TTR INC
424B3, 1997-02-14
COMPUTER PERIPHERAL EQUIPMENT, NEC
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<PAGE>

<PAGE>
                                   PROSPECTUS
                                    TTR INC.
 
                         800,000 SHARES OF COMMON STOCK
 
                                                                          [LOGO]
 
     All  of the 800,000 shares of Common  Stock, par value $.001 per share (the
'Common Stock') offered hereby  (the 'Offering') are being  sold by TTR Inc.,  a
Delaware  corporation  (the  'Company') through  First  Metropolitan Securities,
Inc., the Underwriter (the 'Underwriter'). See 'Description of Securities.'
 
     Prior to this offering  (the 'Offering'), no public  market exists for  the
Common  Stock. There can be no assurance that any such markets will develop. The
offering price of the shares of Common Stock has been determined in negotiations
between the  Company and  the Underwriter  on an  arbitrary basis  and bears  no
relationship  to the assets, earnings or any other recognized criteria of value.
The price should  in no  event, however,  be regarded  as an  indication of  any
future  market  price of  the Common  Stock. After  the Offering,  the Company's
current  directors,   executive  officers   and  principal   stockholders   will
beneficially  own approximately 26.5% of the  outstanding shares of Common Stock
of the  Company. Marc  D. Tokayer,  Chairman of  the Board,  the Tokayer  Family
Trust, Baruch Sollish, Director and four other stockholders with an aggregate of
1,137,430  shares of Common Stock (35.3% after the Offering) have entered into a
voting arrangement whereby they have agreed  to vote their respective shares  to
elect  directors and in support of positions favored by a majority of the shares
held among  them. Accordingly,  the  Company's present  Management will  in  all
likelihood  continue to  control the Company.  The Company  anticipates that the
Common Stock  will be  quoted on  the OTC  Electronic Bulletin  Board under  the
symbol  'TTRF.' An  OTC Electronic  Bulletin Board quote  does not  imply that a
liquid and active market  will develop or be  sustained for the securities  upon
completion  of the Offering. See 'Underwriting'  for a discussion of the factors
considered in determining  the public offering  price of the  Common Stock.  See
'Risk Factors.'
 
     Only the Common Stock is being  sold as part of the underwritten  Offering.
This  Registration Statement also relates to the  offer and sale of an aggregate
of 1,357,021 shares of  Common Stock, including 217,473  shares of Common  Stock
issuable   upon   the   exercise  of   warrants   (collectively,   the  'Selling
Securityholders'


                                                  (Cover continued on next page)
 
- ----------------------------------------------------------
 
     THE  SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND SUBSTANTIAL DILUTION.  SEE 'DILUTION' AND  'RISK FACTORS' BEGINNING  ON
PAGE 7.
                            ------------------------
 
THESE  SECURITIES HAVE  NOT BEEN APPROVED  OR DISAPPROVED  BY THE SECURITIES
    AND EXCHANGE COMMISSION  OR ANY STATE  SECURITIES COMMISSION NOR  HAS
       THE  SECURITIES AND  EXCHANGE COMMISSION OR  ANY STATE SECURITIES
        COMMISSION PASSED  UPON  THE  ACCURACY OR  ADEQUACY  OF  THIS
           PROSPECTUS.  ANY  REPRESENTATION TO  THE CONTRARY  IS A
              CRIMINAL OFFENSE.
 
<TABLE>
<CAPTION>
                                                                                       PRICE       UNDERWRITING
                                                                                        TO         DISCOUNTS AND    PROCEEDS TO
                                                                                     PUBLIC(1)    COMMISSIONS(2)    COMPANY(3)
<S>                                                                                 <C>           <C>               <C>
Per Share........................................................................      $7.00           $.70            $6.30
     Total.......................................................................   $5,600,000       $560,000       $5,040,000
</TABLE>
 
(1) Does not  include  a 3%  nonaccountable  expense allowance  payable  to  the
    Underwriter,  of  which  $50,000  has  been paid  as  at  the  date  of this
    Prospectus. The Company has also agreed to sell to the Underwriter  warrants
    (the  'Underwriter's Warrants')  to purchase up  to 80,000  shares of Common
    Stock, to retain the Underwriter as a financial consultant and to  indemnify
    the Underwriter against certain liabilities, including liabilities under the
    Securities   Act   of  1933,   as  amended   (the  'Securities   Act').  See
    'Underwriting.'
 
(2) Before deducting  certain expenses  payable by  the Company,  including  the
    nonaccountable  expense allowance in the amount of $168,000 ($193,200 if the
    Underwriter's overallotment  option  is  exercised in  full),  estimated  at
    $743,000.
 
(3) The Company and a certain stockholder have granted the Underwriter an option
    (the  'Over-allotment Option'), exercisable within 45  days from the date of
    this Prospectus, to purchase  in the aggregate up  to an additional  120,000
    shares  of Common Stock (including up to  60,000 shares from the Company and
    up to 60,000 shares from the stockholder,  on a pro rata basis) on the  same
    terms  as set forth above, solely to cover over- allotments, if any. If such
    option is  exercised  in  full,  the total  Price  to  Public,  Underwriting
    Discounts  and  Commissions, and  Proceeds  to Company  will  be $6,440,000,
    $644,000 and $5,418,000, respectively. See 'Underwriting.'
                            ------------------------
 
                      FIRST METROPOLITAN SECURITIES, INC.
 
                The date of this Prospectus is February 10, 1997
 
 <PAGE>
<PAGE>
(Cover continued from previous page)
 
Shares'). The Selling Securityholders' Shares  are being registered pursuant  to
registration  rights  agreements entered  into by  the  Company and  the selling
securityholders (the  'Selling  Securityholders'). The  Selling  Securityholders
have  each agreed (except for a certain Selling Securityholder who has agreed to
lock-up an aggregate of 15,000 shares, for a period of 18 months; and except for
a certain Selling Securityholder with respect  to up to 60,000 shares of  Common
Stock  included in the Over-allotment Option) not  to sell any of the securities
being registered in  the Selling Securityholders'  Offering for a  period of  24
months  from  the  Effective  Date  without the  prior  written  consent  of the
Underwriter. The Underwriter will  not consent to the  release of such  lock-ups
prior  to the exercise  or expiration of the  Over-allotment Option. The Company
will not receive  any of  the proceeds  from the  sale of  such securities.  See
'Selling   Securityholders,'   'Selling  Securityholders'   Offering,'  'Selling
Stockholders,' 'Plan of Operation' and 'Underwriting.'
 
     The Common Stock being offered through the Underwriter is being sold by the
Company on a  'firm commitment' basis  subject to  prior sale, when,  as and  if
delivered  to and accepted by the Underwriter and subject to approval of certain
legal matters by counsel  to the Underwriter and  certain other conditions.  The
Underwriter reserves the right to withdraw, cancel or modify the Offering and to
reject  any order  in whole  or in  part. It  is expected  that delivery  of the
certificates representing the  securities offered  hereby will  be made  against
payment  therefor at the offices of the Underwriter in New York City on or about
February 21, 1997.
 
                            ------------------------
     IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR  EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
LEVELS  ABOVE  THAT  WHICH MIGHT  OTHERWISE  PREVAIL  IN THE  OPEN  MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED IN  THE OVER-THE-COUNTER MARKET OR OTHERWISE.  SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
                            ------------------------
     The  Company is not currently a  reporting Company. Following the Offering,
the Company will be subject to the informational requirements of the  Securities
Exchange  Act of 1934, as amended (the  'Exchange Act'), and in accordance there
with, will file reports, proxy and information statements and other  information
with  the  Securities and  Exchange Commission  (the 'Commission').  The Company
intends to  furnish  to  its  stockholders  annual  reports  containing  audited
financial  statements  and  such  other  periodic  reports  as  the  Company may
determine to be appropriate or as may be required by law.
 
                            ------------------------
     SoftGuard'tm', DiscGuard'tm', NetGuard'tm' and Remote Activation Center'tm'
are trademarks of the Company. Certain other trademarks of the Company and other
companies, including Microsoft  Windows, Windows 95,  Windows NT, MS-DOS,  Apple
Macintosh and NEC, are used in this Prospectus.
 
                                       2
<PAGE>
<PAGE>
                               PROSPECTUS SUMMARY
 
     The following summary is qualified in its entirety by reference to the more
detailed  information  and  financial statements  and  notes  thereto, appearing
elsewhere in this Prospectus.  Each prospective investor is  urged to read  this
Prospectus in its entirety. Unless otherwise indicated, all share, per share and
financial  information set forth herein assumes the exercise of 374,548 warrants
into 374,548 shares  of Common  Stock upon completion  of this  Offering and  no
exercise  of  the  Over-allotment  Option  or  the  Underwriter's  Warrants. See
'Description of Securities -- Prior Financings.'
 
     This Prospectus contains forward-looking statements that involve risks  and
uncertainties.  The Company's actual  results may differ  significantly from the
results discussed in  the forward-looking statements.  Factors that might  cause
such  differences  include, but  are not  limited to,  those discussed  in 'Risk
Factors.'
 
                                  THE COMPANY
 
     TTR Inc. ('TTR' or  the 'Company') is primarily  engaged in the design  and
development,  and  intends to  commence marketing  of,  a family  of proprietary
software security  products  that  are  designed  to  prevent  the  unauthorized
reproduction and use of computer software programs. TTR's proposed core product,
SoftGuard,  is designed to be used by software developers for inclusion in their
software packages sold to end-users. The current version of SoftGuard,  although
out  of the development stage and ready  for commercialization, has not yet been
released. Since its inception, the Company has been engaged primarily in product
design and testing, and  has not had  any sales revenue  to date. The  Company's
primary  objective  is  to  make  SoftGuard  the  market  standard  for software
protection.
 
     Annual losses incurred by  software developers due  to software piracy  was
estimated  by the Business Software Alliance  to exceed $15 billion worldwide in
1994.  SoftGuard  is  intended  to  provide  comprehensive  protection   against
unauthorized  software  reproduction. Unlike  most currently  available software
security systems which are dependent on hardware peripherals, SoftGuard does not
entail the use of any  dongles (keys) or similar devices.  It is comprised of  a
protection  diskette, which provides anti-copying  protection while the software
resides on a distribution  diskette, CD-ROM or other  distribution media, and  a
software-based solution that protects against unauthorized reproduction once the
software  is installed  onto the end-user's  system. The  protection diskette is
used by the end-user only at the initial installation of the protected  software
or  upon  an  authorized transfer  of  protected software  to  another computer.
Without the  protection  diskette,  the protected  software  will  not  properly
install.  The  Company plans  on selling  the  SoftGuard protection  diskette to
software developers who will include the protection diskette with their software
program that is ultimately sold to  the legitimate end-user. When included  with
such  software, the developer's  software program would  be further protected by
the SoftGuard  software licensed  from the  Company. The  Company believes  that
SoftGuard  will  provide  an effective,  versatile  and  relatively inexpensive,
comprehensive software protection solution.
 
     For software distributed electronically over  the Internet, the Company  is
developing  a  system  that is  intended  to  insure that  the  payment  for the
downloaded software  has been  received  and that  the  software's use  will  be
restricted  to one  site per payment.  The Company's  proposed Remote Activation
Center will utilize  the core  technology incorporated in  SoftGuard to  provide
both   payment  confirmation  and  conventional  software  protection.  Although
currently in a program design and program development phase, the Company expects
the product to  begin beta  testing during  the second  quarter of  1997 with  a
targeted commercial release date by the third quarter of 1997.
 
     For software that does not require installation on an end-user's hard drive
and  is  run  directly  from  a CD-ROM,  such  as  educational  or entertainment
software, the Company is developing a technology designed to protect against the
unauthorized reproduction of the CD-ROM.  The decreasing costs of  CD-Recorders,
which can be used to faithfully reproduce unauthorized copies of the CD-ROM, and
the increased availability of other mass reproduction machines, have contributed
to  the  increase in  CD-ROM  piracy. Conventional  protection  technologies are
believed by the Company  to be generally impractical  and cost ineffective.  The
Company's    solution    involves    modifications   to    the    laser   optics
 
                                       3
 <PAGE>
<PAGE>
system of  the  CD-ROM mastering  machine.  This technology  would  prevent  the
faithful  reproduction  of  the CD-ROM  itself,  without reference  to  the data
contained on  it.  The  Company  expects to  commercially  release  its  initial
DiscGuard CD-ROM product by the third quarter of 1997.
 
     TTR  believes  that the  principal competitive  advantages featured  in its
proposed products will include the following:
 
            A software application protected by  SoftGuard will only be able  to
     be  installed onto  the end-user's system  in the presence  of an authentic
     protection diskette containing  the appropriate  identification code.  Once
     installed  onto the end-user's system, the protected software will run only
     on that unit.
 
            SoftGuard can be programmed  by the software  developer to permit  a
     limited  number  of installations  of  authorized copies  of  the protected
     software including limited time period trial offers.
 
            SoftGuard's avoidance of any hardware peripherals such as dongles or
     keys is expected  to save  the end-user the  inconvenience associated  with
     such hardware use.
 
            Per-unit  production  costs  associated  with  SoftGuard  protection
     diskettes will  be significantly  lower  compared to  dongle or  key  based
     solutions.
 
            Once  the  SoftGuard protected  software  program is  installed, the
     product safety features will  be self-executing and entirely  'transparent'
     to the end-user who will not be aware of their operation.
 
            A  software program sold over the  Internet that utilizes the Remote
     Activation Center would be protected  against unauthorized copying and  use
     in a similar fashion to conventional software protected by SoftGuard.
 
            CD-ROMs   utilizing   the   DiscGuard   CD-ROM   product   in  their
     manufacturing would be non-reproducible.
 
     The Company intends to  market its SoftGuard line  of products to  software
developers.  The Company's  strategy is to  distribute its  products to software
developers through  independent distributors  or  direct marketing  through  the
establishment  of regional based subsidiaries or affiliates. The Company intends
to market its proposed CD-ROM product directly to CD-ROM replicators.
 
     The Company's objective is  to be a leading  provider of software  security
products  with its  SoftGuard product line.  Some key elements  of the Company's
strategy include  (i)  expansion of  existing  software security  markets;  (ii)
penetration  of  leading  geographic marketing  areas;  (iii)  continued product
expansion  and  enhancement;  (iv)   pursue  strategic  acquisitions;  and   (v)
strengthen competitive advantages.
 
     TTR  was organized as a  holding company in Delaware  on July 14, 1994. The
Company currently conducts its business through its wholly-owned subsidiary, TTR
Technologies Ltd. ('TTR Israel'), a private company formed under the laws of the
State of  Israel on  December 5,  1994. The  Company's current  product  design,
marketing,  research and  development operations  are conducted  at TTR Israel's
premises in Kfar Saba, Israel. As  used herein, the term 'Company' includes  the
operations of TTR and TTR Israel, unless the context otherwise requires.
 
     The Company's executive offices are located at 2 Hanagar Street, Kfar Saba,
ISRAEL 44425. Its telephone number is 011-972-9-766-2393.
 
                                       4
 <PAGE>
<PAGE>
                                  THE OFFERING
 
<TABLE>
<S>                                         <C>
Securities offered by the Company.........  800,000 shares of Common Stock.
Securities Offered Concurrently by the
  Selling Securityholders.................  1,357,021  shares of Common Stock, including 217,473 shares of Common
                                              Stock  issuable   upon   exercise   of   warrants.   See   'Selling
                                              Securityholders' Offering.'
Common Stock outstanding prior to the
  Offering................................  2,424,548(1)(2)
Common Stock to be outstanding after the
  Offering................................  3,224,548(1)(2)(3)
Use of Proceeds...........................  The  Company intends to apply the  net proceeds from the Offering for
                                              marketing, research  and  product  development,  the  repayment  of
                                              indebtedness,  the  purchase  of  capital  equipment;  and  working
                                              capital and general corporate purposes. See 'Use of Proceeds.'
Risk Factors and Dilution.................  Prospective investors should carefully consider the matters set forth
                                              under the captions 'Risk Factors' and 'Dilution.' An investment  in
                                              the  securities offered hereby  involves a high  degree of risk and
                                              immediate and substantial dilution.
OTC Electronic Bulletin Board Symbol(4)...  Common Stock: TTRE
</TABLE>
 
- ------------
 
(1) Does not include 450,000 shares of  Common Stock reserved for issuance  upon
    exercise  of  stock  options  granted  or which  may  be  granted  under the
    Company's Employee Stock Option Plan (the '1996 Plan').
 
(2) Excludes 1,000,000 shares  of Common  Stock which have  been deposited  into
    escrow by the holders thereof. The Escrow Shares are subject to cancellation
    and  will be contributed to  the capital of the  Company if the Company does
    not attain certain earnings levels or  the market price of the Common  Stock
    does not achieve certain levels. If such earnings or market price levels are
    met,  the Company will record a substantial non-cash charge to earnings, for
    financial reporting purposes, as compensation expense relating to the  value
    of  the Escrow Shares released to  Company officers and employees. See 'Risk
    Factors --  Charge to  Income in  the Event  of Release  of Escrow  Shares,'
    'Capitalization' and 'Principal Stockholders.'
 
(3) Does  not give effect to the return  to treasury of 135,000 shares of Common
    Stock  (the  'Bridge  Shares')  from   the  Limited  Partners  (as   defined
    hereafter). See 'Description of Securities -- Prior Financings.'
 
(4) The  Company anticipates  that the  Common Stock will  be quoted  on the OTC
    Electronic Bulletin  Board.  An  OTC  Electronic  Bulletin  Board  quotation
    listing  does not imply that  a liquid and active  market will develop or be
    sustained for the securities upon completion of the Offering.
 
                                       5
 <PAGE>
<PAGE>
                         SUMMARY FINANCIAL INFORMATION
 
     The summary  financial information  set  forth below  is derived  from  the
Financial Statements included elsewhere in this Prospectus and should be read in
conjunction with such Financial Statements and the Notes thereto.
 
<TABLE>
<CAPTION>
                                                     FROM INCEPTION                          NINE MONTHS ENDED
                                                     (JULY 14, 1994)     YEAR ENDED            SEPTEMBER 30,
                                                     TO DECEMBER 31,    DECEMBER 31,    ---------------------------
                                                          1994              1995            1995            1996
                                                     ---------------    ------------    -------------    ----------
 
<S>                                                  <C>                <C>             <C>              <C>
Income Statement Data:
     Revenue......................................     $  --            $   --           $   --          $   --
     Total expenses...............................          36,441          765,867          545,650        760,872
     Operating loss...............................         (36,441)        (765,867 )       (545,650)      (760,872)
     Net loss.....................................         (42,085)        (896,663 )       (612,811)      (897,039)
                                                     ---------------    ------------    -------------    ----------
                                                     ---------------    ------------    -------------    ----------
     Net loss per share(1)........................     $     (0.02)     $     (0.37 )    $     (0.26)    $    (0.39)
                                                     ---------------    ------------    -------------    ----------
                                                     ---------------    ------------    -------------    ----------
     Weighted average shares outstanding..........       2,778,533        2,399,793        2,339,337      2,641,034
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                          AT SEPTEMBER 30, 1996
                                                                                      -----------------------------
                                                                    DECEMBER 31,                      PRO FORMA AS
                                                                        1995             ACTUAL        ADJUSTED(2)
                                                                   ---------------    ------------    -------------
 
<S>                                                                <C>                <C>             <C>
Balance Sheet Data:
     Working capital (deficiencies).............................     $  (616,839)     $(1,955,281 )    $ 2,488,900
     Total assets...............................................         403,204          646,985        4,384,298
     Total liabilities..........................................       1,274,427        2,026,377        1,526,377
     Total stockholders' equity (deficit).......................        (871,223)      (1,379,392 )      2,857,921
</TABLE>
 
- ------------
 
(1) Earnings  per  share  are  presented  for 1995  and  the  nine  months ended
    September 30, 1996 on a pro forma  basis to reflect the exercise of  374,548
    warrants as if it occurred on January 1, 1995. See 'Financial Statements.'
 
(2) Gives  pro forma effect to (i) the exercise of 374,548 warrants and (ii) the
    consummation of  this Offering  and  the application  of the  estimated  net
    proceeds  thereof.  Does not  take into  account the  return to  treasury of
    135,000  Bridge  Shares.  See   'Use  of  Proceeds,'  'Capitalization'   and
    'Description of Securities -- Prior Financings.'
 
                                       6
<PAGE>
<PAGE>
                                  RISK FACTORS
 
     The  securities offered hereby are speculative and involve a high degree of
risk and should not be purchased by persons who cannot afford the loss of  their
entire investment. Prospective investors should carefully consider the following
risk  factors, as  well as  all other  information set  forth elsewhere  in this
Prospectus.
 
     Except for  the  historical  information contained  herein,  the  following
discussion   contains   forward-looking  statements   that  involve   risks  and
uncertainties. The Company's actual results  could differ materially from  those
projected in the forward-looking statements discussed herein. Factors that could
cause  or contribute to such differences include,  but are not limited to, those
discussed in  this  section,  as well  as  in  the sections  entitled  'Plan  of
Operation' and 'Business.'
 
