agreement with the
Company, and (b) damages in excess of $210,000 for the Company's alleged failure
to pay Ripp for services rendered under the Consulting Agreement. In November
2003, a settlement was reached pursuant to which both the Company's claims and
Ripp's counterclaims were dismissed with prejudice. In addition, Ripp
surrendered to the Company the 150,000 stock options which it had obtained in
conjunction with the Consulting Agreements dated June 27, 2001 and September 25,
2000.

On August 14, 2002, nine purported stockholders of the Company filed a complaint
against the Company, eight of its current or former officers and several third
parties in the United States District Court for the Southern District of New
York. The action, which is known as EILENBERG ET AL. V. KRONITZ ET AL. (02 Civ.
6502), alleges, among other things, that the Company issued a series of false
and misleading statements, including press releases, that misled the plaintiffs
into purchasing the Company's common stock. The complaint seeks relief under
federal securities laws and common law, and demands compensatory damages of $7
million or more, and punitive damages of $50 million or more. The Company
believes it has meritorious defenses to this lawsuit. The Company and most of
its current or former officers have filed a motion based upon the federal
securities laws to dismiss the complaint for failure to state a claim and to
plead with particularity under Rule 9(b) of the Federal Rules of Civil
Procedure. After hearing arguments on November 26, 2002, the Court granted
defendants' motion to dismiss the complaint based on Rule 9(b). Plaintiffs filed
an amended complaint, and the Court held a settlement conference on June 24,
2003. Following this settlement conference, the Court adjourned the time for the
Company and all defendants to respond to the amended complaint without date in
order to facilitate settlement negotiations.

                                       F-16
<PAGE>

Counsel for the EILENBERG plaintiffs filed a second action against the Company
and several of its current or former officers in the same court on August 21,
2002, this time on behalf of three additional purported stockholders as
plaintiffs. This action, which is known as STURM ET AL. V. TOKAYER ET AL. (602
Civ. 6672), alleged, among other things, that the Company had violated the
federal securities laws by distributing false and misleading materials in
connection with the annual shareholder meeting scheduled for August 26, 2002,
and that several officers and directors had breached duties to the Company and
committed acts of waste and mismanagement by paying excessive salaries to
themselves and others. Plaintiffs promptly moved for a temporary restraining
order to enjoin the annual shareholder meeting from being conducted on August
26, 2002. The Court denied this motion. The Company believes it has meritorious
defenses to this lawsuit. The Company and the other defendants thereafter moved
to dismiss the complaint for failure to state a claim for relief. In response,
the plaintiffs filed an amended complaint, which deleted the prior claims
concerning violations of the federal securities laws, but continued to assert
derivative claims for waste and mismanagement. The Court denied defendants'
motion to dismiss the latter claims but directed that plaintiffs submit a more
detailed verification to the amended complaint and correct an allegation
concerning one of the defendants. Plaintiffs have served their Second Verified
and Amended Complaint. Subsequent to the filing of this Second Amended and
Verified Complaint, and following a June 24, 2003 conference with the Court, the
Court adjourned the time for the Company and all defendants to respond to the
amended complaint without date in order to facilitate settlement discussions.

The Company has notified the insurer that issued a directors and officers'
liability policy to the Company covering the period in which the filing of the
Eilenberg and Sturm actions occurred. The Company is seeking, among other
things, to recover its costs of defense to the extent provided in the policy.

On November 17, 2003, The Company and the plaintiffs in each of the Eilenberg
Action and the Sturm Action entered into a settlement agreement (the "Settlement
Agreement") pursuant to which (i) the Company paid the plaintiffs in the
aggregate approximately $333,000 to the plaintiffs in the Eilenberg Action, the
parties exchanged mutual releases and (iii) the insurer made certain payment to
the plaintiffs. Under the Settlement Agreement, the Company and each of the
other named defendants in each of the Sturm Action and the Eilenberg Action
denied any violation of federal or state laws. By consent of the parties, on
December 1, 2003, United States District Court for the Southern District of New
York entered an order dismissing the each of the Eilenberg Action and the Sturm
Action with prejudice and without costs.