     Development   Stage  Company;  History  of  Operating  Losses;  Accumulated
Deficit; Working  Capital  Deficiency;  Stockholders'  Deficit;  Uncertainty  of
Future  Profitability. The Company is a development stage company with a limited
history of operations,  and has an  accumulated deficit from  inception in  July
1994  through September 30, 1996, of  approximately $1,835,787. As a development
stage company, the Company has a  limited relevant operating history upon  which
an  evaluation of the  Company's prospects can be  made. The Company's prospects
must therefore  be evaluated  in light  of the  problems, expenses,  delays  and
complications associated with a new business. At September 30, 1996, the Company
had a working capital deficiency of approximately $1,955,000 and a stockholders'
deficit of approximately $1,379,000. Losses have resulted principally from costs
incurred  in research  and development  of the  SoftGuard technologies  and from
general and administrative costs. The current version of SoftGuard, although out
of the  development stage  and ready  for commercialization,  has not  yet  been
released.  Accordingly, the Company  has not realized  any operating revenues to
date. The  Company  expects  to  continue to  incur  operating  losses  for  the
foreseeable  future until such time, if ever,  as the Company is able to achieve
sufficient levels of revenues  from operations. There can  be no assurance  that
the  Company will ever generate revenues  or achieve profitability. See 'Plan of
Operation.'
 
     Explanatory  Paragraph  in  Independent  Auditors'  Report.  The  Company's
independent  auditors have included an explanatory  paragraph in their report on
the Company's financial statement stating that certain factors raise substantial
doubt about the Company's ability to continue as a going concern. The  Company's
continuation  as  a  going-concern  is  dependent  upon  its  ability  to obtain
additional financing, including from this Offering, to generate sufficient  cash
flow  to meet  its obligations on  a timely basis.  As a result  of the start-up
nature of the Company's business, additional operating losses can be expected in
the foreseeable  future. There  can be  no  assurance that  the Company  can  be
operated  profitably in  the future.  See 'Plan  of Operation'  and Consolidated
Financial Statements.
 
     Future Capital Needs;  Uncertainty of Additional  Financing. The  Company's
cash  requirements  may  vary materially  from  those now  planned  depending on
numerous factors, including the status  of the Company's marketing efforts,  the
Company's  business development activities,  the results of  future research and
development and competition. Notwithstanding, the Company believes that the  net
proceeds   of  this  Offering,  together  with  its  projected  cash  flow  from
operations, if any, will be sufficient to finance its working and other  capital
requirements  for a  period of  approximately 12  months from  the date  of this
Prospectus. Thereafter, or sooner if  conditions make it necessary, the  Company
may  need  to  raise  additional funds  through  public  or  private financings,
including equity financings which  may be dilutive  to stockholders. Any  future
equity  financings within the next 36 months would be subject to the approval of
the Underwriter. There  can be no  assurance that  the Company will  be able  to
raise  additional funds  if its capital  resources are exhausted,  or that funds
will be available  on terms attractive  to the  Company or at  all. If  adequate
funds  are not available, the  Company may be required  to reduce materially its
proposed  operations.  See  'Use  of  Proceeds,'  'Underwriting'  and  'Plan  of
Operation.'
 
     Dependence  of Single Product Line and Limited Market. The Company proposes
to initially  market one  line of  products  to a  limited market  of  customers
desiring  to  protect  their  software  products.  The  Company  estimates  that
worldwide sales of software  protection products was approximately  $120,000,000
in  1995.  The  Company believes  that  future  sales growth  will  be dependent
primarily upon expansion of the software  protection products market as well  as
the Company's ability to market its
 
                                       7
 <PAGE>
<PAGE>
products.  There can be  no assurance that the  Company will successfully market
its products or that  the market for software  security products will grow.  See
'Business -- Sales and Marketing.'
 
     Uncertainty  of End-User  Acceptance of  SoftGuard Products.  The Company's
SoftGuard product  line  is intended  to  be  sold to  software  developers  for
inclusion  in the applications programs marketed  and sold by them. However, the
Company is ultimately  dependent upon  the end-user's  acceptance of  SoftGuard.
Many software development houses have elected to not include software protection
with  their  software programs  because  end-users have  encountered operational
difficulties with,  or have  indicated an  unwillingness to  use, such  software
protection. While the Company believes that SoftGuard is intended to address and
solve  many of  the operational difficulties  encountered by  end-users in using
many of the commercially available software protection products, there can be no
assurance that software developers will elect to include the Company's  proposed
products  in their software products or that  if such products are included, the
products will be accepted by the general market. There can be no assurance  that
the  Company will be able to market its software protection successfully or that
future  products,   if  any,   will  be   accepted  in   the  marketplace.   See
'Business -- SoftGuard Software Protection' and ' -- Sales and Marketing.'
 
     New  Products and Rapid Technological Change.  The market for the Company's
proposed products  is characterized  by  rapidly changing  technology,  evolving
industry  standards and new product  introductions. The Company's future success
will depend  in part  on its  ability to  enhance its  planned products  and  to
introduce  new products and technologies to meet changing customer requirements.
The Company is currently devoting  significant resources toward the  development
of  enhancements to its planned software  protection line of products. There can
be no assurance that the Company  will successfully complete the development  of
these  products in  a timely  fashion or  that the  Company's current  or future
products will satisfy the needs of the software security market. There can  also
be  no assurance  that security  related products  or technologies  developed by
others will not adversely  affect the Company's  competitive position or  render
its  products or technologies non-competitive or obsolete. Moreover, the Company
is committed to  devote a substantial  portion of its  revenues to research  and
development  efforts.  There can  be  no assurance  that  these efforts  will be
successful. See 'Use Of Proceeds' and 'Business -- Research and Development' and
' -- Competition.'
 
     Proposed Expansion; Risks Associated with Acquisitions. The Company intends
to use a significant portion of the net proceeds of this Offering to expand  its
operations  through the  establishment of its  sales and  marketing efforts, the
expansion of  its  research  and development  activities,  or  through  possible
acquisitions. The Company believes that the net proceeds of the Offering will be
sufficient to enable the Company to carry out its planned growth, although there
can be no assurance it will be able to do so.
 
     The  Company  may  also seek  to  expand its  operations  through potential
acquisitions. The  Company may  use a  portion  of the  net proceeds  from  this
Offering  to acquire all or a portion  of existing companies in businesses which
the Company  believes  are compatible  with  its business,  including,  but  not
limited to, competitors of the Company. Any decision to make an acquisition will
be  based upon a variety of factors, including, among others, the purchase price
and other financial  terms of the  transaction, the business  prospects and  the
extent  to which any  acquisition would enhance the  Company's prospects. To the
extent that the Company may, depending  upon the opportunities available to  it,
finance  an acquisition  with a combination  of cash and  equity securities, any
such issuance of equity securities could result in dilution to the interests  of
the  Company's stockholders.  However, any  future equity  financings within the
next  36  months  would  be  subject   to  the  approval  of  the   Underwriter.
Additionally,  to  the extent  that the  Company, or  the acquisition  or merger
candidate itself, issues debt securities in connection with an acquisition,  the
Company  may  be  subject  to  risks  associated  with  incurring  indebtedness,
including the risks of interest rate fluctuations and insufficiency of cash flow
to pay  principal  and  interest.  The  Company  is  not  currently  engaged  in
identifying   any   potential  acquisition   and   has  no   plans,  agreements,
understandings or arrangements for any  acquisitions. There can be no  assurance
that  the Company  will be  able to  successfully consummate  any acquisition or
successfully integrate  into  its  business any  acquired  business  or  portion
thereof.
 
     The  management  of the  anticipated  growth in  expenditures  will require
expansion of the Company's management and financial controls, and could place  a
significant  strain on  the Company's resources.  None of  the Company's current
officers   have    had    experience    in    managing    a    public    company
 
                                       8
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or a company having expenditures as large as the anticipated expenditures of the
Company.  While the  Company intends  to hire  additional appropriate personnel,
there can  be no  assurance that  these  or other  measures implemented  by  the
Company  will  effectively increase  the Company's  capabilities to  manage such
growth or to do so in a timely and cost effective manner. See 'Use of  Proceeds'
and 'Business.'
 
     Limited   Marketing   Capability.   The  Company   has   limited  marketing
capabilities  and   resources.  Achieving   market  penetration   will   require
significant  efforts by the  Company to create  awareness of and  demand for the
Company's products. Accordingly,  the Company's  ability to  build its  customer
base  will  be dependent  on  its marketing  efforts,  including its  ability to
establish an  effective  internal  sales organization,  or  establish  strategic
marketing  arrangements with other companies. The Company currently has no plan,
agreement, understanding or arrangement with any distributors, and no  assurance
can  be  given  that  any will  be  entered  into. The  failure  by  the Company
successfully to develop its marketing capabilities, both internally and  through
distributors,  would have a  material adverse effect  on the Company's business.
Further, there  can be  no  assurance that  the  development of  such  marketing
capabilities will lead to sales of the Company's products. See 'Use of Proceeds'
and 'Business -- Sales and Marketing.'
 
     Risks Associated with International Sales. The Company intends to initially
market  its  products  primarily in  North  America and  Israel  with subsequent
efforts in Europe and  the Far East.  The Company will be  subject to the  risks
inherent  in international business activities,  including unexpected changes in
regulatory requirements and the burdens of complying with a wide variety of laws
and regulations. Moreover, if for any reason exchange or price controls or other
restrictions on the conversion of foreign currencies were imposed, the Company's
business could be materially adversely affected.
 
     Risks Associated  with  Operations in  Israel.  The Company's  offices  and
production  facilities  are located  in  the State  of  Israel and  are directly
affected by the economic, military and political conditions in that country. For
information with  respect to  certain factors  concerning the  State of  Israel,
including   risks  related  to   the  political  and   economic  situation,  see
'Business -- Conditions in Israel.'
 
     Uncertain Ability  to  Protect  Patent-Pending  Technology.  The  Company's
ability  to  compete  effectively  depends  on  its  success  in  protecting its
proprietary technology, both in  the United States and  abroad. The Company  has
filed for patent protection in the United States, Israel, Germany, France, Great
Britain,  the Netherlands  and Japan  for the process  by which  it imprints the
protection diskette used in the proposed  SoftGuard line of products and in  the
United  States for the technology underlying the proposed DiscGuard CD-ROM based
protection (the 'Patent  Rights'). No assurance  can be given  that any  patents
will  be issued from  the United States  or other patent  offices for the Patent
Rights, that the Company  will receive any  patents in the  future based on  its
continued development in the technology, or that the Company's patent protection
within  and/or outside of the United States  will be sufficient to deter others,
legally  or  otherwise,  from  developing  or  marketing  competitive   products
utilizing the SoftGuard technologies.
 
     The  Company believes that the protection  afforded by the Patent Rights is
material to its future revenues and earnings. There can be no assurance that the
Patent Rights  will be  found to  be valid  or that  the Patent  Rights will  be
enforceable to prevent others from developing and marketing competitive products
or  methods. A successful challenge  to the validity of  the Patent Rights would
have a material adverse effect on the Company, and could jeopardize its  ability
to  engage in  its contemplated business  activities. An  infringement action on
behalf of the Company  may require the diversion  of substantial funds from  the
Company's  operations and  may require management  to expend  efforts that might
otherwise be devoted to the Company's  operations. Furthermore, there can be  no
assurance that the Company will be successful in enforcing the Patent Rights.
 
     The  Company has  received a  letter from  attorneys in  Israel relating to
allegations that  the technologies  comprising the  Company's proposed  products
infringe  certain proprietary  rights of  others. Although  the Company believes
that the  allegations are  without merit,  there can  be no  assurance that  the
Company  will be successful  in defending against  such claims. There  can be no
assurance that other patent infringement claims in the United States, Israel  or
in  other countries will not be asserted  against the Company by a competitor or
others, or if asserted, that the Company will be successful in defending against
such claims. In the event one of the Company's proposed products is adjudged  to
infringe
 
                                       9
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patents of others with the likely consequence of a damage award, the Company may
be  enjoined from  using and  selling such  product or  be required  to obtain a
royalty-bearing license, if available on acceptable terms. Alternatively, in the
event a license is not offered, the  Company might be required, if possible,  to
redesign  those  aspects  of  the  product  held  to  infringe  so  as  to avoid
infringement. Any redesign efforts undertaken by the Company might be expensive,
could delay the introduction  or the re-introduction  of the Company's  products
into  certain  markets, or  may  be so  significant  as to  be  impractical. See
'Business  --  Legal   Proceedings,'  'Business  --   Patents,  Trademarks   and
Proprietary Information' and 'Risk Factors -- Competition.'
 
     Trademark  Registration. The  Company intends  to promote  the 'SoftGuard,'
'NetGuard,' 'Remote Activation Center' and 'DiscGuard' trademarks in  connection
with  its  marketing activities.  The Company  pursues  the registration  of its
trademarks  in   the   United   States  and   (based   upon   anticipated   use)
internationally,  and  has  applied  for  the  registration  of  certain  of its
trademarks, including 'SoftGuard,' and intends to apply for others. There can be
no assurance that prior registrations and/or uses  of one or more of such  marks
(or a confusingly similar mark) does not exist in one or more of such countries,
in  which case  the Company might  thereby be precluded  from registering and/or
using such  mark in  such  country. See  'Business  -- Patents,  Trademarks  and
Proprietary Information.'
 
     Competition. The software protection industry is extremely competitive. The
Company's  primary  competitors  include  companies  with  substantially greater
financial, technological,  marketing,  personnel and  research  and  development
resources  than those of the Company. There can be no assurance that the Company
will be able  to compete  successfully in  this market.  In particular,  Rainbow
Technologies  Inc. and Aladdin Knowledge Systems  Ltd., each have an established
installed product base in the limited  market that exists for software  security
products.  Further, there can  be no assurance  that existing software companies
will not enter the market in the future. Although the Company believes that  its
products are distinguishable from those of its competitors on the basis of their
technological  features  and  functionality at  an  attractive price/performance
ratio, there can be no assurance that the Company will be able to penetrate  any
of  its competitors'  portion of the  market. Many of  the Company's competitors
have existing relationships with major software development houses in the United
States, some  of which  are  dominant software  producers worldwide,  and  those
existing  relationships  may  impede  the Company's  ability  to  sell  to those
customers and expand its  market share. Furthermore, there  can be no  assurance
that  the Company will  be able to continue  developing products with innovative
features and  functions, or  that  developments by  others  of similar  or  more
effective  products  will  not  render the  Company's  products  or technologies
noncompetitive or obsolete. Since the Company's proposed products will be new to
the market and sold in competition  with the products of companies with  greater
financial  and other resources, there can be  no assurance that a market for the
Company's products will develop. See 'Business -- Competition.'
 
     Protection of Proprietary Technology and Information. The Company will also
rely on  trade secrets,  know-how and  continuing technological  advancement  to
maintain  its proposed  competitive position.  Although the  Company has entered
into  confidentiality   and  invention   agreements  with   its  employees   and
consultants,  no assurance can be given that  such agreements will be honored or
that the  Company  will  be  able  to effectively  protect  its  rights  to  its
unpatented  trade secrets and know-how. Moreover, no assurance can be given that
others will  not  independently  develop  substantially  equivalent  proprietary
information  and  techniques or  otherwise gain  access  to the  Company's trade
secrets and  know-how.  See 'Business  --  Patents, Trademarks  and  Proprietary
Information.'
 
     Manufacture  of  Production  Machinery. The  Company  utilizes  a specially
designed laser based machine (the 'Diskette Marking Machine') in  mass-producing
the  protection diskette used  in its proposed  SoftGuard products. The Diskette
Marking Machine was built  by an independent third-party  and specially made  to
the  Company's  order. The  Company currently  has one  fully-operating Diskette
Marking Machine, which it believes can meet its foreseeable needs. Although  the
Company  does not have a written contract  with the manufacturer of its Diskette
Marking Machine, the Company believes,  based upon the experience of  Management
and  the Company's working relationship with  such manufacturer, that it will be
able to  have additional  Diskette Marking  Machines produced  on an  as  needed
basis.  There can be no  assurance that the Company will  be able to purchase or
will not experience delays  in shipment of future  Diskette Marking Machines  or
that  it will have  a sufficient number  of such machines  to produce protection
diskettes at full capacity.
 
                                       10
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     The Company  believes that  it  could arrange  for  the assembly  of  these
machines  with alternate sources  if required to  do so, but  that any alternate
arrangement  could  result   in  temporary   disruptions  of   its  design   and
manufacturing  operations.  Most  of  the sources  and  components  used  in the
manufacture and assembly  of the  Diskette Marking Machine  are obtainable  from
local  sources, except for the laser device that specially marks each protection
diskette. Although  the Company  believes that  there are  adequate  alternative
sources  for  such devices,  there  can be  no assurance  that  the usage  of an
alternative source for  the laser device  will not render  the Diskette  Marking
Machine  cost ineffective or that the Company  will not experience delays in its
operations.
 
     Dependence on Key  Personnel. The success  of the Company  will be  largely
dependent  upon the  personal efforts  of Marc  D. Tokayer,  Dr. Baruch Sollish,
Ph.D. and Arik Shavit.  The loss of  the services of any  of such persons  could
have a material adverse effect on the Company's business and prospects. Although
the   Company  has  entered   into  employment  agreements   with  each  of  the
aforementioned individuals, there can be no  assurance that the Company will  be
able to retain their services. The Company is seeking to obtain prior to closing
of  this Offering  key-man life  insurance on Mr.  Tokayer and  Dr. Sollish with
benefits of $1,000,000  payable to  the Company in  the event  of each  person's
death.  The  benefits  receivable under  these  proposed policies  might  not be
sufficient to  compensate the  Company for  the  loss of  Mr. Tokayer's  or  Dr.
Sollish's services should a suitable replacement not be employed. The Company is
also  dependent  to a  substantial degree  on its  other technical  and research
staff. Further,  the success  of the  Company will  also be  dependent upon  its
ability  to  hire and  retain  additional qualified  management,  marketing, and
financial personnel,  including  a chief  financial  officer. The  Company  will
compete  with other  companies with  greater financial  and other  resources for
other such  personnel. Although  the Company  has not  experienced to  date  any
difficulty in attracting qualified personnel, there can be no assurance that the
Company  will  be able  to retain  its present  personnel or  acquire additional
qualified personnel  as  and when  needed.  See 'Management  --  Employment  and
Consulting Agreements.'
 
     Control   by  Management  and  Current  Stockholders;  Absence  of  Outside
Directors. Upon consummation  of this  Offering, Management of  the Company  and
current stockholders will own 2,349,548 shares of Common Stock, or approximately
72.9%  of  the then  issued  and outstanding  shares  of Common  Stock.  Marc D.
Tokayer, Chairman  of  the Board,  the  Tokayer Family  Trust,  Baruch  Sollish,
Director  and four other  stockholders with an aggregate  of 1,137,430 shares of
Common Stock (35.3% after the Offering)  have entered into a voting  arrangement
whereby  they have agreed to vote their respective shares to elect directors and
in support of positions  favored by a  majority of the  shares held among  them.
Accordingly, the Company's present Management may be able to effectively control
the  Company,  elect all  of the  Company's  directors, increase  the authorized
capital, dissolve, merge or sell all of the assets of the Company, and generally
direct the  affairs of  the Company.  Currently,  all members  of the  Board  of
Directors  are also employees of the Company. The absence of independent outside
directors may  further  Management's  control of  the  Company.  See  'Principal
Stockholders.'
 
     Broad  Discretion in Application  of Proceeds. While  the Company presently
intends to use the net proceeds of this Offering as set forth herein, Management
has broad discretion in the application of the net proceeds allocated to working
capital and general corporate purposes, which  may be used, among other  things,
for  payment of executive salaries. As a result of the foregoing, the success of
the Company will be substantially dependent upon the discretion and judgment  of
Management. See 'Use of Proceeds.'
 
     Immediate Substantial Dilution. The Company's present stockholders acquired
their  shares of  the Company's  Common Stock  at costs  substantially below the
anticipated offering price  of the  Common Stock to  be sold  in this  Offering.
Therefore,  investors purchasing  Common Stock  in this  Offering will  incur an
immediate and substantial dilution in net tangible book value per share of $6.32
(90%). Accordingly, investors will bear a disproportionate part of the financial
risk associated with the Company's business while effective control will  remain
with existing stockholders. See 'Dilution.'
 
     Charge  to Earnings in the  Event of Release of  Escrow Shares. The Company
has outstanding 1,000,000 Escrow  Shares which will be  released from escrow  if
the  Company attains certain earnings levels over the next one to three years or
if the Common  Stock trades at  certain levels  over the next  three years.  The
position  of  the Securities  and  Exchange Commission  (the  'Commission') with
respect to such escrow  arrangements provides that in  the event any shares  are
released  from  escrow to  the  stockholders of  the  Company who  are officers,
directors, employees or consultants of the Company, a
 
                                       11
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compensation  expense  will  be  recorded  for  financial  reporting   purposes.
Accordingly, the Company will, in the event of the release of the Escrow Shares,
recognize  during the period  in which the  earnings thresholds are  met or such
stock levels achieved,  a substantial noncash  charge to earnings  equal to  the
fair  value of such  shares on the date  of their release,  which would have the
effect of significantly increasing the Company's loss or reducing or eliminating
earnings, if any, at such time. The recognition of such compensation expense may
have a depressive effect  on the market price  of the Company's securities.  See
'Plan  of Operation,' 'Principal Stockholders'  and 'Description of Securities.'
Notwithstanding the foregoing  discussion, there  can be no  assurance that  the
Escrow Shares will be released from escrow.
 
     No  Dividends. To date, the Company has  not paid any cash dividends. After
the consummation  of  this  Offering,  the Company  does  not  intend,  for  the
foreseeable  future,  to declare  or  pay any  dividends  and intends  to retain
earnings, if  any, for  the  future operation  and  expansion of  the  Company's
business.  The declaration and payment of any  cash dividends in the future will
be determined by the Board  of Directors of the  Company in light of  conditions
and  circumstances  then  existing,  including the  Company's  earnings  and its
financial conditions and requirements. See 'Dividends.'
 
     OTC  Electronic   Bulletin  Board;   Absence   of  Prior   Public   Market;
Determination  of Offering Price.  The Company's Common Stock  will be traded in
the over-the-counter market. It is anticipated that it will be quoted on the OTC
Electronic Bulletin Board, an NASD-sponsored and operated inter-dealer automated
quotation system  for equity  securities  not included  in the  Nasdaq  SmallCap
Market or Nasdaq National Market, and will also be quoted in the NQB Pink Sheets
published by the National Quotation Bureau Incorporated. Prior to this Offering,
there  has been no public trading market for  the Common Stock, and there can be
no assurance that an active public market  for the Common Stock will develop  or
continue  following  the Offering.  There  can be  no  assurance that  an active
trading market for  the securities  will develop, or  if a  trading market  does
develop, that it will continue. Until such time, if ever, that an active trading
market  develops,  investors  will,  in all  likelihood,  be  unable  readily to
liquidate their investment in the Company's securities following this Offering.
 
     The initial public offering price of  the Common Stock has been  determined
by  negotiation between the Company and  the Underwriter and may not necessarily
bear any relationship  to the Company's  assets, book value,  revenues or  other
established  criteria of value,  and should not be  considered indicative of the
price at which  the Common Stock  will trade after  completion of the  Offering.
There  can be no  assurance that the market  price of the  Common Stock will not
decline below their initial public offering price. See 'Underwriting.'
 
     Possible Volatility of Securities Prices. Trading volume and prices for the
Common Stock could  be subject  to wide  fluctuations in  response to  quarterly
variations in operations, financial results, announcements with respect to sales
and  earnings, technological innovations, new  product developments, the sale or
attempted sale of a large amount of  securities in the public market, and  other
events  or factors  which cannot  be foreseen  or predicted  by the  Company. In
addition, various factors affecting the  computer industry generally may have  a
significant impact on the market price of the Common Stock, as well as price and
volume volatility affecting small and emerging growth companies, in general, and
not necessarily related to the operating performance of such companies.
 
     Shares  Eligible for Future Sale. Future sales of shares of Common Stock by
existing stockholders pursuant to  Rule 144 ('Rule  144') promulgated under  the
Securities  Act of 1933, as amended  (the 'Securities Act'), or otherwise, could
have an  adverse  effect on  the  price of  the  shares of  Common  Stock.  Upon
completion  of this Offering,  the Company will have  3,224,548 shares of Common
Stock outstanding (excluding 1,000,000 Escrow  Shares and without giving  effect
to  the return to treasury  of 135,000 Bridge Shares).  In addition, the Company
has reserved for issuance 217,473 shares  upon exercise of warrants at $.01  per
share,  5,000  shares upon  exercise  of options  granted  under the  1996 Plan,
445,000 shares  upon exercise  of options  to be  granted under  the 1996  Plan,
1,000,000  shares for issuance upon exercise of  warrants at $7.00 per share and
up to 80,000 shares  for issuance upon exercise  of the securities contained  in
the Underwriter's Warrants.
 
     The  800,000 shares of Common Stock offered hereby and the 1,139,548 shares
of Common Stock  (excluding 217,473  shares issuable upon  exercise of  warrants
subject   to  a  four-year  vesting  schedule)  being  offered  by  the  Selling
Securityholders (all of which shares are subject to lock-up agreements described
below) will be freely transferable  without restriction or further  registration
under  the Securities Act except  for any shares purchased  by an 'affiliate' of
the Company within the meaning of
 
                                       12
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Rule 144. The  remaining 1,150,000 outstanding  shares of Common  Stock will  be
'restricted  securities,' as that term  is defined in Rule  144, and may only be
sold pursuant  to  a registration  statement  under  the Securities  Act  or  an
applicable exemption from registration thereunder, including exemptions provided
by  Rule 144. Approximately 653,547  of such shares will  be eligible for resale
under Rule 144  commencing 90 days  following the completion  of this  Offering;
however,  all of  such shares  are subject  to the  lock-up agreements described
hereafter. The remaining shares will become  eligible for resale under Rule  144
between July 1997 through February 1998. In addition, the Company has granted to
some  securityholders certain registration rights. No  prediction can be made as
to the effect that future sales of  Common Stock, or the availability of  shares
of  Common Stock for future  sales, will have on the  market price of the Common
Stock prevailing  from time  to time.  Sales of  substantial amounts  of  Common
Stock,  or the  perception that such  sales could occur,  could adversely affect
prevailing market prices  for the Common  Stock and could  impair the  Company's
ability  to raise capital through the future  sale of its equity securities. The
Company, its officers, directors and stockholders beneficially owning 5% or more
of the Common Stock, all Selling  Securityholders (except for a certain  Selling
Securityholder  who has agreed to lock-up his  15,000 shares, for a period of 18
months) and certain  other stockholders (holding  an aggregate of  approximately
2,214,548  shares, excluding up to 60,000  shares included in the Over-allotment
Option) have agreed, for a period of 24 months from the date of this Prospectus,
not to sell or otherwise dispose of  any securities of the Company, without  the
prior written consent of the Underwriter. See 'Principal Stockholders,' 'Certain
Transactions,' 'Shares Eligible for Future Sale' and 'Underwriting.'
 
     Effect   of  Outstanding  Warrants   and  Options.  The   exercise  of  the
Underwriter's Warrants,  other  warrants and  stock  options granted  or  to  be
granted  may adversely affect prevailing market  prices for the Common Stock and
may dilute  the interests  of existing  stockholders. Moreover,  the terms  upon
which  the  Company will  be able  to  obtain additional  equity capital  may be
adversely affected  since the  holders  of such  outstanding securities  can  be
expected  to exercise them at a time  when the Company would, in all likelihood,
be able to obtain any needed capital on terms more favorable to the Company than
those provided in the Underwriter's Warrants, other warrants or the options. The
Company has granted certain demand  and 'piggy-back' registration rights to  the
Underwriter  with  respect  to  the securities  issuable  upon  exercise  of the
Underwriter's Warrants. See 'Description of Securities' and 'Underwriting.'
 
     Antitakeover Provisions of Delaware Law. Certain provisions of Delaware law
may discourage  third party  attempts  to acquire  control  of the  Company.  In
particular,  Section  203  of  the Delaware  General  Corporation  Law generally
prohibits a  publicly held  Delaware corporation  from engaging  in a  'business
combination'  with an 'interested stockholder' for a period of three years after
the  date  of  the  transaction  in  which  such  person  became  an  interested
stockholder,  unless certain restrictive  requirements are met.  The Company has
not opted  to include  any provisions  in its  Certificate of  Incorporation  or
By-laws  electing not  to be  governed by  Section 203  of the  Delaware General
Corporation  Law.  The  provisions  of  Section  203  of  the  Delaware  General
Corporation  Law may have a depressive effect  on the market price of the Common
Stock because  they could  impede any  merger, consolidating  takeover or  other
business  combination involving the  Company or discourage  a potential acquiror
from making a  tender offer  or otherwise attempting  to obtain  control of  the
Company. See 'Description of Securities.'
 
     Restrictions  on Israeli  Government Funding for  Research and Development.
TTR Israel has received from  the Office of the  Chief Scientist of the  Israeli
Ministry of Industry & Trade (the 'OCS') certain research and development grants
in the approximate amount of $97,500. As a condition to its participation in the
funding  program  of  the OCS,  TTR  Israel  may not  transfer  the technologies
developed using such funds  out of Israel  without the consent  of the OCS.  TTR
Israel  is also  obligated to  pay a  specified level  of royalties  on sales of
products developed  using  such grants.  Moreover,  OCS grant  programs  as  are
currently  in effect  require the Company  to comply with  various conditions in
order for TTR Israel to continue  to be eligible for participation. The  Company
anticipates that for so long as such grants continue to be available, TTR Israel
will  likely seek from  time to time  to utilize such  grants. While the Company
believes that TTR Israel will continue  to participate in these grant  programs,
no  assurance can be given that  this will be the case  or that the programs, or
their conditions of participation, will be  maintained in their current form  or
at all. See 'Business -- Research and Development.'
 
                                       13
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     Service  of Process and  Enforcement of Judgments.  Service of process upon
directors and officers  of the Company,  all of whom  reside outside the  United
States,  may be difficult to obtain within the United States. Furthermore, since
substantially all of the Company's assets are located outside the United States,
any judgment  obtained in  the United  States  against the  Company may  not  be
collectible within the United States.
 
     The  Company has been informed  by its Israeli legal  counsel that there is
doubt as to the enforceability of civil liabilities under the Securities Act and
the Securities Exchange Act of 1934, as amended, in original actions  instituted
in  Israel. However, subject to certain  limitations, Israeli courts may enforce
United States final executory judgments for liquidated amounts in civil matters,
obtained after a trial  before a court of  competent jurisdiction (according  to
the  rules of  private international law  currently prevailing  in Israel) which
enforce similar Israeli judgments, provided that (i) due service of process  has
been  effected, (ii) such judgments or  the enforcement thereof are not contrary
to the law, public policy, security or sovereignty of the State of Israel, (iii)
such judgments were not  obtained by fraud  and do not  conflict with any  other
valid  judgments in the same matter between  the same parties and (iv) an action
between the same parties in the same matter is not pending in any Israeli  court
at the time the lawsuit is instituted in the foreign court. All of the Company's
executive   officers  and   Directors  have  irrevocably   appointed  Samuel  F.
Ottensoser, Esq. of  Baer Marks &  Upham as  their agent to  receive service  of
process in any action against them in any Federal or state court of the State of
New York.
 
     Foreign  judgments enforced by Israeli courts  generally will be payable in
Israeli currency, and a  specific permit of the  Controller of Foreign  Exchange
will  be required to convert  the Israeli currency into  dollars and to transfer
such dollars out of Israel. Judgment creditors must bear the risk that they will
be unable to convert their award  into foreign currency that can be  transferred
out of Israel and the risk of unfavorable exchange rates.
 
     Penny   Stock  Regulation.  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.  If the  Company's securities  become subject  to the  penny  stock
rules,  investors in  this Offering  may find  it more  difficult to  sell their
securities.
 
     Possible Conflicts  of Directors.  In lieu  of the  Underwriter's right  to
designate  two non-voting  advisors to the  Company's Board of  Directors at any
time within the five  years commencing in fiscal  1996, the Underwriter has  the
right  during such  five-year period, in  its sole discretion,  to designate two
persons for election as  directors of the Company.  If and when the  Underwriter
designates  such persons to serve as directors of the Company, those individuals
may  be  associated  persons  of  the  Underwriter  who  may  have   conflicting
obligations  to the  Company and  the Underwriter when  serving on  the Board of
Directors. See 'Underwriting.'
 
     Relationship  of  Underwriter  to  Trading;  Lack  of  Experience  of   the
Underwriter. The Underwriter may act in a market making capacity with respect to
the purchase or sale of the Common Stock in the over-the-counter market where it
will trade. First Metropolitan Securities, Inc. commenced operations in November
1995, and has acted as an underwriter of only one public offering of securities.
First  Metropolitan's  lack of  experience  may have  an  adverse impact  on the
development of  a trading  market for  the Company's  securities following  this
Offering. See 'Underwriting.'
 
                                       14
<PAGE>
<PAGE>
                                USE OF PROCEEDS
 
     The  net proceeds to  the Company from  the sale of  the Securities offered
hereby  (after  deducting  underwriting  discounts  and  commissions  and  other
expenses  of  this  Offering),  are  estimated  to  be  approximately $4,297,000
($4,662,400 if  the Over-allotment  Option is  exercised in  full). The  Company
expects  to use the  net proceeds in  approximately the manner  set forth in the
following table:
 
<TABLE>
<CAPTION>
                                                                                             APPROXIMATE
                             APPLICATION OF                                 APPROXIMATE     PERCENTAGE OF
                                PROCEEDS                                   DOLLAR AMOUNT    NET PROCEEDS
- ------------------------------------------------------------------------   -------------    -------------
<S>                                                                        <C>              <C>
Repayment of Indebtedness(1)............................................    $ 2,215,000          51.6%
Research and Product Development(2).....................................        615,000          14.3
Additional Facilities(3)................................................        500,000          11.6
Marketing(4)............................................................        473,000          11.0
Capital Equipment(5)....................................................        150,000           3.5
Working Capital and General Corporate Purposes(6).......................        344,000           8.0
                                                                           -------------       ------
     Total..............................................................    $ 4,297,000         100.0%
                                                                           -------------       ------
                                                                           -------------       ------
</TABLE>
 
- ------------
 
(1) Represents the repayment of  the outstanding Bridge  Notes in the  aggregate
    principal  amount of $500,000 plus estimated accrued interest thereon at the
    rate of 10%  per annum to  the date  of consummation of  this Offering.  The
    Company  used  the net  proceeds  from the  sale of  such  notes to  pay for
    research and product development,  operating expenses, and various  expenses
    related  to this  Offering. Also  represents the  repayment of approximately
    $1,041,000 from  the 1995  Debt Financing  plus estimated  accrued  interest
    thereon  at the rate  of 10% per  annum, $133,400 payable  to 732498 Ontario
    Ltd., plus estimated accrued interest thereon  at the rate of 22% per  annum
    and  $300,000  payable to  six  investors, plus  estimated  accrued interest
    thereon at  the  rate  of  15%. See  'Description  of  Securities  --  Prior
    Financings,'   'Plan  of  Operation'  and  Note  8  of  Notes  to  Financial
    Statements.
 
(2) Anticipated  expenditures   include  hardware   and  software   development,
    electronics  engineering and prototype and tooling  costs, and the hiring of
    additional personnel.  The Company  intends to  use this  allocation of  net
    proceeds  to  expand  its  research and  development  department  into three
    groups: a research group, a development group and a quality assurance group.
    The Company anticipates  hiring between  15 and 18  additional employees  to
    staff these groups. The Company estimates the first year's salaries of these
    persons  to be paid from this allocation  of proceeds of this Offering to be
    approximately  $19,000  to  $38,000  per  person  per  annum  based  on  the
    qualifications  and position of each employee. See 'Business -- Research and
    Development,' ' -- Production and Supplies' and 'Plan of Operation.'
 
(3) The Company intends to use this allocation  of net proceeds to open a  sales
    office  in  the United  States over  the  next nine  months at  an estimated
    initial cost of $500,000 depending on the amount of equipment, inventory and
    personnel, exclusive of working  capital needs. It  is anticipated that  the
    office  would  be staffed  with  three to  eight  salespersons, who  will be
    responsible for  managing  and  servicing  the  Company's  business  in  the
    respective  areas, as well as developing new business. The Company estimates
    the first year's salaries of these  persons to be paid from this  allocation
    of  proceeds of  this Offering  to be  approximately $35,000  per person per
    annum based  on  the  qualifications  and position  of  each  employee.  See
    'Business -- Sales and Marketing.'
 
(4) This  allocation includes  approximately $358,000 of  expenditures for print
    media  such   as  advertising   and  sales   literature,  and   trade   show
    participation.  The Company plans to hire two internal sales people, each at
    approximately $20,000  per annum  (excluding sales  commissions), and  three
    customer  service people, each at approximately $25,000 per annum, following
    the completion of this Offering. See 'Business -- Sales and Marketing.'
 
(5) In connection with the Company's proposed expansion and the hiring of up  to
    20  additional  employees,  the Company  intends  to purchase  for  each new
    employee a computer work station at an estimated cost of $7,500 per station.
    See 'Plan of Operation.'
 
(6) Includes general and administrative expenses, including, but not limited to,
    the payment of  rent for the  Company's offices and  other office  overhead,
    executive  salaries, and anticipated professional fees, as well as potential
    acquisitions as described below.
 
                                       15
 <PAGE>
<PAGE>
     If the Underwriter exercises the Over-allotment Option in full, the Company
will realize additional net  proceeds of approximately  $365,400, which will  be
added to the Company's marketing capital.
 
     The  Company anticipates, based on currently proposed plans and assumptions
relating to its  operations, that the  net proceeds of  this Offering,  together
with  its projected  cash flow  from operations, if  any, will  be sufficient to
satisfy the Company's contemplated cash requirements for a minimum of 12  months
following  the closing date  of this Offering.  In the event  that the Company's
plans change or its assumptions change or  prove to be inaccurate or if the  net
proceeds  of this  Offering or  the Company's  projected cash  flow prove  to be
insufficient to fund  operations (due to  unanticipated expenses,  manufacturing
problems,  marketing  difficulties  or  otherwise),  the  Company  may  find  it
necessary  or  advisable  to  reallocate   some  of  the  proceeds  within   the
above-described  categories, or  to use portions  of the net  proceeds for other
purposes or  may  be  required  to seek  additional  financing  or  curtail  its
operations.  The Company has no current arrangements with respect to, or sources
of, additional financing and  it is not  anticipated that existing  stockholders
will  provide any portion of the  Company's future financing requirements. There
can be no assurance that any such additional financing will be available to  the
Company on commercially reasonable terms, or at all. See 'Risk Factors -- Future
Capital Needs; Uncertainty of Additional Financing' and 'Plan of Operation.'
 
     The  Company may use all or a portion  of the $344,000, or 8.0%, of the net
proceeds from the  Offering allocated to  working capital, to  acquire all or  a
portion  of  existing companies  in businesses  which  the Company  believes are
compatible with its business including, but  not limited to, competitors of  the
Company.  Any decision to  make an acquisition  will be based  upon a variety of
factors, including, among others, the  purchase price and other financial  terms
of  the transaction, the business prospects  and competitive position of and the
nature of any  formulations, designs  or products and  the extent  to which  any
acquisition  would  enhance  the Company's  prospects.  To the  extent  that the
Company may,  depending  upon the  opportunities  available to  it,  finance  an
acquisition  with a combination of cash and equity securities, any such issuance
of equity securities could result in dilution to the interests of the  Company's
stockholders.  However, any future  equity financings within  the next 36 months
would be subject to the approval of the Underwriter. Additionally, to the extent
that the Company issues debt securities  in connection with an acquisition,  the
Company  may  be  subject  to  risks  associated  with  incurring  indebtedness,
including the risks of interest rate fluctuations and insufficiency of cash flow
to pay  principal  and  interest.  The  Company  is  not  currently  engaged  in
identifying   any   potential  acquisition   and   has  no   plans,  agreements,
understandings or arrangements for any  acquisitions. There can be no  assurance
that  the Company  will be  able to  successfully consummate  any acquisition or
successfully integrate into its business any acquired product or business.
 
     Pending utilization of the  net proceeds of the  Offering, the Company  may
make temporary investments, in among other things, bank certificates of deposit,
interest-bearing  investments, prime commercial  paper, United States government
obligations, or money-market funds.
 
                                DIVIDEND POLICY
 
     To date, the Company has not paid  any cash dividends on its Common  Stock.
The  payment of future cash  dividends, if any, is  within the discretion of the
Board of Directors and will depend upon the Company's earnings, if any,  capital
requirements  and financial condition and other relevant factors. The Board does
not intend to  declare any cash  or other dividends  in the foreseeable  future,
rather  it  intends  to retain  future  earnings,  if any,  to  provide  for the
operation and expansion of the Company's business. See 'Plan of Operation.'
 
                                       16
 <PAGE>
<PAGE>
                                    DILUTION
 
     At September 30, 1996, the negative net tangible book value of the  Company
was  $(1,586,368), or $(.52) per share of Common Stock based on 3,050,000 shares
of Common Stock issued and outstanding.  After giving retroactive effect to  the
exercise  of  374,548 warrants  into  374,548 shares  of  Common Stock  upon the
consummation of this Offering and the receipt of an aggregate of $3,745.48  from
all  of such exercises,  the pro forma  negative net tangible  book value of the
Company was $(1,582,623) or  $(.46) per share based  on 3,424,548 shares  issued
and  outstanding.  See 'Description  of Securities  -- Prior  Financings.' After
giving effect to  the sale  of 800,000  shares of  Common Stock  offered by  the
Company  hereby  (less  underwriting  discounts and  estimated  expenses  of the
Offering and the application  of the estimated net  proceeds therefrom) but  not
the  return to treasury of 135,000 Bridge  Shares, the pro forma as adjusted net
tangible book  value  of the  Company  at September  30,  1996 would  have  been
$2,857,921,  or  $.68  per  share, based  on  4,224,548  shares  representing an
immediate increase in  net tangible book  value of $1.14  per share to  existing
stockholders  and  an  immediate  dilution  of  $6.32  per  share  (90%)  to the
purchasers of Common Stock in the Offering.
 