The Company's former attorneys commenced an action in state court in New York in
January 2003 seeking unpaid legal fees in the approximate amount of $324,000.
The Company's answer denies the complaint's material allegations and alleges as
defenses that it was over-billed in unreasonable amounts and otherwise damaged
by the law firm's failure to advise properly in the Sturm Action. While
conducting discovery, the parties engaged in settlement negotiations. On October
29, 2003, the parties executed a Settlement Agreement agreeing to resolve all
outstanding claims with regard to the dispute. Under the terms of the Settlement
Agreement, the Company's former attorneys dismissed all outstanding claims in
the action with prejudice and the Company agreed paid to Company's former
attorneys $133,899 with respect to its invoices in the Sturm Action, $73,748
with respect to its invoices in the Eilenberg Action, and $42,353 with respect
to general Company matters. The parties also exchanged mutual general releases.

EMPLOYMENT AND TERMINATION AGREEMENTS

In October 2003, Daniel C. Stein, TTR's former Chief Executive Officer ("Mr.
Stein"), was paid a one-time gross payment of $78,000 under the terms of his
Termination and Settlement Agreement with the Company. Additionally, in
consideration of Mr. Stein's waiver of certain

                                       F-17
<PAGE>

claims under his employment agreement, the outstanding balance of approximately
$67,000 of the advance of $100,000 made to Mr. Stein upon the commencement of
his employment in May 2002 was extinguished. The initial one-third of such
advance (approximately $33,000) was, consistent with the terms of Mr. Stein's
employment agreement, extinguished at year-end 2002. In addition, the 550,000
stock options held by Mr. Stein were extinguished and are no longer exercisable.
In connection with his resignation, Mr. Stein also received certain limited
benefits, including limited indemnification and general releases.

The Company's aggregate annual commitments under the existing employment
agreements are approximately $322,000 and $268,500 during 2004 and 2005. In
addition, each of the employment agreements provides for payments through the
term of the employment agreement under certain circumstances.

LEASE COMMITMENTS
As of December 31, 2003, the Company had no lease obligations.

NOTE 10 - GEOGRAPHIC DATA


                               U.S. % of Total                  Israel % of
Total
For the year ended
December 31, 2003
   Revenue                 $        --        0.00%     $        --       0.00%
   Operating gain (loss)   $(2,233,797)     -64.44%     $ 5,700,399     164.44%
   Identifiable assets     $ 3,253,968      100.00%     $        --       0.00%

For the year ended
December 31, 2002
   Revenue                 $        --        0.00%     $        --       0.00%
   Operating loss          $(2,969,015)      72.27%     $(1,138,971)     27.73%
   Identifiable assets     $   765,530       93.94%     $    49,414       6.06%

For the year ended
December 31, 2001
   Revenue                 $        --        0.00%     $        --       0.00%
   Operating loss          $(2,589,846)      50.25%     $(2,563,878)     49.75%
   Identifiable assets     $ 5,163,161       78.82%     $ 1,387,786      21.18%


NOTE 11 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                    1st Qtr.    2nd Qtr.     3rd Qtr.     4th Qtr.        Total
                    --------    --------     --------     --------       -------
<S>                  <C>         <C>           <C>          <C>           <C>
2003
Revenues             $ --        $ --          $ --         $ --          $ --
Net income (loss) $(560,386)   $4,990,778    $(770,310)   $(193,480)    $3,466,602
Net income (loss) per share -
basic and diluted    $(.03)      $.28         $(.05)        $.00          $.20

2002
Revenues             $ --        $ --          $ --         $ --          $ --
Net loss          $(950,152)  $(1,887,785) $(1,166,735) $(1,240,079)   $(5,244,751)
Net loss per share -
basic and diluted    $(.05)      $(.11)       $(.07)       $(.06)        $(.29)
</TABLE>

                                       F-18
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                             <C>
2001
Revenues             $ --        $ --          $ --         $ --          $ --
Net loss        $(1,291,867)  $(1,276,115) $(1,355,739) $(1,574,916)   $(5,498,637)
Net loss per share -
basic and diluted    $(.07)      $(.07)        $(.08)       $(.09)       $(.31)
</TABLE>