     The difference between the public offering price per share of Common  Stock
and  the net tangible  book value per  share of Common  Stock after the Offering
constitutes the dilution per share of Common Stock to investors in the Offering.
Net tangible  book  value  per share  of  Common  Stock on  any  given  date  is
determined  by  dividing  the net  tangible  book  value of  the  Company (total
tangible  assets  less  total  liabilities)  on  such  date  by  the  number  of
outstanding shares of Common Stock.
 
     The  following table illustrates  the dilution to  the purchasers of Common
Stock in the Offering on a per-share basis:
 
<TABLE>
<S>                                                                             <C>      <C>
Offering price...............................................................            $7.00
Pro forma net tangible book value before the Offering........................   $(.46)
                                                                                -----
Increase attributable to new investors.......................................   $1.14
                                                                                -----
                                                                                -----
Pro forma as adjusted net tangible book value after the Offering.............            $ .68
                                                                                         -----
                                                                                         -----
Dilution to new investors....................................................            $6.32
                                                                                         -----
                                                                                         -----
</TABLE>
 
     The following  table  summarizes  as  of  September  30,  1996,  the  total
consideration  paid and  the average  price per  share of  Common Stock  paid by
existing stockholders and by purchasers of Common Stock in the Offering:
 
<TABLE>
<CAPTION>
                                                   SHARES PURCHASED            TOTAL CONSIDERATION         AVERAGE
                                               ------------------------     -------------------------     PRICE PER
                                                AMOUNT       PERCENTAGE     AMOUNT(1)      PERCENTAGE       SHARE
                                               ---------     ----------     ----------     ----------     ---------
 
<S>                                            <C>           <C>            <C>            <C>            <C>
Existing Stockholders.......................   3,424,548(2)      81.1%      $  412,151          6.9%        $ .12
                                                                                                          ---------
New Investors...............................     800,000         18.9        5,600,000         93.1%        $7.00
                                               ---------     ----------     ----------     ----------     ---------
                                                                                                          ---------
     Total..................................   4,224,548        100.0%      $6,012,151        100.0%
                                               ---------     ----------     ----------     ----------
                                               ---------     ----------     ----------     ----------
</TABLE>
 
- ------------
 
(1) Prior to deduction of costs of issuances.
 
(2) Includes 1,000,000 Escrow Shares but does  not give effect to the return  to
    treasury  of 135,000  Bridge Shares.  See 'Principal  Stockholders -- Escrow
    Shares' and 'Description of Securities -- Prior Financings.'
 
                                       17
<PAGE>
<PAGE>
                                 CAPITALIZATION
 
     The  following table  sets forth  the capitalization  of the  Company as of
September 30, 1996 (including the 1,000,000  Escrow Shares), and as adjusted  to
reflect the exercise of 374,548 warrants and the receipt of $3,745.48 therefrom,
the  issuance and sale of the shares  of Common Stock hereby and the application
of the  estimated net  proceeds therefrom,  but not  the return  to treasury  of
135,000  Bridge  Shares.  This table  should  be  read in  conjunction  with the
consolidated  financial  statements  and  the  related  notes  thereto  included
elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                                                                  SEPTEMBER 30, 1996
                                                                              --------------------------
                                                                                              PRO FORMA
                                                                                ACTUAL       AS ADJUSTED
                                                                              -----------    -----------
                                                                                     (UNAUDITED)
<S>                                                                           <C>            <C>
Total liabilities..........................................................   $ 2,026,377    $1,526,377
                                                                              -----------    -----------
Stockholders' equity (deficit)
     Common Stock, $.001 par value; 20,000,000 shares authorized; 3,050,000
       shares issued and outstanding; 4,224,548, pro forma as adjusted.....         3,050         4,225
     Additional paid-in capital............................................       405,356     4,704,926
     Cumulative translation adjustment.....................................        47,989        47,989
     Accumulated deficit...................................................    (1,835,787)   (1,899,219)
                                                                              -----------    -----------
          Total stockholders' equity (deficit).............................    (1,379,392)    2,857,921
                                                                              -----------    -----------
               Total capitalization........................................   $   646,985    $4,384,298
                                                                              -----------    -----------
                                                                              -----------    -----------
</TABLE>
 
                               PLAN OF OPERATION
 
     To   date,  the  Company  has  had  a  limited  operating  history,  is  in
development-stage and  has  not realized  any  operating revenues.  The  current
version  of  SoftGuard, although  out  of the  development  stage and  ready for
commercialization, has not  yet been  released. Since  inception, the  Company's
activities   have  been  principally  limited   to  organizational  and  initial
capitalization activities, designing  and developing  the technology  underlying
its  proposed  software protection  product lines  and recruitment  of executive
personnel. See 'Business.'
 
     The current version of  SoftGuard is intended to  be compatible for use  on
Windows  3.x and MS-DOS  based systems. Although ready  for release, the Company
does not intend on releasing the product to the general public until it develops
a sales  and other  customer  support infrastructure.  The Company  is  actively
engaged  in  the  development  of  expanding  its  SoftGuard  product  line  for
multi-platform versatility and  compatibility with other  operating systems  and
networks.   Although  no  assurance  can   be  given,  the  Company  anticipates
introducing versions of  SoftGuard for use  with Windows 95  and the TTR  Remote
Activation   Center  for   software  being  distributed   through  the  Internet
(electronic distribution) by the second quarter  of 1997. A version for  Windows
NT  is in the system design stage,  and versions for NEC based operation systems
and networks are  being investigated. The  Company is also  actively engaged  in
developing  DiscGuard for CD-ROM copy  protection, and anticipates releasing the
initial version by  the third quarter  of 1997. The  Company is exploring  other
compatible  or complementary product  offerings. There can  be no assurance that
the Company will successfully develop  or ultimately commercialize any of  these
proposed products. See 'Business.'
 
     The  Company anticipates  undertaking marketing  efforts in  North America,
Israel, Europe and the Far East to increase awareness of the Company's products.
In this respect, the Company will  be exploring the possibility of  establishing
strategic  relationships  with  appropriate  significant  software distributors.
Further, it is anticipated  that TTR Israel's new  Chief Executive Officer,  who
assumed  his duties in September 1996, will  devote a significant portion of his
time in developing appropriate marketing strategies. In addition, the Company is
actively seeking  an  independent  marketing  professional  with  experience  in
introducing  new  hi-tech  products to  market.  The Company  would  utilize the
marketing professional's services to  explore the possibilities of  establishing
strategic  relationships with  well-known software  developers and distributors.
See 'Management' and 'Business -- Sales and Marketing.'
 
     The Company  anticipates  that  the  proceeds  of  this  Offering  will  be
sufficient  to satisfy the Company's contemplated cash requirements for the next
12 months following the consummation of  the Offering, based upon the  Company's
present   plans   and   certain  assumptions   relating   to   general  economic
 
                                       18
 <PAGE>
<PAGE>
and industry conditions, market factors,  and the Company's future revenues  and
expenditures.  If any of  these factors change,  the Company may  be required to
raise additional funds during the next 12 months. The Company may, in any event,
seek additional financing following the completion of this Offering, even though
the Company has  no present  intention, agreement,  understanding or  commitment
with respect to any such financing.
 
     As  of September  30, 1996, the  Company had an  aggregate of approximately
$51,490  in  bank  loans  of  which  principal  payments  are  due  in   various
installments  through 1998.  These loans  bear interest  at rates  of prime plus
2.4%-3% per annum  and are secured  by substantially  all of the  assets of  TTR
Israel.
 
     In  September 1996, the Company entered  into a loan and security agreement
with 732498 Ontario Ltd. ('Ontario') pursuant to which the Company borrowed  and
aggregate  of $133,400 at  a per annum  interest rate of  22%. The principal and
accrued interest on these loans are payable in full on the earlier of March  30,
1997  or  the consummation  of this  Offering.  To secure  the repayment  of all
amounts due, Ontario  has been granted  a floating security  interest and  lien,
subject  to  existing liens,  on  all tangible  and  intangible property  of the
Company. See 'Use of Proceeds.'
 
     At September  30,  1996, the  Company  had  a working  capital  deficit  of
approximately $1,955,000. Since inception, the Company has relied for all of its
funding  on private sales of its debt and equity securities. See 'Description of
Securities -- Prior Financings' for a description of these sales.
 
     The Company's  product  development  is centralized  out  of  TTR  Israel's
facilities  in Israel.  The Company  does not have  any commitments  or plans to
undertake significant capital expenditures in plant or equipment, other than the
purchase of approximately $140,000 of computer equipment. See 'Use of Proceeds.'
 
     The Company requires  the net  proceeds of  this Offering  to continue  its
product  development efforts and to commence full-scale marketing of its version
of SoftGuard available  for commercial release.  As of September  30, 1996,  the
Company  has  expended approximately  $616,000 on  its research  and development
activities, and plans to spend approximately $615,000 of the net proceeds of the
Offering to continue such activities. Over the next 12 months, the Company plans
to spend approximately $473,000  of the Offering  proceeds on marketing  related
activities. See 'Use of Proceeds' and 'Business -- Research and Development' and
' -- Sales and Marketing.'
 
     As  of  January 15,  1997,  $626,203 of  note  principal and  interest with
respect to two-year  promissory notes issued  in connection with  the 1995  Debt
Financing (as defined hereafter) became due and payable. The holders of $619,525
note  principal and interest  extended the due  date of such  notes to March 31,
1997. The Company anticipates that the remaining holder of $5,515 note principal
will grant a similar  extension. Accordingly, to date  the Company has not  made
payment  with  respect to  such note.  See 'Description  of Securities  -- Prior
Financings.'
 
     In December 1996, the Company borrowed, on an unsecured basis, an aggregate
of $300,000 from six unaffiliated investors at a per annum interest rate of 15%.
The principal and accrued  interest on these  loans are payable  in full on  the
earlier  of the first anniversary of the  borrowings or the consummation of this
Offering. See 'Use of Proceeds.'
 
     To date, the Company  has not generated any  revenues from operations.  For
the  period from its inception  to September 30, 1996,  the Company has incurred
net losses aggregating approximately $1,835,787, reflecting principally research
and  development   expenses   associated   with  SoftGuard   and   general   and
administrative   expenses.  Accordingly,  the   Company's  independent  auditors
included an explanatory paragraph in their report dated July 1, 1996, indicating
that there is substantial doubt regarding the Company's ability to continue as a
going concern. The Company's continuation  as a going-concern is dependent  upon
its  ability to  obtain additional financing,  including from  this Offering, to
generate sufficient cash flow to  meet its obligations on  a timely basis. As  a
development  stage company, the Company has a limited relevant operating history
upon which an evaluation of the  Company's prospects can be made. The  Company's
prospects must therefore be evaluated in light of the problems, expenses, delays
and  complications associated with a  new business. As a  result of the start-up
nature of the Company's business, additional operating losses can be expected in
the foreseeable  future. There  can be  no  assurance that  the Company  can  be
operated  profitably  in  the future.  See  'Risk Factors  --  Development Stage
Company;   History   of   Operating   Losses;   Accumulated   Deficit;   Working
 
                                       19
 <PAGE>
<PAGE>
Capital    Deficiency;    Uncertainty    of    Future    Profitability,'   'Risk
Factors --  Explanatory  Paragraph  in Independent  Auditors'  Report'  and  the
Financial Statements.
 
     The  Company currently  has ten  employees, and  depending on  its level of
business activity, expect to  hire additional employees in  the next 12  months,
including  marketing  and  sales, research  and  development,  customer support,
production  and  administrative  personnel,  and  has  allocated   approximately
$780,000  of  the proceeds  of  this Offering  for  the recruitment  and related
payroll expenses  for  approximately  20  additional  employees  over  the  next
12-month period. See 'Risk Factors -- Proposed Expansion' and 'Use of Proceeds.'
 
     The  Company expects  that any  release of  the Escrow  Shares to officers,
directors, employees and consultants of the Company will be deemed compensatory,
and accordingly,  will result  in a  substantial non-cash  charge to  reportable
earnings  equal to the fair market value of  such shares on the date of release.
Such charge  could  substantially  increase  the Company's  loss  or  reduce  or
eliminate the Company's net income, if any, for financial reporting purposes for
the  period(s)  during  which such  shares  are,  or become  probable  of being,
released from escrow. Although the amount of compensation expense recognized  by
the  Company will  not affect the  Company's total stockholders'  equity, it may
have a depressive effect  on the market price  of the Company's securities.  See
'Risk Factors -- Charge to Earnings in the Event of Release of Escrow Shares.'
 
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                                    BUSINESS
 
     The Company is primarily engaged in the design and development, and intends
to  commence marketing  of, a family  of proprietary  software security products
that are designed to prevent the  unauthorized reproduction and use of  computer
software  programs. TTR's  proposed core product,  SoftGuard, is  designed to be
used by software  developers for inclusion  in their software  packages sold  to
end-users.  The current  version of SoftGuard,  although out  of the development
stage and ready  for commercialization,  has not  yet been  released. Since  its
inception, the Company has been engaged primarily in product design and testing,
and has not had any sales revenue to date. The Company's primary objective is to
make SoftGuard the market standard for software protection.
 
INDUSTRY BACKGROUND
 
     Losses  related to the  unauthorized use of  software present an increasing
concern for software developers and  publishers. The Business Software  Alliance
estimated  that software-piracy related losses exceeded $15 billion worldwide in
1994. In  the United  States,  total losses  from  software piracy  exceeded  $3
billion  in  1994. Illegal  copies  of widely-recognized  software  programs can
frequently be purchased in certain parts of  Eastern Europe and the Far East  at
retail  prices that are a fraction of  those prevailing in the United States and
Europe.
 
     Additionally, the  increasing  use of  CD-ROMs  poses new  dangers.  Unlike
standard  distribution  diskettes, CD-ROMs  enable  the processing,  storing and
distribution of vast amounts of information. Increasingly, the data contained on
the CD-ROM  is  of a  purely  informative or  entertainment  nature and  is  not
intended  to be installed permanently on  the user's hard-drive. Until recently,
CD-ROM software  has been  relatively protected  from unauthorized  reproduction
owing to the relatively high-cost of CD-recording technology. With the advent of
low-cost  CD Recorders and mass reproduction machines, software pirates are able
to  duplicate  the  software  applications  contained  on  the  CD-ROM  with  no
significant  impediment.  The  unauthorized reproduction  (and  distribution) of
unprotected software applications residing on CD-ROMs can represent  significant
potential revenue-losses.
 
     Software  protection  is a  relatively  new market.  Until  the mid-1980's,
software  developers  and  publishers  traditionally  relied  on  copyright  and
intellectual  property laws to police software piracy. However, as the frequency
and sophistication of  software piracy  increased, continued  reliance on  legal
sanctions  frequently proved ineffective. Software developers began to seek ways
to aggressively and effectively halt the proliferation of unauthorized copies of
their software, thereby  triggering the development  of the software  protection
market.  Most  of  the  security  solutions  which  were  commercially available
typically required that the software to be protected be stored in an 'encrypted'
mode so as to prevent its copying.  In addition, a hardware component such as  a
'dongle'  (key), a physical  device that plugs into  a computer's parallel port,
was ordinarily utilized. The device must  be present in order for the  protected
software  to execute (or 'decrypt'). Without the  key or the plug, the protected
program wouldn't ordinarily execute. The  dongle acts as 'identification  code,'
enabling  the  protected  software to  execute.  Dongles and  keys  are provided
directly to the  software vendor  and are frequently  customized for  particular
software  applications.  The  technology  underlying  these  solutions  came  to
represent   the   'market   standard'   in   terms   of   affording    effective
software-protection.
 
     Security  solutions utilizing  hardware components such  as dongles present
significant  operational   difficulties   and  inconveniences   for   legitimate
end-users.  By its very  nature, the key  is not 'transparent,'  and needs to be
physically present on a parallel port  each time that the protected  application
is  run. Frequently, keys are  not interchangeable among different applications,
necessitating a different  key for  each application,  giving rise  to a  'daisy
chain'  of plugs  protruding out  of the  back of  operating units. Furthermore,
dongles cannot currently be  mass-produced. Each device must  be custom made  or
programmed, invariably resulting in relatively high production costs.
 
     Accordingly,  dongles are  ordinarily used  for higher  priced applications
whose retail price typically  exceeds $300. Software developers  of many of  the
commercially   available  popular  software  applications,  such  as  well-known
word-processing and other business related programs, have elected to forego  any
software  anti-copying  protection.  Further, the  relatively  high-cost  of the
dongles and other peripherals
 
                                       21
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render their use  impractical for relatively  lower priced CD-ROM  applications,
such as games or other entertainment packages.
 
     SoftGuard  does  not entail  the use  of any  hardware peripherals  such as
dongles, and requires the end-user to use a protection diskette only once at the
installation of the protected software  onto the end-user's system.  Thereafter,
the  safety measures are transparent to the legitimate end-user, who need not be
aware of their  operation. Furthermore,  the utilization of  SoftGuard does  not
necessitate  the software developer  to implement design or  code changes in the
software.  Additionally,  the  Company  expects  to  be  able  to   mass-produce
SoftGuard,  significantly decreasing  the per-unit  production costs. DiscGuard,
the proposed CD-ROM protection product, is  intended to modify the laser  optics
system  of the CD-ROM  mastering machine, rendering  the CD-ROM non-reproducible
and thereby  thwarting  CD-ROM  pirates' efforts  to  faithfully  reproduce  the
contents of the CD-ROM.
 
     TTR believes that its proposed SoftGuard products will provide a versatile,
transparent,  easy-to-use,  effective  and  relatively  inexpensive anti-copying
security solution that  will not require  the software developer  to effect  any
basic design changes to the protected software application program.
 
BUSINESS STRATEGY
 
     The  Company's primary objective is to make SoftGuard the 'market standard'
in software anti-copying protection.  The Company intends  to pursue a  business
strategy that incorporates the following principal components:
 
          Penetration of Software Security Markets. The Company intends to begin
     marketing  by the first  quarter of 1997 its  proposed SoftGuard product to
     large well-known software developers  whose products enjoy wide  geographic
     dispersion  but  who  have  previously  disregarded  the  software security
     market. By emphasizing SoftGuard's reduced costs and end-user transparency,
     the Company  hopes to  promote  the penetration  of the  software  security
     market  beyond  the  current  $300 and  above  retail  software  market. In
     addition, new developments  such as the  proposed DiscGuard CD-ROM  product
     may  enable the Company to expand its potential customer base from software
     developers to CD-ROM replicators. See 'Business -- Sales and Marketing.'
 
          Penetration of Leading Geographic Marketing Areas. The Company intends
     to launch its marketing and distribution efforts initially in Israel by the
     first quarter of 1997 and in North  America by the second quarter of  1997.
     The  Company also expects  to expand its  marketing efforts to subsequently
     include Europe and  the Far  East. The Company  also intends  to develop  a
     version  of SoftGuard that  is compatible with  Japanese-standard NEC based
     operating systems, which it expects to  introduce by the second quarter  of
     1997.  See 'Business  -- Sales and  Marketing' and '  -- SoftGuard Software
     Protection System.'
 
          Continued Product Expansion and Enhancement. The Company is  committed
     to  continuous product expansion  and enhancement to  stay competitive with
     rapid technological advancement  and other changes  affecting the  computer
     industry.  The Company is focusing  its research and development activities
     toward lowering the cost of its existing proposed products, the design  and
     development  of  new products,  and  the enhancement  of  existing proposed
     products. For  example, the  Company intends  on increasing  the  SoftGuard
     product  line by  introducing new  products for  multi-platform versatility
     with interoperability and  compatibility with  operating systems  including
     the   Apple  Macintosh,   the  Japanese-standard   NEC  computers,  network
     environments, Microsoft's Windows 95 and Windows NT, and the Internet.  See
     'Business  -- SoftGuard Software  Protection System' and  ' -- Research and
     Development' and 'Use of Proceeds.'
 
          Pursue Strategic Acquisitions. In addition to growing internally,  the
     Company  desires to grow through  strategic acquisitions. The Company plans
     to seek  to  acquire  new  products  or  complementary  product  lines  for
     integration  into  the Company's  product offerings  and its  business. The
     Company is not currently engaged in identifying any potential  acquisitions
     and  currently has no plans, agreements, understandings or arrangements for
     any acquisitions.  See 'Risk  Factors --  Proposed Expansion'  and 'Use  of
     Proceeds.'
 
          Strengthen  Competitive Advantages. The Company  believes that the key
     to competition is  to offer  an effective  security product  which is  more
     convenient to use and more cost-effective than the
 
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     competition.  Research and  development efforts  are being  focused towards
     making SoftGuard even more  user-friendly and cost-effective. In  addition,
     the Company is developing novel approaches to software security such as its
     DiscGuard   for  CD-ROM  based  software,   that  are  unavailable  to  its
     competition. See 'Business  -- Research  and Development';  ' --  SoftGuard
     Software Protection System' and ' -- Competition.'
 
SOFTGUARD SOFTWARE PROTECTION SYSTEM
 
     The proposed SoftGuard software protection products are intended to provide
comprehensive  protection against unauthorized software copying. SoftGuard is to
be comprised  of  a  specially  designed  protection  diskette,  which  provides
anti-copying  protection while the software  resides on a distribution diskette,
CD-ROM or  other  distribution medium,  as  is the  case  when the  software  is
initially purchased by the end-user, and a software-based solution that protects
against  unauthorized  reproduction  once  the software  is  installed  onto the
legitimate  end-user's  system.   SoftGuard  will  not   include  any   hardware
peripherals such as dongles.
 
     The software applications to be protected will be encrypted by the software
developer  using an  encryption key  derived from  the protection  diskette. The
protection diskette will be a standard commercially available diskette which  is
physically  altered by  means of  a novel and  proprietary method  to imprint an
identification code that  is unique  to the  particular software  house and  the
specific  application. The protected software will  be purchased by the end-user
in the encrypted format, and such protected software will not execute or run  as
intended  unless  it is  installed in  the presence  of an  authentic protection
diskette containing the appropriate identification code. Without the  protection
diskette,  the protected software will not  properly install onto the end-user's
system and cannot be used. The protection diskette will be sold to the developer
and included in  the applications  package that  is finally  distributed to  the
end-user.  The protection diskette will be designed  to be used only once by the
end-user at the time of the initial installation of the protected software.
 
     It is  intended  that the  developer's  software program  will  further  be
protected  by the SoftGuard software  licensed from the Company.  As part of the
installation of  the  protected software  onto  the legitimate  end-user's  hard
drive,  SoftGuard re-encrypts the protected software. The re-encryption effected
by SoftGuard  is designed  to adapt  to certain  unique characteristics  of  the
computer on which the protected software is being installed. When the authorized
or  legitimate end-user tries to run  the protected software (after installation
on the  end-user's system),  SoftGuard verifies  the validity  of the  installed
software,  decrypts  the protected  file and  permits  execution to  take place.
Protected software subsequently installed or  copied onto a different unit  will
not  work unless  so authorized  by the  software developer,  and thus  will not
execute. The software developer will fix  a pre-determined number of times  that
the  protected software can  be installed (or  reinstalled in the  event of hard
disk failure) by the legitimate end-user. Any attempted installation beyond such
authorized number will not properly execute. Furthermore, SoftGuard will provide
the software developer with the option of limiting any installs of the protected
software for  a  pre-determined time-period.  Thus,  the end-user  can  try  the
protected  software  for a  limited time-period.  This  option will  provide the
software developer with  a powerful marketing  tool, enabling it  to expose  the
benefits  and applications of  its software to the  market without incurring the
risk of unauthorized mass-copying and distribution of the software.
 
     The encryption  key derived  from the  protection diskette  is based  on  a
published  algorithm.  SoftGuard utilizes  a  unique technology  to  develop the
encryption keys. The encryption key is based in part upon the pattern created by
a series of marks on the diskette generated by physically altering the  diskette
to  remove  magnetic  material from  its  surface in  pre-determined  areas. The
resulting distinct  pattern, or  key, is  used  as a  parameter in  creating  an
encryption   key  that   can  produce   different  encryption   formats  upon  a
corresponding change in  the key. In  Management's view, this  creates a  highly
effective  product since  the unlikely event  of the successful  cracking of one
encryption key  by an  unauthorized user  will  not assist  in the  cracking  of
another key.
 
     Additionally,   most  commercially  available  anti-copying  software-based
solutions utilize an 'envelope' method of encryption whereby the executable file
to be protected is  encrypted in such  a manner which requires  a 'jump' to  the
beginning  of  the protected  file  on the  system's  memory when  such  file is
executed. For  someone running  a  debugger, such  as  a potential  hacker,  the
envelope method
 
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acts  as a  beacon indicating  where, on a  system's memory,  the protected file
resides. Once the hacker knows where  the protected file begins in the  system's
memory,  he is able to take a snapshot  of the protected file in its unencrypted
and unprotected format and download it to a disk, thereby effectively 'cracking'
the program. Unlike the envelope method of encryption protection, SoftGuard will
utilize a program  that monitors  all program  executions. Upon  execution of  a
SoftGuard protected file, the SoftGuard monitor will validate the protected file
and  remove the encryption, thereby allowing successful execution. The SoftGuard
method of encryption requires no 'jump'  to the beginning of the protected  file
on  the system's memory. Thus, the potential  hacker is not informed as to where
the protected file begins  in the system's memory.  In Management's view,  these
features present significant impediments to 'cracking.'
 
     The  Company  intends on  using a  specially  designed and  highly accurate
laser-based duplicating machine  to mass-produce the  protection diskettes  (the
'Diskette  Marking Machine').  Mass-production of the  protection diskettes will
significantly reduce the production costs  of the protected software,  affording
the  software  developer  with  a low-cost  effective  solution  to unauthorized
software copying.  Since  the protection  diskettes  will  only be  able  to  be
produced   by  the  Company's  specially   designed  Diskette  Marking  Machine,
Management believes that  it is highly  unlikely for an  unauthorized person  to
make usable copies of protection diskettes.
 
     SoftGuard  is intended to be used to safeguard MS-DOS and Microsoft Windows
EXE executable files, as  well as non-executable  files including Windows  DLL's
and runtime applications.
 
SOFTGUARD SOFTWARE PROTECTION PRODUCT LINE AND DEVELOPMENTS
 
     The  Company expects  to initially  market a  version of  SoftGuard that is
compatible for use on Windows 3.X and DOS based systems. The Company is planning
on expanding the proposed SoftGuard product line for multi-platform  versatility
with  interoperability and compatibility with other operating systems. There can
be no  assurance  given that  the  Company  will successfully  develop  any  new
products,  or if  developed, that  they will  be developed  in a  timely fashion
and/or  result  in  sales.  See  'Risk   Factors  --  New  Products  and   Rapid
Technological  Change.'  The  Company  is currently  developing  or  planning on
developing the following new features to the SoftGuard product line:
 
          SoftGuard for Windows  95. The  proposed SoftGuard for  Windows 95  is
     intended to support protected applications that are compatible with Windows
     95.  Upon finalization, SoftGuard for Windows 95 is expected to include all
     of the  features of  the  Windows 3.x  version  of SoftGuard.  The  program
     development  is completed and  the system is being  tested by the Company's
     quality assurance  staff.  It is  currently  anticipated that  it  will  be
     available for beta testing during the first quarter of 1997. When a program
     is  in beta testing, it is being used at actual customer sites. The Company
     receives feedback  from the  customers  and responds  to problems  as  they
     arise. The length of the beta test depends to a large extent on the results
     of  the  testing.  The  Company  expects SoftGuard  for  Windows  95  to be
     available for commercial release by the second quarter of 1997.
 
          SoftGuard  for  Windows  NT.  This  version  is  intended  to  support
     protected  applications  (both  16 and  32  bit)  under Windows  NT.  It is
     expected to include all of the features found in the Windows 3.x version of
     SoftGuard. The program is currently in a system design phase, which  occurs
     after  the  functional  specifications  of the  software  system  have been
     determined, whereby  the system  files,  databases, logical  processes  and
     interfaces  with other  systems and with  a user are  designed. The Company
     expects SoftGuard for Windows NT to be available for commercial release  by
     the third quarter of 1997.
 
          SoftGuard  for  NEC  and  SoftGuard  for  Macintosh.  The overwhelming
     majority of  the  Japanese  software market  utilize  NEC  based  operating
     systems. In addition, many software developers design their software to run
     on  Macintosh operating systems  in addition to DOS/Windows.  TTR is in the
     functional definition  stage  of adapting  SoftGuard  to operate  on  these
     systems, whereby the functional specifications are being developed.
 
          NetGuard. The proposed networks version of SoftGuard is being designed
     to  be used on any type of network server. The networks version is intended
     to support tandem servers,  RAID and disk stripping,  as well as  automatic
     crash   recovery.  Additionally,  it  is   being  designed  to  enable  any
 
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     desired combination of fixed and  floating licensing. The proposed  product
     is  currently in a program design and program development stage. In program
     design, the individual programs which comprise the processes of the  system
     are designed. In the program development stage, programmers use the program
     design  documents to write the programs which are then tested individually.
     The Company expects the program to be  ready for beta testing in the  first
     quarter of 1997, with a targeted commercial release by the third quarter of
     1997.
 
TTR REMOTE ACTIVATION CENTER FOR INTERNET (ELECTRONIC) DISTRIBUTION
 
     Companies  desiring to distribute protected software electronically need to
insure that  payment for  the  downloaded software  is  received and  that  such
software  is  restricted to  use to  one  site per  payment. Utilizing  the core
technology incorporated in SoftGuard, the Company believes that it is addressing
these concerns  with  the Remote  Activation  Center for  Internet  (Electronic)
Distribution.  The Remote Activation Center as proposed is based on a triangular
communication design, linking the end-user's system, the software  distributor's
Internet  server and the  Company's Internet server.  This will permit companies
that would like to sell protected  software via electronic distribution such  as
the  Internet to protect  their software utilizing similar  procedures as in the
conventional version of SoftGuard. Once the end-user downloads and pays for  the
protected  (encrypted)  software,  the  distributor's  server  would  activate a
utility which automatically notifies the  Company's Internet web server. All  of
this  would  happen  automatically  and transparently  to  the  end-user.  It is
intended that when the end-user  installs the protected software, the  Company's
Internet  server will be automatically  contacted. Upon verification of payment,
the Company's  server  would pass  a  decryption  key to  unlock  the  protected
software. This part of the process is similar to the install process which takes
place in the current conventional version, with the Company's server acting like
the  protection diskette. Unlike other  remote activation schemes, the SoftGuard
electronic distribution  product  will  not  require the  end-user  to  enter  a
key-code  in  order to  activate the  downloaded  software. Once  the downloaded
software is installed onto  the end-user's hard drive,  it will be protected  in
the same way as conventionally distributed SoftGuard treated software. Thus, the
Remote  Activation  Center is  intended  to insure  payment  by the  end-user in
addition to providing  conventional software protection.  The Remote  Activation
Center  is  currently in  a program  design and  program development  phase. The
Company expects the  proposed system  to begin  beta testing  during the  second
quarter  of 1997 with a targeted commercial release date by the third quarter of
1997.
 
DISCGUARD FOR CD-ROM BASED SOFTWARE
 
     Increasingly,   popular   game,   video,   educational   materials   (i.e.,
encyclopedias), business and other professional applications are distributed via
CD-ROM.  A CD-ROM  is able to  store vast amounts  of data, rendering  it a more
efficient distribution vehicle than the standard diskette. Ordinarily, the  user
does  not install onto a hard-drive the data contained on the CD-ROM, but merely
accesses it  from time  to  time for  educative, entertainment  or  professional
purposes.
 
     Until  recently, CD-ROM based applications  have enjoyed some immunity from
unauthorized reproduction due to the high cost of the copying hardware. However,
the decreasing costs of CD-Recorders, which can be used to faithfully  reproduce
unauthorized  copies of the CD-ROM, and the increased availability of other mass
reproduction machines, have contributed to the increase in CD-ROM piracy. By use
of a CD-Recorder,  a software pirate  is able to  read the software  application
program  contained on  the CD-ROM  and to  faithfully reproduce  a copy  of such
program on a  parallel CD-ROM. Conventional  encryption based technologies  that
encrypt  data  contained on  the CD-ROM  are  impractical if  the user  does not
ordinarily install  the  CD-ROM  data  onto  a  hard-drive.  Also,  dongles  are
prohibitively expensive for the popular CD-ROM applications.
 
     The  Company  is developing  a proprietary  technology  that permits  it to
programmatically distinguish between  an authentic original  CD-ROM designed  by
the software developer and an unauthorized reproduction. Thus, a software pirate
who is attempting to copy a CD-ROM will be prevented from faithfully reproducing
the  software program. The Company's proposed solution involves modifications to
the laser optics  system of  the CD-ROM  mastering machine.  This technology  is
intended  to prevent  the faithful  reproduction of  the CD-ROM  itself, without
reference to the data
 
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contained on  it. The  Company  expects to  commercially release  its  DiscGuard
CD-ROM product by the third quarter of 1997.
 
ADVANTAGES OF SOFTGUARD
 
     From  an end-user's viewpoint, copy protection  is not necessarily the most
welcome feature in  a software  program. Many software  development houses  have
elected  to not include software protection with their software programs because
end-users have encountered operational difficulties  with, or have indicated  an
unwillingness  to use, such  software protection. The  Company believes that its
proposed SoftGuard products  will address many  of the operational  difficulties
previously encountered by end-users. Significant features of SoftGuard available
to the end-user will include the following:
 
          Avoids  the  Inconvenience  Associated  with  Hardware  Components  or
     Peripherals. Unlike  most  commercially  available  anti-copying  solutions
     utilizing hardware peripherals such as dongles, SoftGuard is proposed to be
     a  hardware-based solution in a software  format that utilizes one diskette
     that  is  typically  used  by  the  end-user  only  once  at  the  time  of
     installation   of  the  protected  software   onto  the  desired  computer.
     Thereafter, the solution  is entirely software  based. With SoftGuard,  the
     end-user avoids the inconvenience associated with hardware peripherals each
     time  the  software  is  accessed.  This  renders  SoftGuard  versatile and
     especially attractive for the growing number of laptop users.
 
          Transparent Safety  Features.  Upon  installation  by  the  legitimate
     end-user,  the anti-copying features of SoftGuard are intended to integrate
     onto the  operating system  and will  not require  any subsequent  end-user
     interaction.  The software  will be  able to  be accessed  and used  by the
     legitimate end-user without  any inconvenient  procedures or  steps on  the
     legitimate  end-user's  part.  Accordingly,  once  the  protected  software
     program is  installed  utilizing  the protection  diskette,  the  SoftGuard
     safety features will be self-executing and transparent to the end-user.
 
          Competitive  Pricing.  Unlike  most  commercially  available solutions
     utilizing dongles,  where such  peripherals  need to  be custom  made,  the
     protection  diskettes are expected to be mass-produced, resulting in a cost
     savings to the software developer that can be passed onto the end-user.
 
          Anti-virus protection. Computer viruses typically attach themselves to
     executable files.  Since  SoftGuard  protected  executable  files  will  be
     maintained  in an encrypted format, a by-product of SoftGuard protection is
     that viruses will not be able  to attach themselves to SoftGuard  protected
     files.
 
          Authorized  Transfers. Increasingly, end-users work  outside of, or in
     addition to,  the traditional  office setting.  If the  software  developer
     chooses,  SoftGuard  will  be able  to  enable the  legitimate  end-user to
     perform an  authorized install  of the  protected application  on both  the
     office-based  unit  and  the  additional portable  or  home-based  unit, as
     needed. Authorization can thus be transferred  using a built in utility  to
     the unit where the end-user would like to work.
 
RESEARCH AND DEVELOPMENT
 
     The  computer industry in general is characterized by rapid product changes
resulting from  new  technological developments,  performance  improvements  and
lower  production costs.  The Company's  research and  development activities to
date have  focused  on developing  products  responsive to  perceived  immediate
demands  in  the market.  The Company  believes  that its  future growth  in the
software protection field, of which no assurance can be given, depends in  large
part on its ability to be an innovator in the development and application of its
proprietary  technology and know-how.  The Company intends  to work closely with
software developers to determine their  requirements and to design  enhancements
and new releases to meet their needs.
 
     The  Company has a  staff of six  full-time and two  part-time research and
development personnel working  on improvements and  enhancements to current  and
anticipated  products  as  well  as developing  new  products  for  the software
security industry.  The Company  has  a policy  of recruiting  highly  qualified
technical  personnel  and  anticipates expanding  its  research  and development
personnel in order to
 
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maintain its technological expertise. The  Company intends to capitalize on  the
highly-skilled  pool  of computer  and  engineering professionals  in  Israel in
pursuing its product research and development efforts.
 
     Following the completion of  this Offering, the  Company intends to  expand
its  research and development department into  three groups: a research group, a
development group and a quality assurance group. The Company anticipates  hiring
between  15 and 18  additional employees to staff  these groups. The development
team will be responsible for developing new products identified by the  research
group  and  the maintenance  and enhancement  of  current products.  The quality
assurance group will be responsible for the quality of all products and customer
support. See 'Business -- Customer Support' and 'Plan of Operation.'
 
     TTR Israel  has  received grants  from  the OCS  aggregating  approximately
$97,500. Generally, grants from OCS constitute up to 50% of certain research and
development  expenses on the development of  products intended for export. Under
terms of the OCS's participation, a royalty  of 3% of the net sales of  products
developed  from a project funded  by OCS must generally  be paid, beginning with
the commencement of sales of products developed with grant funds and ending when
150% of the grant is repaid.  The terms of the Israeli government  participation
also  require that the manufacture of  products developed with government grants
be forever performed in Israel, even after all of the required royalty  payments
are  made, unless  a special approval  has been granted.  Separate Government of
Israel consent is required to  transfer to third parties technologies  developed
through  projects in which the OCS participates. The Company believes that these
restrictions and obligations  will not  have a  material adverse  effect on  the
operations  of  the  Company since  the  Company does  not  presently anticipate
manufacturing  its  products  outside  of  Israel  or  transferring   technology
developed  by it to  third parties. Further,  such restrictions do  not apply to
exports from Israel of products developed with such technologies.  Additionally,
government consent to use less offensive third party manufacturing sites outside
of Israel is not unreasonably withheld.
 
     The Company's research and development efforts are currently focused on the
compatibility  of its products with the most widely used software functioning on
different platforms. From the date of inception through September 30, 1996,  the
Company  has  expended approximately  $616,000 on  its research  and development
activities including  no expenses  for  the year  ended  December 31,  1994  and
approximately $276,000 for the year ended December 31, 1995. The Company expects
the level of its research and development expense to increase in the future. The
Company  has allocated approximately  $615,000 of the  net proceeds for research
and development activities. See 'Use of Proceeds.'
 
SALES AND MARKETING
 
     The Company's  objective  is to  make  SoftGuard the  market  standard  for
software  anti-copying  protection.  The  Company  has  allocated  approximately
$473,000 of the net proceeds to be  used to launch a marketing and  distribution
effort  initially in Israel and North  America with subsequent efforts in Europe
and the Far East. See 'Use of  Proceeds' and 'Risk Factors -- Limited  Marketing
Capability.'
 
     The  Company currently employs one salesman  to identify beta sites locally
but anticipates  expanding  its  sales and  marketing  personnel  following  the
completion of this Offering. See 'Use of Proceeds.' Initially, the Company plans
to  open a  North America  sales office in  Boston, Massachusetts  by the second
quarter of 1997. The  Company is also considering  future locations in  Chicago,
Illinois and Houston, Texas. The Company intends to center its marketing efforts
around  advertising  and promotional  campaigns designed  to enhance  brand name
recognition. See 'Business -- Patents, Trademarks and Proprietary Information.'
 
     Mr. Arik  Shavit,  the new  Chief  Executive  Officer of  TTR  Israel,  has
extensive  experience in the hi-tech marketing  field and it is anticipated that
Mr. Shavit will devote a significant  amount of his business time to  developing
and implementing appropriate marketing strategies designed to expand recognition
of the Company and its products. See 'Management.' Additionally, the Company has
entered  into  an  agreement  with an  independent  marketing  professional with
experience in  the introduction  of new  hi-tech products  and concepts  to  the
market. Management believes that utilizing the services of a market professional
is  instrumental  in establishing  strategic relationships  with certain  of the
larger and
 
                                       27
 <PAGE>
<PAGE>
internationally recognized  software developers  and distributors.  However,  no
assurance  can  be  given  that  such  an  agreement  will  result  in strategic
relationships with well-known software developers and distributors.
 
     The Company  intends  to  establish a  distribution  network,  although  no
assurance can be given, that will attempt to penetrate the relevant markets. The
Company  anticipates that its marketing strategy will include original equipment
manufacturer ('OEM')  arrangements with  software vendors  and distributors  and
direct  sales over the Internet. The Company  views the rapid penetration of the
North American, European and Far Eastern  markets as a key strategic element  in
the  success of  its business,  and it  intends to  devote significant marketing
efforts in these areas.
 
     The  Company  intends  on  selling  the  protection  diskette  to  software
developers  or to their packagers who  will include the protection diskette with
their software program that is ultimately sold to the end-user. In addition, the
Company will license its protection software to the developer. The Company  will
receive  a licensing fee from the developer,  which is expected to be determined
on a case-by-case basis, dependent, among others, upon the retail price and  the
expected sales of the software.
 
     The  Company has established  an Internet web site  whereby it will promote
its proposed products electronically. The Company intends on using the site,  at
http:/www.ttr.co.il,   to  permit  software  houses   to  be  able  to  download
demonstration test  versions  of  its proposed  Remote  Activation  Center.  See
'Business   --   TTR  Remote   Activation   Center  for   Internet  (Electronic)
Distribution.' Following the demonstration, the software developer will be  able
to contact the Company and obtain an authorization code if it wishes to purchase
the product. The Company anticipates that electronic distribution will assume an
increasingly  larger  role  in  the  product  distribution  efforts  of software
developers. The Company plans on charging  a fee to the software developer  each
time  the Company's Internet  server is contacted  by the end-user  as well as a
license for  including  the  Company's software  protection  in  the  downloaded
software, similar to conventional SoftGuard.
 