NOTE 12 - SUBSEQUENT EVENTS

The Company announced on January 14, 2004 that it and Lucent Technologies, Inc.
("Lucent") entered into the Development and Licensing Agreement, effective as of
January 6, 2004, as subsequently amended as of January 16, 2004 (the
"Development and Licensing Agreement"), pursuant to which Lucent has agreed to
develop for and license to the Company next-generation management and routing
technologies and equipment designed to provide Fiber-to-the-Premises (FTTP)
capabilities for voice, video, data, and voice-over-Internet protocol (VoIP)
services. The Development and Licensing Agreement contemplates that Lucent
deliver to the Company design models of specified equipment designed to enable
the provision of very rapid broadband access to a range of communication
services directly to the consumer's facility (collectively, the "Equipment"). On
February 10, 2004, the Company filed with the Securities and Exchange Commission
("SEC") a definitive proxy statement (the "Proxy Statement") soliciting
stockholder approval to enter into the transactions contemplated by the
Development and Licensing Agreement (collectively, the "Transaction"). A special
meeting of the stockholders was scheduled for and held on March 4, 2004, at
which the Company's stockholders approved the Transaction. Following stockholder
approval of the Transaction, the Company has commenced operations to provide and
market products in the field of advanced telecommunication equipment. As of
March 4, 2004, the Company had remitted to Lucent $1 million and is obligated to
remit to Lucent another $2 million through February 15, 2005 and $350,000
required for specified regulatory specifications, not including normal operating
expenses.

On January 21, 2004, the Company's Compensation Committee awarded 164,406
non-qualified, options to purchase the company's common stock at a $0.56 strike
price and immediate vesting with a 5 year life, to independent director Richard
Rosenblum and another 164,406 non-qualified, options to purchase the company's
common stock at a $0.56 strike price and immediate vesting with a 5 year life,
to independent director Juan Mendez.

On January 28, 2004, TTR and Mr. Judah Marvin Feigenbaum, former acting Chief
Executive Officer and a director ("JMF"), entered into an agreement (the
"Separation Agreement") whereby JMF resigned from all positions held with
Company. Under the terms of the Separation Agreement, in consideration of
releases to the Company, the Company paid to JMF approximately $60,000 for
services provided during 2003, less payroll deductions and withholdings. The
Company also issued to JMF a five-year option to purchase up to 164,406 shares
of the Company's common stock, par value $0.001 (the "Common Stock") at a per
share exercise price of $0.56 (a premium to the grant date's closing market
price of the Common Stock), subject to cashless exercise provisions. Following
the approval by the Company's stockholders of the Development and Licensing
Agreement, the Company remitted to JMF a $60,000 payment. The Company also
agreed, under certain conditions, to issue options to purchase up to an
additional 328,812 shares of the Company's Common Stock at a per share exercise
price not less than the market price at the time of issuance. JMF has agreed to
certain restrictions on the sale or other transfer of shares of Common Stock
issuable upon exercise of these options.

On March 3, 2004, the Company entered into a three-year employment agreement
with Frank Galuppo as Chief Executive Officer and Director. The agreement
provides for an annual base salary of $180,000 for the first 12 months, then
increases to $210,000 per annum for the next 12 months and increases to $235,000
per annum for the last 12 months. If Mr. Galuppo is terminated other than for
cause (as defined in the employment agreement) or if Mr. Galuppo

                                       F-19
<PAGE>

terminates his employment for good reason (as defined in the employment
agreement), he will be entitled to receive the equivalent of three month salary
and benefits, if such event takes place within the first 12 months of
employment; he will be entitled to receive the equivalent of six month salary
and benefits if such event takes place after the first 12 months of employment.
Additionally, in connection with his employment, the Mr. Galuppo was issued,
under the Company's 2000 Equity Incentive Plan, options to purchase up to
1,315,250 shares of the Company's Common Stock, such option to vest over the
next three (3) years in equal quarterly installments beginning June 30, 2004, in
each case at a per share exercise price of $0.79.

On March 8, 2004, Raj Varadarajan, the Company's Vice President of Product
Realization, was issued in conjunction with his employment agreement, options to
purchase up to 100,000 shares of the Company's Common Stock under the Company's
2000 Equity Incentive Plan, such option will vest on March 8, 2005, at a per
share exercise price of $0.80.

On March 8, 2004, William Zakowski, the Company's Vice President of Business
Development, was issued in conjunction with his employment agreement, options to
purchase up to 100,000 shares of the Company's Common Stock under the Company's
2000 Equity Incentive Plan, such option will vest on March 8, 2005, at a per
share exercise price of $0.80.

                                       F-20