     The  Company's proposed DiscGuard CD-ROM protection technology, premised on
distinguishing between authentic and replicated CD-ROMs, will involve changes to
the circuitry controlling the laser writing of CDs on CD presses and  recorders.
There  is  no need,  however, to  open up  CD presses  physically to  modify the
circuitry. These  machines are  designed to  accept 'plug-ins.'  The Company  is
developing a black box (electronic circuit), although no assurance can be given,
which can be attached to a CD press. The Company intends to license use of these
black  boxes to CD-ROM replicators. The replicator  may then use the machines to
produce either conventional or non-reproducible CDs for those clients requesting
it.  Clients  of  the  replicators  are  expected  to  pay  a  premium  for  the
non-reproducible CDs, a portion of which would go to the Company.
 
PRODUCTION AND SUPPLIES
 
     The  Diskette  Marking  Machine,  used  to  specially  mark  the protection
diskettes  used  in  SoftGuard,  is  specially  made  to  the  Company's  order.
Management estimates that each Diskette Marking Machine is capable of supporting
the  annual production, at  full capacity, of  750,000 protection diskettes. The
Company currently has  one fully-operating  Diskette Marking  Machine, which  it
believes  can meet its needs for a minimum of 12 months following the completion
of this Offering.  Although the Company  does not have  a written contract  with
Pylon  Technologies Ltd., the manufacturer of  its Diskette Marking Machine, the
Company believes,  based upon  the experience  of Management  and the  Company's
working  relationship  with such  manufacturer,  that it  will  be able  to have
additional Diskette Marking Machines produced on an as needed basis. All of  the
sources  and components  used in  the manufacture  and assembly  of the Diskette
Marking Machine are obtainable from local  sources, except for the laser  device
that  specially marks  each protection  diskette. However,  the Company believes
that there are adequate alternative sources for such devices.
 
     The  manufacture  of  the  protection  diskettes  requires  that   standard
commercially  available diskettes, specially formatted, be physically altered by
the Diskette Marking Machine  to create the identification  code from which  the
encryption  is derived.  The Company  obtains the  specially formatted diskettes
from a local source, at an approximate cost to the Company of $.50 per formatted
diskette. The  Company does  not regard  any one  supplier as  essential to  its
operations, since equivalent
 
                                       28
 <PAGE>
<PAGE>
replacements  for the  diskettes are  either available from  one or  more of the
Company's other  suppliers  or  are  available from  various  other  sources  at
competitive prices.
 
     The  Company  anticipates that  it  will be  able  to fill  orders  for its
products within several hours to no longer than several weeks after receipt of a
firm purchase order.  Consequently, the  Company believes that  backlog will  be
kept  at  low  levels  as a  result  of  the Company's  ability  to  fill orders
relatively quickly.  Due to  the  nature of  its  intended sales  and  marketing
efforts  and the expected resulting close contact with the customer prior to the
receipt of a  purchase order,  the Company anticipates  being able  to plan  its
production and component purchases in advance in order to enable it, although no
assurance  can be  given, to  deliver its products  quickly after  receipt of an
order.
 
     The Company  intends  to  manufacture  in-house the  black  boxes  for  its
proposed  DiscGuard  product. All  of  the sources  and  components used  in the
manufacture and assembly of the black  boxes are obtainable from local  sources.
The  Company currently  does not  have a written  contract with  any supplier of
these parts; however, the Company  believes that there are adequate  alternative
sources for each component.
 
CUSTOMER SUPPORT
 
     The  Company believes that highly efficient, responsive and prompt customer
service is  essential  for  the  Company's success  in  building  and  retaining
customer confidence.
 
     Upon  the commencement of  commercialization of its  proposed products, the
Company anticipates maintaining an appropriately sized staff of customer service
personnel, which will  offer direct technical  support. The Company  anticipates
that  it will geographically disperse its support  staff as needed. On a routine
basis, the support staff will be expected to provide feed-back to the  Company's
research  and development  and marketing  staffs. The  Company intends  to use a
portion of the net  proceeds of this Offering  to increase its customer  service
capabilities.
 
COMPETITION
 
     The  software  protection industry  is  extremely competitive.  The Company
faces tough competition from companies  that are more established, benefit  from
greater  market recognition and have greater resources, financial and otherwise,
than the Company.  The Company's  primary competitors  are Rainbow  Technologies
Inc.  and Aladdin Knowledge Systems Ltd., whom  the Company believes to have the
largest installed product base  in the limited market  that exists for  software
security  products. Further,  there can be  no assurance  that existing software
companies will  not  enter  the market  in  the  future. Most  of  the  software
protection  products distributed by each of these competitors utilize a hardware
device such  as  a dongle.  Although  the  Company believes  that  its  proposed
SoftGuard  line of products will be  favorably distinguishable from those of its
competitors, there  can  be  no assurance  that  the  Company will  be  able  to
penetrate   any  of   its  competitor's  portion   of  the   market.  See  'Risk
Factors -- Competition.'
 
     The Company believes that its principal competitive advantages will be  its
ability  to  offer a  relatively  inexpensive and  effective software-protection
solution that does not utilize any hardware components (other than a  protection
diskette)  such as a dongle, plug, key or similar device that is compatible with
a wide variety of operating systems and platforms. The Company believes that its
proposed products will provide an additional competitive advantage in that  they
are  transparent to the end-user and do  not interfere with the operation of the
computer or  the protected  application.  Additionally, the  Company's  expected
ability  to  mass-produce  the  protection  diskettes  may  provide  it  with an
additional competitive  advantage in  that it  is anticipated  to  significantly
reduce  the protected software's per-unit  production costs. There can, however,
be no assurance that  the Company will be  able to continue developing  products
with  innovative features and functions, or  that competitive pressures will not
result in price reductions that  could materially adversely affect the  Company.
See 'Risk Factors -- Competition.'
 
                                       29
 <PAGE>
<PAGE>
PATENTS, TRADEMARKS AND PROPRIETARY INFORMATION
 
     The  Company currently relies  on a combination  of trade secret, copyright
and trademark law, as well as non-disclosure agreements and invention-assignment
agreements, to  establish and  protect  the technologies  used in  its  proposed
products  and other proprietary information. In  addition, the Company has filed
patent applications  in  the  United  States,  Israel,  Germany,  France,  Great
Britain, the Netherlands and Japan with respect to the technology underlying the
imprinting  of the protection diskettes to be  used in SoftGuard and has filed a
patent application  in  the United  States  for the  technology  underlying  the
proposed  DiscGuard  CD-ROM based  protection and  intends on  filing additional
applications in other countries. There can be no assurance that any patents will
be granted or that the Company's proprietary technology will remain a secret  or
that  others  will not  develop similar  technology and  use such  technology to
compete with the  Company. See  'Risk Factors  -- Uncertain  Ability to  Protect
Patent-Pending Technology' and ' -- Legal Proceedings.'
 
     The  Company is of the view that  its software products are proprietary and
are protected  by  copyright law,  non-disclosure  and secrecy  agreements.  The
Company also relies on proprietary know-how and employs various methods, such as
the  proper labeling of confidential documents and non-disclosure agreements, to
protect its processes,  concepts, ideas  and documentation  associated with  its
proprietary  products. However, such methods  may not afford complete protection
and there can be  no assurance that others  will not independently develop  such
processes, concepts, ideas and documentation.
 
     The  Company believes that product  recognition is an important competitive
factor. Accordingly, the Company intends to promote the 'SoftGuard,' 'NetGuard,'
'Remote Activation Center'  and 'DiscGuard'  trademarks in  connection with  its
marketing  activities. The Company pursues the registration of its trademarks in
the United  States and  (based upon  anticipated use)  internationally, and  has
applied   for  the  registration   of  certain  of   its  trademarks,  including
'SoftGuard.'  The  Company  intends   on  making  additional  applications   for
registration  with respect to other marks. There  can be no assurance that prior
registrations and/or uses of one or more of such marks (or a confusingly similar
mark) does not exist in one or more of such countries, in which case the Company
might thereby  be precluded  from registering  and/or using  such mark  in  such
country. The Company's use and registration rights with respect to any trademark
does not ensure that the Company has superior rights to others that may register
or  use identical  or similar  marks on  related goods  and services.  See 'Risk
Factors -- Trademark Registration.'
 
CONDITIONS IN ISRAEL
 
     The following information  is intended to  advise prospective investors  of
certain conditions in Israel that could affect the Company.
 
POLITICAL CONDITIONS
 
     Since  the  establishment  of the  State  of  Israel in  1948,  a  state of
hostility  existed,  varying  as  to  degree,  among  Israel  and  various  Arab
countries.  A peace agreement  was signed between  Israel and Egypt  in 1979 and
limited relations  have been  established.  A peace  treaty with  the  Hashemite
Kingdom  of Jordan was  signed in 1995,  ending the state  of war along Israel's
longest border.
 
     Since December 1987, civil unrest has existed in the territories which came
under Israel's control in 1967. In  April 1994, negotiations between Israel  and
the  Palestine Liberation  Organization resulted  in the  signing of  an interim
agreement to  grant  Palestinian  Arabs  limited  autonomy  in  certain  of  the
Territories  administered by  Israel. The  interim agreement  was followed  by a
series  of  agreements  and  understandings  expanding  the  areas  subject   to
autonomous  administration.  No prediction  can be  made as  to whether  a final
resolution of the area's problems will be achieved, as to the nature of any such
resolution or  whether the  civil unrest  in the  administered territories  will
continue  and to what extent the unrest  will have an adverse impact on Israel's
economic development or on the operations of the Company in the future.
 
     All adult  male permanent  residents of  Israel under  the age  of 51  are,
unless  exempt, obligated  to perform  up to  45 days  of military  reserve duty
annually. Additionally, all such residents are subject to
 
                                       30
 <PAGE>
<PAGE>
being called to active duty at  any time under emergency circumstances. Many  of
the  male  employees  of the  Company  (including its  President)  are currently
obligated to perform annual  reserve duty. While the  Company and its  personnel
have  operated effectively under these requirements,  no assessments can be made
as to the  full impact on  the Company's  work force or  business if  conditions
should  change and no prediction can be made  as to the effect on the Company of
any expansion or reduction of these obligations.
 
     Certain countries  and  companies  participate  in  a  boycott  of  Israeli
companies  and others  doing business  in Israel  or with  Israel companies. The
Company, however, believes that  the boycott will not  have an material  adverse
impact on the Company's business.
 
ECONOMIC CONDITIONS
 
     Israel's  economy  has  been subject  to  numerous  de-stabilizing factors,
including a period of rampant inflation in  the early to mid 1980s, low  foreign
exchange  reserves, fluctuations  in world commodity  prices, military conflicts
and civil unrest. For these and  associated reasons, the Israeli Government  has
intervened  in  sectors of  the Israeli  economy,  employing among  other means,
fiscal and monetary policies, import  duties, foreign currency restrictions  and
control  of wages,  prices and  exchange rates,  and has  frequently reversed or
modified its policies  in all  these areas. The  New Israeli  Shekel ('NIS')  is
linked  to  a  weighted basket  of  major  currencies, of  which  the  US Dollar
constitutes 50%.  Periodically, the  central Bank  of Israel  resets the  target
exchange  rate of  the NIS in  relation to  the currency basket,  and allows the
actual exchange rate to float within a range of 5% of the target rate.
 
     Israel has recently experience a wave of immigration from the former Soviet
Union and its satellite  countries. Almost 600,000  new immigrants have  arrived
since  1989. The rate of recent immigration, however, has declined dramatically.
If immigration  were  to resume  to  its  former levels,  increased  strains  on
government  services,  economic  development and  resources  could  be expected.
Notwithstanding, it could be expected that such increased immigration would also
result in an increase in the highly-skilled labor pool.
 
TRADE AGREEMENTS
 
     Israel is a member of the United Nations, the international Monetary  Fund,
the  International Bank for  Reconstruction & Development  and the International
Finance Corporation. Israel is a signatory  to the General Agreement on  Tariffs
and  Trade, which provides  for reciprocal lowering of  trade barriers among its
members.
 
     Israel became associated with the European Union by an agreement  concluded
in 1975 which confers certain advantages with respect to Israeli exports to most
of  the European countries and obliges Israel  to lower its tariffs with respect
to imports from those countries over a number of years.
 
     In 1985,  Israel  and  the  United States  entered  into  an  agreement  to
establish  a  Free Trade  Area, which  is intended  to ultimately  eliminate all
tariff and  certain  non-tariff  trade  between the  two  countries.  Under  the
Agreement,  most products  received immediate duty  free status  in 1985, staged
reductions are taking place  on others and reductions  on tariffs relative to  a
third  category may be accelerated prior to 1995, by which all tariffs are to be
eliminated.
 
PROPERTIES
 
     The Company,  through  TTR  Israel, currently  leases  approximately  4,860
square  feet for  its executive offices,  research and  production facilities in
Kfar Saba, Israel  at a  monthly rental of  approximately $4,025  pursuant to  a
three-year  lease expiring in May 1999,  subject to two optional annual renewals
through May 2001.
 
EMPLOYEES
 
     The Company presently has ten full-time employees, of whom six are employed
in research  and  development,  one in  sales,  two  in management  and  one  in
administration.  In addition, the  Company employs an  electrical engineer and a
quality assurance engineer as consultants on an as needed per project basis.
 
                                       31
 <PAGE>
<PAGE>
LEGAL PROCEEDINGS
 
     The Company is not a party to  any material litigation and is not aware  of
any pending or threatened litigation; except as follows:
 
     On  October  31,  1996,  the  Company  received  a  letter  from  attorneys
representing  Smart  Chip  Group  USA  ('Smart  Chip')  in  Israel  relating  to
allegations  that the Company was infringing certain proprietary rights of Smart
Chip  and/or  its  affiliates.  Specifically,   Smart  Chip  alleged  that   the
technologies  comprising the Company's proposed products use or are derived from
technologies   developed   by   Dr.   Baruch   Sollish,   the   Company's   Vice
President  -- Product Research and Development,  as part of his prior consulting
services provided  to Smart  Chip.  The Company  has denied  these  allegations.
Management  believes that the allegations are  without merit and intends, should
it become necessary, to vigorously  defend against those claims. However,  there
can  be no assurance  that the Company  will be successful  in defending against
such claims. See 'Risk  Factors -- Uncertain  Ability to Protect  Patent-Pending
Technology.'
 
                                       32
<PAGE>
<PAGE>
                                   MANAGEMENT
 
DIRECTORS AND EXECUTIVE OFFICERS
 
     The  names, ages and  positions of the executive  officers and Directors of
the Company are as follows:
 
<TABLE>
<CAPTION>
              NAME                 AGE                                   POSITION
- --------------------------------   ---   -------------------------------------------------------------------------
 
<S>                                <C>   <C>
Marc D. Tokayer.................   40    Chairman of  the  Board,  President  and  Treasurer;  and  President  and
                                           Director of TTR Israel
Baruch Sollish..................   50    Director,   Vice  President  --  Product  Research  and  Development  and
                                           Secretary;  and  Director  of  Product  Research  and  Development  and
                                           Director of TTR Israel
Arik Shavit.....................   47    Director  and Vice President; and Chief Executive Officer and Director of
                                           TTR Israel
</TABLE>
 
     Marc D. Tokayer is the founder of the Company and has been Chairman of  the
Board  of Directors, President and Treasurer  of the Company since its inception
in July  1994  and Chairman  of  the Board  of  Directors, President  and  Chief
Executive  Officer  of TTR  Israel since  its inception  in December  1994. From
September 1992 until he joined the Company, Mr. Tokayer worked as an independent
consultant primarily in the  areas of business  applications. From October  1990
through  August 1992, Mr. Tokayer was employed by Yael Ltd., a software company,
where he managed the development of the Central Inventory Control System.
 
     Baruch Sollish, Ph.D. has been a Director of the Company and the Manager of
Product Research and  Development for  TTR Israel  since December  1994. He  was
elected  the Vice President -- Product Research and Development and Secretary of
the Company in  September 1996.  Dr. Sollish  created the  core technology  that
makes  up the SoftGuard  protection process. Prior to  joining the Company, from
June 1987 through  December 1994,  Dr. Sollish founded  and managed  Peletronics
Ltd.,  an Israel software company, engaged primarily in the field of smart cards
and software design for personnel administration, municipal tax authorities  and
billing  procedures  at bank  clearance centers.  Dr.  Sollish holds  six United
States Patents in the fields of  electro optics, ultrasound and electronics  and
has published and lectured extensively.
 
     Arik  Shavit has been a Director and  Vice President of the Company and the
Chief Executive Officer of TTR Israel  since September 1996. Prior thereto,  Mr.
Shavit  was a Manager of Business Development, Smart Card Services at IBM Israel
Ltd., where  he had  held this  position  since August  1994. From  August  1990
through  July 1994,  Mr. Shavit  founded and  managed Silvaco  (Israel) Ltd., an
Israeli subsidiary of SILVACO International,  Inc., a California based  software
company   which  develops  state-of-the-art  computer  aided  engineering  (CAE)
Software Applications and provided development, marketing and support  services.
Mr.  Shavit also served  as Corporate Vice-President and  Director of the United
States company.
 
     In accordance with the by-laws of  the Company, the number of directors  of
the  Company shall be three,  unless such number is  increased or decreased by a
vote of  the majority  of the  outstanding shares  of the  Company. The  Company
currently  has  three  directors,  Messrs.  Tokayer,  Sollish  and  Shavit.  All
directors hold office  until the  next annual  meeting of  stockholders and  the
election  and qualification of their  successors. Directors currently receive no
cash compensation for serving on the Board of Directors. The Underwriter has the
right during the five-year period following the date of this Prospectus, in  its
sole  discretion, to  designate two  persons for  the election  as directors, or
alternatively to designate two  individuals to serve  as non-voting advisors  to
the  Company's Board  of Directors. The  Underwriter has no  intention to select
either designee in the  immediate future. Officers are  elected annually by  the
Board of Directors and serve at the discretion of the Board.
 
EXECUTIVE COMPENSATION
 
     The  following table sets forth all  compensation awarded to, earned by, or
paid for all services  rendered to the Company  during Fiscal 1996, Fiscal  1995
and  Fiscal 1994 by the  Company's President and Vice  President -- Research and
Development. No executive officers received  compensation in excess of  $100,000
during such periods.
 
                                       33
 <PAGE>
<PAGE>
                           SUMMARY COMPENSATION TABLE
                              ANNUAL COMPENSATION
<TABLE>
<CAPTION>
                                                            ANNUAL COMPENSATION
                                                -------------------------------------------
                                                                               OTHER ANNUAL
    NAME AND PRINCIPAL POSITION                                                COMPENSATION
             (1)(2)(3)                YEAR       SALARY ($)      BONUS ($)         ($)
                (A)                    (B)          (C)             (D)            (E)
- -----------------------------------  -------    ------------    -----------    ------------
 
<S>                                  <C>        <C>             <C>            <C>
Marc D. Tokayer ...................    1996       $ 60,000            0          (1)
  Chairman, President and CEO          1995       $ 60,000            0          (1)
                                       1994       $ 60,000            0          (1)
Baruch Sollish ....................    1996       $ 65,000            0          (1)
  Vice President - Research and        1995       $ 60,000            0          (1)
  Development                          1994            n/a          n/a             n/a
 
<CAPTION>
                                                 LONG-TERM COMPENSATION
                                   --------------------------------------------------
 
                                           AWARDS                     PAYOUTS
                                   -----------------------    -----------------------
                                   RESTRICTED   SECURITIES
                                     STOCK      UNDERLYING     LTIP       ALL OTHER
    NAME AND PRINCIPAL POSITION     AWARD(S)     OPTIONS/     PAYOUTS    COMPENSATION
             (1)(2)(3)                ($)        SARS (#)       ($)          ($)
                (A)                   (F)          (G)          (H)          (I)
- ---------------------------------------------   ----------    -------    ------------
<S>                                  <<C>       <C>           <C>        <C>
Marc D. Tokayer ...................       0           0           0             0
  Chairman, President and CEO             0           0           0             0
                                          0           0           0             0
Baruch Sollish ....................       0           0           0             0
  Vice President - Research and           0           0           0             0
  Development                           n/a         n/a         n/a           n/a
</TABLE>
 
- ------------
 
(1) The above compensation figures do not include the cost to the Company of the
    use  of  automobiles leased  by  the Company,  the  cost to  the  Company of
    benefits, including premiums  for life  and health insurance  and any  other
    personal benefits provided by the Company to such persons in connection with
    the  Company's business, all of  which in the aggregate  does not exceed the
    lesser of $50,000 or 10% of such person's annual salary and bonus.
 
(2) See 'Employment  Arrangements'  for  a  description  of  Marc  D.  Tokayer's
    employment  agreement  as  President  of  TTR  Israel  and  Baruch Sollish's
    employment agreement as Director  of Product Research  & Development of  TTR
    Israel.
 
(3) Mr.  Tokayer's compensation commenced  effectively on October  15, 1994. Dr.
    Sollish's compensation commenced effectively on January 1, 1995. Arik Shavit
    assumed the position of Chief Executive  Officer of TTR Israel in  September
    1996 pursuant to an employment agreement more fully described in 'Employment
    Arrangements.'
 
                            ------------------------
     The Company did not grant any options in the last three fiscal years to any
of  its executive  officers. The Company  does not have  any long-term incentive
plans for compensating its executive officers.
 
EMPLOYMENT ARRANGEMENTS
 
     TTR Israel  has entered  into an  employment agreement  with Marc  Tokayer,
pursuant  to which Mr. Tokayer is employed  as the President and General Manager
for a term of three years commencing in August 1994. Pursuant to the  employment
agreement,  Mr. Tokayer will devote his full business time in consideration of a
monthly salary of $5,000,  subject to adjustment. If  Mr. Tokayer is  terminated
without  cause,  as defined  in  the agreement,  then  he shall  be  entitled to
continue to receive his salary and benefits for an additional 12 months  subject
to certain limitations.
 
     TTR  Israel has entered  into an employment  agreement with Baruch Sollish,
pursuant to which Dr. Sollish is employed as the Director of Product Research  &
Development  for a term of one year  commencing in December 1995 and renewed for
an additional  year. Pursuant  to  the employment  agreement, Dr.  Sollish  will
devote  his full business  time in consideration  of a monthly  salary of $5,000
plus incentive compensation, payable quarterly, equal to one (1%) percent of the
initial $1,000,000 of gross  receipts from the sale  of certain products of  the
Company (including SoftGuard), and two (2%) percent for gross receipts in excess
of  such amount. If Dr.  Sollish is terminated without  cause, as defined in the
agreement, then such  incentive compensation shall  convert to royalty  payments
under certain circumstances.
 
     TTR  Israel  has entered  into an  employment  agreement with  Arik Shavit,
pursuant to which Mr.  Shavit shall be employed  as the Chief Executive  Officer
for  a  term  of three  years  commencing  in September  1996.  Pursuant  to the
employment  agreement,  Mr.  Shavit  will  devote  his  full  business  time  in
consideration  of a monthly salary of $8,334, subject to adjustment. Pursuant to
the employment agreement,  Mr. Shavit  will be  issued warrants  to purchase  an
aggregate  of 217,473 shares of  Common Stock upon the  date of this Prospectus.
The warrants are exercisable at $.01 per share until September 2002, subject  to
a  four-year  vesting  schedule,  whereby  the  first  72,491  warrants  are not
exercisable until
 
                                       34
 <PAGE>
<PAGE>
September 1997, 48,328 in September 1998, 48,327 in September 1999 and 48,327 in
September 2000. See 'Certain Transactions.'
 
EMPLOYEE BENEFIT PLANS
 
1996 STOCK OPTION PLAN
 
     In June  1996,  the Board  of  Directors adopted,  subject  to  stockholder
approval,  the Company's Incentive & Non-Qualified  Stock Option Plan (the '1996
Plan'). The 1996 Plan provides for  the grant to qualified employees  (including
officers  and directors) of the Company of  options to purchase shares of Common
Stock. A total of 450,000 shares of Common Stock have been reserved for issuance
upon exercise of stock  options granted under  the 1996 Plan.  The 1996 Plan  is
administered  by the Board of Directors or a committee of the Board of Directors
(the 'Compensation Committee') whose members are not entitled to receive options
under the Plan (excluding options  granted exclusively for directors fees).  The
Compensation  Committee has  complete discretion to  select the  optionee and to
establish the terms and conditions of each option, subject to the provisions  of
the  Plan. Options  granted under the  Plan may  or may not  be 'incentive stock
options' as defined  in Section  422 of  the Internal  Revenue Code  ('Incentive
Options')  depending upon the terms established by the Compensation Committee at
the time of grant,  but the exercise  price of options granted  may not be  less
than  100% of the fair market value of the  Common Stock as of the date of grant
(110% of  the fair  market value  if  the grant  is an  Incentive Option  to  an
employee  who owns more than  10% of the outstanding  Common Stock). Options may
not be exercised more than 10 years after the grant (five years if the grant  is
an  Incentive Option to any  employee who owns more  than 10% of the outstanding
Common Stock). Options granted  under the Plan are  not transferable and may  be
exercised  only by  the respective grantees  during their lifetimes  or by their
heirs, executors or administrators in the  event of death. Under the 1996  Plan,
shares  subject to canceled or terminated  options are reserved for subsequently
granted options.  The  number of  options  outstanding and  the  exercise  price
thereof  are subject to adjustment  in the case of  certain transactions such as
mergers, recapitalizations, stock splits or stock dividends.
 
     As of the  date of this  Prospectus, the  Company has granted  to a  former
director  of the Company options  exercisable for a period  of four and one-half
years to purchase an aggregate of 5,000  shares of Common Stock, at an  exercise
price of $6.00 per share.
 
INDEMNIFICATION
 
     Pursuant  to  the  Company's  Certificate  of  Incorporation  and  By-laws,
officers and directors of the Company shall be indemnified by the Company to the
fullest extent allowed  under Delaware law  for claims brought  against them  in
their capacities as officers or directors. Indemnification is not allowed if the
officer  or  director does  not act  in good  faith and  in a  manner reasonably
believed to  be in  the best  interests of  the Company,  or if  the officer  or
director had no reasonable cause to believe his conduct was lawful. Accordingly,
indemnification  may occur for liabilities arising under the Securities Act. The
Company and  the Underwriter  have  agreed to  indemnify each  other  (including
officers and directors) against certain liabilities, including liabilities under
the   Securities  Act.  See  'Underwriting.'   Insofar  as  indemnification  for
liabilities arising under  the Securities  Act may be  permitted for  directors,
officers  and  controlling  persons of  the  Company pursuant  to  the foregoing
provisions or otherwise, the Company has been advised that in the opinion of the
Securities and  Exchange  Commission,  such indemnification  is  against  public
policy as expressed in the Securities Act and is, therefore, unenforceable.
 
                                       35
 <PAGE>
<PAGE>
                             PRINCIPAL STOCKHOLDERS
 
     The  following table sets forth,  as of the date  of this Prospectus and as
adjusted to reflect the sale  of 800,000 shares of  Common Stock offered by  the
Company  hereby  (but not  the  return to  treasury  of 135,000  Bridge Shares),
certain information, with respect to the beneficial ownership of Common Stock by
(i) each person known  by the Company  to be the  owner of more  than 5% of  the
outstanding Common Stock, (ii) each director, (iii) each executive officer named
in  the Summary Compensation Table and (iv) all directors and executive officers
as a group:
 
<TABLE>
<CAPTION>
                                                                                                  PERCENTAGE OF
                                                                                             OUTSTANDING SHARES OWNED
                                                                             AMOUNT AND
                                                                             NATURE OF      --------------------------
                            NAME AND ADDRESS                                 BENEFICIAL       BEFORE          AFTER
                         OF BENEFICIAL OWNER(1)                             OWNERSHIP(2)    OFFERING(3)    OFFERING(4)
- -------------------------------------------------------------------------   ------------    -----------    -----------
 
<S>                                                                         <C>             <C>            <C>
Marc D. Tokayer(5).......................................................      753,547          31.1%          23.3%
Baruch Sollish...........................................................      100,000           4.1            3.1
Arik Shavit(6)...........................................................            0             0              0
Canova Finance Inc.(7)...................................................      639,375          22.7           17.7
Etilon Trading Ltd.(8)...................................................      639,375          22.7           17.7
Joe Ohayon(9)............................................................      253,275           9.8            7.5
Chana Sasha Foundation Inc.(10)..........................................      167,975           6.7            5.1
All directors and executive officers as a group (3 persons)(5)(6)........      853,547          35.2           26.5
</TABLE>
 
- ------------
 
 (1) Except as otherwise indicated, the address of each beneficial owner is  c/o
     TTR Inc., 2 Hanagar Street, Kfar Saba, ISRAEL 44425.
 
 (2) Unless  otherwise noted, the Company believes that all persons named in the
     table have sole voting and investment  power with respect to all shares  of
     Common  Stock beneficially  owned by  them. A  person is  deemed to  be the
     beneficial owner of securities that can  be acquired by such person  within
     60 days from the date hereof upon the exercise of warrants or options. Each
     beneficial  owner's  percentage ownership  is  determined by  assuming that
     options or warrants that are held by such person (but not those held by any
     other person) and which are exercisable within 60 days from the date hereof
     have been exercised.
 
 (3) Based on 2,424,548 shares outstanding (excluding 1,000,000 Escrow Shares).
 
 (4) Based on 3,224,548  shares outstanding (excluding  1,000,000 Escrow  Shares
     and  without  giving effect  to the  return to  treasury of  135,000 Bridge
     Shares), including 800,000 shares  of Common Stock  offered by the  Company
     hereby.
 
 (5) Includes 384,274 shares held by the Tokayer Family Trust (the 'Trust'). The
     wife  of  Mr.  Tokayer  is  the  Trustee  for  the  Trust,  and  the income
     beneficiaries of the Trust are Mr. Tokayer's children. Mr. Tokayer does not
     have or  share  any  voting  power or  investment  power  with  respect  to
     securities  held  by  the  Trust,  and  accordingly,  disclaims  beneficial
     ownership of all  such securities.  After the  Offering, the  Trust may  be
     deemed to own 11.9% of the outstanding shares of Common Stock.
 
     The  amount of beneficial ownership for Mr. Tokayer excludes 269,274 Escrow
     Shares in the name of Mr. Tokayer and 730,726 Escrow Shares in the name  of
     the  Trust.  Including  the  Escrow  Shares  would  increase  Mr. Tokayer's
     percentage of outstanding  shares owned  before and after  the Offering  to
     51.2%  and  41.5%,  respectively.  See  'Principal  Stockholders  -- Escrow
     Shares.'
 
     See 'Principal Stockholders -- Voting Arrangements' for a description of  a
     voting  arrangement entered into among Mr.  Tokayer, the Trust, Dr. Sollish
     and four other stockholders with an aggregate of 1,137,430 shares of Common
     Stock (35.3% after  the Offering) whereby  they have agreed  to vote  their
     respective shares to elect directors and in support of positions favored by
     a majority of the shares held among them.
 
                                              (footnotes continued on next page)
 
                                       36
 <PAGE>
<PAGE>
(footnotes continued from previous page)
 
 (6) Excludes 217,473 shares issuable upon exercise of a like number of warrants
     to  be  issued  upon  the  date  of  this  Prospectus,  which  will  not be
     immediately exercisable.  See 'Management  -- Employment  Arrangement'  and
     'Certain Transactions.'
 
 (7) Includes  387,500  shares  issuable  upon  exercise  of  a  like  number of
     warrants. The address of  Canova Finance Inc. is  3 New Burlington  Street,
     London  WIX 1FE  United Kingdom  and its  principals are  Mariana Hubli and
     Angela Sanchez.
 
 (8) Includes 387,500  shares  issuable  upon  exercise  of  a  like  number  of
     warrants.  The address of Etilon Trading  Limited is 4, Lower Hatch Street,
     Dublin 2, Republic of Ireland and its principals are James Graffick,  Simon
     Elmont and Gilles Corset.
 
 (9) Includes  153,500  shares  issuable  upon  exercise  of  a  like  number of
     warrants.
 
(10) Includes 71,500 shares issuable upon exercise of a like number of warrants.
     Chana Sasha Foundation, Inc. is  a charitable foundation managed by  Morris
     Wolfson and Ariel Wolfson, whose address is 1 State Street Plaza, New York,
     NY 10004.
 
                            ------------------------
 
     By  virtue of his ownership of Common  Stock and position with the Company,
Marc D. Tokayer may be  deemed a 'parent' and 'founder'  of the Company as  such
terms are defined under the Federal securities laws.
 
ESCROW SHARES
 
     The  1,000,000 Escrow Shares are not assignable or transferable. The Escrow
Shares were deposited in escrow pursuant to an Escrow Agreement by and among the
Company, Marc D. Tokayer (269,274 shares), the Trust (730,726 shares) and Aboudi
& Brounstein Trustees Ltd. (the 'Escrow Agent') dated as of January 8, 1995 (the
'Escrow Agreement'). The Escrow  Shares will be released  from escrow, on a  pro
rata basis, unless otherwise agreed to by the Underwriter, if one or more of the
following conditions are met:
 
          (a)  250,000 Escrow Shares  (67,319 shares to  Mr. Tokayer and 182,681
     shares to the  Trust) shall  be released if  (i) the  Company's net  income
     before  provision  for  income  taxes and  exclusive  of  any extraordinary
     earnings (all as audited by  the Company's independent public  accountants)
     (the 'Minimum Pretax Income') amounts to at least $1,800,000 for the fiscal
     year  ending December 31,  1997; or (ii)  the Bid Price  (as defined in the
     Escrow Agreement) of  the Common  Stock averages  in excess  of $15.00  per
     share  for  30  consecutive  business  days  during  the  12  month  period
     commencing on the date of this Prospectus;
 
          (b) 300,000 Escrow Shares  (80,782 shares to  Mr. Tokayer and  219,218
     shares  to the Trust) shall be released if (i) the Company's Minimum Pretax
     Income amounts to at least $4,000,000  for the fiscal year ending  December
     31, 1998; or (ii) the Bid Price (as defined in the Escrow Agreement) of the
     Common  Stock averages  in excess  of $20.00  per share  for 30 consecutive
     business days during the 12 month period commencing 12 months from the date
     of this Prospectus;
 
          (c) 450,000 Escrow Shares (121,173  shares to Mr. Tokayer and  328,827
     shares  to the Trust) shall be released if (i) the Company's Minimum Pretax
     Income amounts to at least $6,000,000  for the fiscal year ending  December
     31, 1999; or (ii) the Bid Price (as defined in the Escrow Agreement) of the
     Common  Stock averages  in excess  of $25.00  per share  for 30 consecutive
     business days during the 12 month period commencing 24 months from the date
     of this Prospectus;
 
          (d) During the periods specified in (a), (b) or (c) above, the Company
     is acquired by or merged into another entity in a transaction in which  the
     value  of the per  share consideration received by  the stockholders of the
     Company on  the  date  of  such  transaction or  at  any  time  during  the
     applicable  period set  forth in (a),  (b) or (c),  respectively, equals or
     exceeds the applicable levels set forth  in (a), (b) or (c),  respectively,
     then such respective amount of Escrow Shares shall be released.
 
                                       37
 <PAGE>
<PAGE>
     Notwithstanding  the  conditions  of release  specified  above,  the Escrow
Shares are subject to  the Company Lock-up (as  defined hereafter). See  'Shares
Eligible  for Future  Sale.' The Minimum  Pretax Income amounts  set forth above
shall (i) be calculated exclusively of any extraordinary earnings including, but
not limited to, any charge to income resulting from release of the Escrow Shares
and (ii) be increased  proportionately, with certain  limitations, in the  event
additional  shares of Common Stock  or securities convertible into, exchangeable
for or  exercisable  into Common  Stock  are  issued after  completion  of  this
Offering. The Bid Price amounts set forth above are subject to adjustment in the
event of any stock splits, reverse stock splits or other similar events.
 
     Pursuant to the Escrow Agreement, any money, securities, rights or property
distributed  in respect of the Escrow Shares, including any property distributed
as  dividends  or  pursuant  to  any  stock  split,  merger,   recapitalization,
dissolution,  or total or partial  liquidation of the Company,  shall be held in
escrow by the Escrow Agent until release  of the Escrow Shares. During the  time
the  Escrow Shares  are held in  escrow, the  Escrow Agent will  vote the Escorw
Shares in the same manner as the  majority of all other shares of the  Company's
outstanding  Common Stock is voted. If the applicable Minimum Pretax Income, the
Bid Price or alternative tests set forth above have not been met by March 31  of
the  following fiscal year, then the Escrow  Shares, as well as any dividends or
other distributions made with respect thereto, will be cancelled and contributed
to the capital of the Company. The Company expects that the release, if any,  of
the  Escrow  Shares to  officers, directors,  employees  and consultants  of the
Company  will  be  deemed  compensatory  and,  accordingly,  will  result  in  a
substantial  charge to  reportable earnings, which  would equal  the fair market
value of such  shares on the  date of release.  Such charge could  substantially
increase  the loss or reduce or eliminate the Company's net income for financial
reporting purposes for  the period(s) during  which such shares  are, or  become
probable  of being,  released from escrow.  Although the  amount of compensation
expense  recognized  by  the  Company  will  not  affect  the  Company's   total
stockholders'  equity, it may have a negative  effect on the market price of the
Company's securities.  See  'Plan of  Operation,'  'Risk Factors  --  Charge  to
Earnings  in the  Event of  Release of Escrow  Shares' and  Note 11  of Notes to
Financial Statements.
 
     The Minimum  Pretax  Income and  Bid  Price  levels set  forth  above  were
determined by negotiation between the Company and the Underwriter and should not
be  construed to  imply or  predict any  future earnings  by the  Company or any
increase in the market price of its securities.
 
VOTING ARRANGEMENTS
 
     Marc D. Tokayer, Chairman  of the Board, the  Tokayer Family Trust,  Baruch
Sollish,  Director and  four other stockholders  with an  aggregate of 1,137,430
shares of Common Stock  (35.3% after the Offering),  have entered into a  voting
arrangement  whereby they have  agreed to vote their  respective shares to elect
directors and in support of positions favored  by a majority of the shares  held
among   them.  See   'Risk  Factors  --   Control  by   Management  and  Current
Stockholders.'
 
                              CERTAIN TRANSACTIONS
 
     In July 1994, the Company sold 1,200,000 shares of its Common Stock to Marc
D. Tokayer,  Chairman of  the Board  of Directors  of the  Company. Mr.  Tokayer
subsequently  contributed 561,453 shares  to the Company  which were immediately
cancelled by the Company  and deposited 269,274 shares  into escrow. The  shares
were  issued in consideration of services  performed and Mr. Tokayer's shares of
Common Stock of TBR Systems Inc. ('TBR') (representing approximately 22% of  the
then  issued equity of TBR), in the aggregate valued at $1,200 ($.001 per share)
(ascribing no value  to the shares  of TBR).  In August 1994,  the Company  sold
1,200,000  shares  of its  Common Stock  to the  Trust, which  may be  deemed an
affiliate of the  Issuer, in  consideration of $25,000.  The Trust  subsequently
transferred  85,000  shares  to  an unaffiliated  third  party  in  exchange for
services and deposited 730,726 shares into escrow. See 'Principal Stockholders.'
 
     TTR Inc. retained Shane,  Alexander, Unterburgher Securities, Inc.  ('SAU')
to   assist  it  in  the  establishment  of  a  United  States-based  sales  and
representative office at a fee of $7,900 per month and the issuance of  warrants
for  185,000 shares of Common Stock for the period from November 1, 1994 through
December 31, 1995. SAU subsequently  transferred the warrants to  non-affiliated
third parties,
 
                                       38
 <PAGE>
<PAGE>
and  the shares  of Common  Stock issuable  upon exercise  of such  warrants are
included in the Selling Securityholders Offering. See 'Selling  Securityholders'
Offering.'
 
     In  November 1994, the Company loaned SAU $256,000, which was repaid in its
entirety in 1995.  The terms of  the loan included  an interest rate  of 8%  per
annum, with principal and interest payable by December 31, 1995.
 
     In  November  1994 and  June  1995, the  Company  advanced an  aggregate of
$26,000 to Marc D.  Tokayer, Chairman of  the Board. Mr.  Tokayer has agreed  to
repay such advances at the Closing of this Offering.
 
     In  January 1995, TTR Israel acquired  the technology underlying certain of
the features of  SoftGuard from  Rina Marketing  R&D Ltd.,  an Israeli  software
company  ('Rina'). Until  December 1994, Dr.  Baruch Sollish, a  director of the
Company, was affiliated with  Rina. Dr. Sollish  was responsible for  developing
the  technology  purchased by  the Company  from Rina.  In consideration  of the
purchase of  such technology,  the  Company paid  to  Rina at  closing  $50,000.
Following  purchase of the technology, the Company developed, enhanced and added
to such technology to develop the SoftGuard line of products.
 
     In January 1996,  the Company  sold 50,000 shares  of its  Common Stock  to
Chana  Sasha Foundation, Inc.  ('CSF') for $100,000. In  April 1996, the Company
completed a private placement of 650,000 shares of Common Stock and warrants  to
purchase  an additional 1,000,000 shares of  Common Stock to Canova Finance Inc.
(251,875 shares and 387,500 warrants),  Etilon Trading Ltd. (251,875 shares  and
387,500  warrants),  Joe Ohayon  (99,775 shares  and  153,500 warrants)  and CSF
(46,475 shares and 71,500 warrants) for an aggregate purchase price of $200,000,
including $10,000  ascribed to  the warrants.  The warrants  are exercisable  at
$7.00 per share. See 'Description of Securities -- Prior Financings.'
 
     In  September  1996, the  Company agreed  to  issue upon  the date  of this
Prospectus 217,473 warrants to Arik Shavit, a director of the Company,  pursuant
to  his employment agreement with TTR Israel as its Chief Executive Officer. The
warrants are exercisable  at $.01 per  share until September  2002 subject to  a
four-year   vesting  schedule,  whereby  the   first  72,491  warrants  are  not
exercisable until September 1997. See 'Management -- Employment Arrangements.'
 
     For information concerning employment  and consulting agreements with,  and
compensation   of,  the   Company's  executive   officers  and   directors,  see
'Management --  Executive Compensation;  Employment Arrangements;  and  Employee
Benefit  Plans.'  See  'Principal  Stockholders --  Voting  Arrangements'  for a
description of a voting arrangement to be entered into among certain members  of
Management and other stockholders.
 
     The  Company believes that the terms  of each of the foregoing transactions
and those which will exist  after the consummation of  the Offering are no  less
favorable to the Company than could have been obtained from non-affiliated third
parties,  although no independent  appraisals were obtained.  In the future, all
transactions between the Company and its affiliates will also be on terms  which
the  Company believes will continue to be  no less favorable to the Company than
the Company could  obtain from  non-affiliated parties.  The Company  represents
that  any  future  loans or  advances  made  to any  officers,  directors  or 5%
beneficial stockholders will be done only for bona fide business purposes.
 
                           DESCRIPTION OF SECURITIES
 
COMMON STOCK
 
     The Company is authorized to issue 20,000,000 shares of Common Stock, $.001
par value per share, of which 2,424,548 shares (assuming the pro forma  exercise
of  374,548 warrants into 374,548 shares of Common Stock and excluding 1,000,000
Escrow Shares) are currently outstanding and held of record by approximately  60
holders.  See 'Description of Securities --  Prior Financings' for a description
of the 374,548  warrants and  'Principal Stockholders  -- Escrow  Shares' for  a
description of the Escrow Shares. Holders of shares of Common Stock are entitled
to  one vote  for each share  held of record  on all  matters to be  voted on by
stockholders. There are  no preemptive, subscription,  conversion or  redemption
rights  pertaining to the  shares of Common  Stock. Holders of  shares of Common
Stock are entitled to receive dividends when, as and if declared by the Board of
Directors from funds legally
 
                                       39
 <PAGE>
<PAGE>
available therefor and to share ratably  in the assets of the Company  available
upon  liquidation, dissolution  or winding up.  The holders of  shares of Common
Stock do not have  cumulative voting rights for  the election of directors  and,
accordingly, the holders of more than 50% of the shares of Common Stock are able
to  elect all directors. After the completion of this Offering, the officers and
directors of the Company will be entitled to vote 26.5% of the shares of  Common
Stock.  Marc  D. Tokayer,  Chairman  of the  Board,  the Trust,  Baruch Sollish,
Director and four other  stockholders with an aggregate  of 1,137,430 shares  of
Common  Stock (35.3% after the Offering)  have entered into a voting arrangement
whereby they have agreed to vote their respective shares to elect directors  and
in  support of positions  favored by a  majority of the  shares held among them.
Accordingly, in all likelihood they will be  able to elect all of the  Company's
directors.  All of the  outstanding shares of  Common Stock are,  and the Common
Stock offered hereby, upon issuance and when paid for, will be duly  authorized,
validly issued, fully paid and non-assessable.
 
PRIOR FINANCINGS
 
     From  November 1994  through July 1995,  the Company  consummated a private
placement  to  26  accredited  investors   of  two-year  10%  promissory   notes
aggregating  approximately $1,041,000 (the '1995 Debt Financing'). As of January
15, 1997, $626,203 of  note principal and interest  became due and payable.  The
holders  of $619,525 note principal and interest  of such notes extended the due
date of the notes to March 31, 1997. In connection with the Debt Financing,  the
Company  issued warrants (the  'Debt Financing Warrants')  to the noteholders to
purchase up to a total of 174,548 shares of Common Stock for $.01 per share. The
174,548 shares of  Common Stock  issuable upon  exercise of  the Debt  Financing
Warrants  are included  in the Selling  Securityholders Offering.  The 1995 Debt
Financing will be repaid  from the proceeds of  this Offering as the  promissory
notes  become due and payable,  or sooner at the  discretion of the Company. See
'Use of Proceeds.' The proceeds from the  1995 Debt Financing were used for  the
initial   activities  of  the  Company,   including  recruitment  of  personnel,
acquisition  of  equipment  and  office  premises,  and  for  general  corporate
purposes.  Also in  connection with  the 1995  Debt Financing,  the Company paid
commissions and non-accountable  expense allowances in  the aggregate amount  of
approximately $146,000 to SAU. See 'Plan of Operation,' 'Selling Securityholders
Offering' and 'Principal Stockholders.'
 
     In  April 1996, the Company completed a private placement of 650,000 shares
of Common  Stock and  warrants to  purchase an  additional 1,000,000  shares  of
Common  Stock to four sophisticated investors for an aggregate purchase price of
$200,000 (the 'Equity Financing'). The securities issued in connection with  the
Equity  Financing  are included  in  the Selling  Securityholders  Offering. The
proceeds from the  Equity Financing were  used for product  development and  for
general corporate purposes. See 'Selling Securityholders Offering.'
 
     In  June 1996, the Company issued in  a private placement to six accredited
investors (including  five limited  partners of  the Underwriter  (the  'Limited
Partners'))  one-year 10% promissory  notes in the  aggregate amount of $500,000
(the 'Bridge Financing'). By its terms, the Bridge Financing must be repaid from
the proceeds of this Offering.  See 'Use of Proceeds.'  The net proceeds to  the
Company  of  the Bridge  Financing were  approximately $423,000  after deducting
related placement expenses. The proceeds  were used for product development  and
working  capital purposes. In connection with  the Bridge Financing, the Company
issued an aggregate  of 150,000 shares  of Common Stock.  In February 1997,  the
Limited  Partners agreed to return to treasury an aggregate of 135,000 shares of
Common Stock, subject to the completion  of this Offering. The remaining  15,000
shares  of  Common Stock  issued  in connection  with  the Bridge  Financing are
included in the Selling  Securityholders Offering. Also  in connection with  the
Bridge  Financing,  the  Company paid  commissions  and  non-accountable expense
allowances in the aggregate amount of approximately $55,000 to the  Underwriter.
See 'Use of Proceeds' and 'Selling Securityholders Offering.'
 
LIMITATIONS UPON TRANSACTIONS WITH 'INTERESTED STOCKHOLDERS'
 
     Section  203 of the  Delaware General Corporation  Law prohibits a publicly
held Delaware  corporation from  engaging in  a 'business  combination' with  an
'interested  stockholder' for  a period  of three  years after  the date  of the
transaction   in   which   the   person   became   an   interested   stockholder
 
                                       40
 <PAGE>
<PAGE>
unless  (i) prior to  the date of  the business combination,  the transaction is
approved by the board of directors of the corporation, (ii) upon consummation of
the transaction  which  resulted  in  the  stockholder  becoming  an  interested
stockholder,  the interested  stockholder owns at  least 85%  of the outstanding
voting stock,  or  (iii) on  or  after such  date  the business  combination  is
approved  by the  board of  directors and  by the  affirmative vote  of at least
66 2/3% of the  outstanding voting stock  which is not  owned by the  interested
stockholder.  A 'business combination'  includes mergers, asset  sales and other
transactions resulting in a financial benefit to the stockholder. An 'interested
stockholder' is a person who, together with affiliates and associates, owns  (or
within three years, did own), 15% or more of the corporation's voting stock. The
restrictions  of Section 203 do not apply, among other things, if a corporation,
by action  of  its stockholders,  adopts  an  amendment to  its  certificate  of
incorporation  or by-laws expressly electing not  to be governed by Section 203,
provided that, in addition to any other vote required by law, such amendment  to
the  certificate of incorporation or by-laws must be approved by the affirmative
vote of a majority  of the shares  entitled to vote.  Moreover, an amendment  so
adopted  is not effective  until twelve months  after its adoption  and does not
apply to any  business combination between  the corporation and  any person  who
became  an  interested  stockholder of  such  corporation  on or  prior  to such
adoption.  The  Company's  Certificate  of  Incorporation  and  By-laws  do  not
currently  contain any provisions electing not to  be governed by Section 203 of
the Delaware  General Corporation  Law. The  provisions of  Section 203  of  the
Delaware  General Corporation  Law may  have a  depressive effect  on the market
price of the Common  Stock because they could  impede any merger,  consolidating
takeover  or other  business combination involving  the Company  or discourage a
potential acquiror from making a tender offer or otherwise attempting to  obtain
control of the Company.
 
TRANSFER AGENT, REGISTRAR AND WARRANT AGENT
 
     The transfer agent and registrar for the Common Stock and the warrant agent
for  the Warrants is North American Transfer Co., 147 W. Merrick Road, Freeport,
New York.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
     Upon completion of the Offering, the Company will have 3,224,548 shares  of
Common  Stock outstanding  (without giving effect  to the return  to treasury of
135,000 Bridge Shares). Of the Common  Stock to be issued and outstanding  after
the  Offering, an aggregate  of 2,074,548 shares of  Common Stock, consisting of
the 800,000 shares of Common Stock sold in the Offering and the 1,139,548 shares
of Common Stock (all of which shares  will be subject to a lock-up agreement  as
described  below) being  offered by the  Selling Securityholders  will be freely
tradeable without restriction or further registration under the Securities  Act,
except  for any  shares purchased  by an 'affiliate'  of the  Company within the
meaning of  Rule  144 under  the  Securities  Act ('Rule  144').  The  remaining
1,150,000  shares of Common  Stock are 'restricted securities,'  as that term is
defined under Rule 144, and may not be sold in the absence of registration under
the Securities Act unless an exemption from registration is available, including
the exemption provided by Rule 144. Approximately 653,547 of such shares will be
eligible for sale under  Rule 144 commencing 90  days after the consummation  of
the  Offering; however,  all of  such shares  will be  subject to  the following
lock-up  agreement.  The  Company's   officers,  directors,  stockholders   each
beneficially  owning 5% or more of the Common Stock, all Selling Securityholders
(except for a certain selling stockholder  who has agreed to lock-up his  15,000
shares  for a period of  18 months) and certain  other stockholders (covering an
aggregate of approximately 2,214,548 shares excluding 60,000 shares included  in
the  Over-allotment Option) have agreed, for a period of 24 months from the date
of this Prospectus, not to  sell or otherwise dispose  of any securities of  the
Company, without the prior written consent of the Underwriter. In addition, Marc
D.  Tokayer, Chairman of the Board, and the Trust, have agreed with the Company,
for a period  of 36 months  from the date  of this Prospectus,  not to sell  any
securities  of the Company, including the Escrow Shares (the 'Company Lock-up').
Notwithstanding, such securities may be released from the Company Lock-up during
(a) the 12 month period commencing 12 months from the date of this Prospectus if
sold for a  price not less  than $14.00 per  share and (b)  the 12 month  period
commencing  24 months from the  date of this Prospectus if  sold for a price not
less than $7.00 per share. See 'Principal Stockholders -- Escrow Shares.'
 
     In general, under Rule 144, as currently in effect, a person, including  an
'affiliate'  of the  Company as  defined under  the Securities  Act, (or persons
whose shares are aggregated), who for at least two
 
                                       41
 <PAGE>
<PAGE>
years  has  beneficially  owned  restricted  securities  acquired  directly   or
indirectly  from  the  Company or  an  affiliate  of the  Company  in  a private
transaction, is entitled  to sell, within  any three-month period,  a number  of
shares that does not exceed the greater of 1% of the total number of outstanding
shares  of the same class  or the average weekly  trading volume during the four
calendar weeks preceding the day notice is given to the Securities and  Exchange
Commission  with respect  to such  sale. A person  (or persons  whose shares are
aggregated) who is not an affiliate and has not been an affiliate of the Company
at any time during the three months  immediately preceding the sale and who  has
beneficially  owned shares of Common Stock for  at least three years is entitled
to sell such shares pursuant to subparagraph  (k) of Rule 144 without regard  to
the volume limitations described above.
 
     Prior  to this Offering,  there has been  no public trading  market for the
Common Stock, and there can be no  assurance that a regular trading market  will
develop  after  the Offering,  or that  if  developed it  will be  sustained. In
addition, no prediction can be made as to the effect, if any, that market  sales
of  Common Stock or  the availability of such  shares for sale  will have on the
market prices prevailing from time  to time. Nevertheless, the possibility  that
substantial  amounts of shares of Common Stock  may be sold in the public market
may adversely affect  prevailing market prices  for the Common  Stock and  could
impair  the Company's ability  to raise capital  through the sale  of its equity
securities.
 
     Rule 701 under the  Securities Act provides that,  beginning 90 days  after
the  date of this Prospectus, shares of Common Stock acquired on the exercise of
outstanding options may be resold by persons other than affiliates subject  only
to  the manner of sale provisions of Rule  144, and by affiliates subject to all
provisions of Rule 144 except its  two-year minimum holding period. The  Company
intends  to file a registration statement under  the Securities Act (on Form S-8
or any  successor  form) to  register  the shares  of  Common Stock  issued  and
reserved  for issuance  in compensatory arrangements  and under  its stock plan.
Registration would permit  the resale of  such shares by  non-affiliates in  the
public market without restriction under the Securities Act.
 
REGISTRATION RIGHTS
 
     The  holders of  665,000 shares of  Common Stock, 374,548  shares of Common
Stock of the Company issuable upon exercise of warrants at an exercise price  of
$.01  per share and 1,000,000  shares of Common Stock  issuable upon exercise of
warrants at  an exercise  price of  $7.00 per  share have  been granted  certain
incidental and/or demand registration rights. These securities were purchased in
private  transactions with the Company in November 1994 through July 1995, April
1996  and  June  1996.  The  piggyback  registration  rights  do  not  apply  to
registrations  relating to  initial public  offerings, mergers,  acquisitions or
pursuant to  Form S-8  (or any  successor form).  Notwithstanding, all  of  such
shares  of Common Stock,  except for 1,000,000 shares  issuable upon exercise of
warrants; are included in the Selling Securityholders' Offering.
 
                                  UNDERWRITING
 
     Subject to the  terms of  the Underwriting Agreement,  the Underwriter  has
agreed  to  purchase  from the  Company,  800,000  shares of  Common  Stock. The
Underwriting Agreement  provides that  the obligations  of the  Underwriter  are
subject  to  certain  conditions  precedent.  The  Underwriter  is  committed to
purchase all of the securities offered  hereby on a 'firm commitment' basis,  if
any are purchased.
 
     The Underwriter has advised the Company that it proposes to initially offer
the Common Stock to the public at the prices set forth on the cover page of this
Prospectus  and to certain dealers at such prices less concessions not in excess
of $.25 per share of Common Stock.
 
     Neither the  Company nor  any of  its officers,  directors, affiliates  and
associates  will  recommend, encourage  or  advise investors  to  open brokerage
accounts with  any  broker-dealer that  is  obtained to  make  a market  in  the
Company's Securities. Furthermore, no promoter or anyone acting at the direction
of  the Company's officers, directors,  affiliates, associates or promoters will
engage in such activities.
 
                                       42
 <PAGE>
<PAGE>
     There  are  no  current  or   future  plans,  proposals,  arrangements   or
understandings  of the  Underwriter or  known to the  Underwriter or  any of the
Underwriters, with  respect to  engaging in  any transactions  with the  Selling
Securityholders.
 
     The Company and the Trust, which may be deemed an affiliate of the Company,
have  granted to the  Underwriter an option, exercisable  during the 45 calendar
day period after the closing  of the Offering, to  purchase from the Company  at
the   initial  public  offering  price   less  underwriting  discounts  and  the
non-accountable expense  allowance, up  to  an aggregate  of 120,000  shares  of
Common   Stock  (on  a   pro  rata  basis)   for  the  sole   purpose  to  cover
over-allotments, if any.
 
     The Company has agreed that it will not issue any other securities  (except
with  respect  to the  shares  of Common  Stock  issuable upon  the  exercise of
outstanding options or warrants, pursuant to the 1996 Plan, or the Underwriter's
Warrants) for three  years from  the Effective  Date without  the prior  written
consent  of the Underwriter. The Company has  agreed to pay to the Underwriter a
non-accountable expense allowance of 3% of the gross proceeds of this  Offering,
of which $50,000 has been paid by the Company as of the date of this Prospectus.
Further,  the  Company  has  agreed to  reimburse  the  Underwriter  for certain
accountable expenses relating to this Offering.
 
     The Underwriter has  informed the Company  that no shares  of Common  Stock
offered hereby will be issued to discretionary accounts.
 
     The  Underwriter acted as Placement Agent  for the Bridge Financing in June
1996 for which it received a  Placement Agent fee and a non-accountable  expense
allowance of approximately $55,000.
 
     Each of the Company's stockholders who beneficially own more than five (5%)
percent  of the  Company's outstanding Common  Stock, or warrants  or options to
purchase Common Stock  or other  securities convertible into  Common Stock,  the
Selling  Securityholders (except  for a  certain Selling  Securityholder who has
agreed to lock-up  his 15,000 shares,  for a  period of 18  months) and  certain
other  stockholders, and each officer and director of the Company or relative of
such officer or director have agreed not to sell or otherwise dispose of any  of
their  Common Stock  (covering an  aggregate of  approximately 2,214,548 shares,
excluding  60,000  shares  included  in  the  Over-allotment  Option)  or  other
securities of the Company owned directly or indirectly by him or beneficially by
him  on the date of this  Prospectus for a period of  24 months from the date of
this Prospectus  without the  prior written  consent of  the Underwriter,  which
consent  may be granted prior  to the expiration of  the lock-up period, but not
prior  to  the  exercise  or  expiration  of  the  Over-allotment  Option.   The
Underwriter has no present intention to waive or shorten the lock-up agreements.
Notwithstanding   these  lock-up  agreements,  such  persons  may  make  private
transfers, provided  that  the  transferees  agree  to  be  bound  by  the  same
restrictions.  An appropriate legend will be  marked on the face of certificates
representing all such securities.
 
     The Company has agreed, if required  by the Underwriter at any time  within
the  five years commencing in fiscal 1996, to designate two individuals to serve
as non-voting advisors to  the Company's Board  of Directors. The  Underwriter's
designees  will receive the same compensation, if any, for such service as other
non-officer directors. In lieu of the Underwriter's right to designate the  non-
voting  advisors, the  Underwriter shall  have the  right during  such five-year
period, in  its  sole discretion,  to  designate  two persons  for  election  as
directors of the Company. The Underwriter has advised the Company that it has no
intention  to select  its designees as  non-voting advisors or  directors in the
immediate future. If and when the  Underwriter designates such persons to  serve
as  directors of the Company, those individuals may be associated persons of the
Underwriter who  may  have  conflicting  obligations  to  the  Company  and  the
Underwriter when serving on the Board of Directors. The Company will utilize its
best  efforts to  obtain the  election of  such persons,  each of  whom shall be
entitled to  receive the  same compensation,  expense reimbursements  and  other
benefits  as  any other  director. See  'Risk Factors  -- Possible  Conflicts of
Directors.'
 
     The Company  has also  agreed  to retain  the  Underwriter, pursuant  to  a
consulting  agreement (the 'Consulting Agreement'),  as the Company's management
and financial consultants for the two-year period commencing at or prior to  the
closing  of this Offering, for  an annual rate of  $60,000 payable in advance on
the Closing  of  this  Offering.  Pursuant  to  the  Consulting  Agreement,  the
Underwriter  will  render  certain  financial  advisory  and  investment banking
services to the Company, including advice as
 
                                       43
 <PAGE>
<PAGE>
to the  Company's financial  public  relations, internal  operations,  corporate
finance matters, and other related matters. As part of the Consulting Agreement,
the  Company has  agreed, for  a period of  three years  following the Effective
Date, to pay  the Underwriter a  cash finder's fee  of (i) five  percent of  the
first  $1,000,000;  (ii)  four percent  of  the second  $1,000,000;  (iii) three
percent of the third $1,000,000; and (iv) two percent of any consideration  over
$4,000,000  upon the completion of any  transaction in which the Underwriter was
responsible for introducing a  merger or acquisition  candidate to the  Company.
Notwithstanding,  the Underwriter has no  current plans, proposals, arrangements
or understandings with respect to introducing a merger or acquisition  candidate
to the Company.
 
     In  connection with this  Offering, the Company  has agreed to  sell to the
Underwriter, for nominal  consideration, warrants to  purchase from the  Company
80,000  shares of Common Stock at 160% of the offering price (the 'Underwriter's
Warrants').  The  shares  of  Common   Stock  issuable  upon  exercise  of   the
Underwriter's  Warrants will be identical to  the securities offered hereby. The
Underwriter's Warrants contain anti-dilution provisions providing for adjustment
of the exercise price upon the occurrence of certain events.
 
     The Underwriter's Warrants will be nontransferable for a period of one year
from the date of  this Prospectus except to  officers of the Underwriter,  other
underwriters,  selected dealers, or  their respective officers  or partners. The
holders of the  Underwriter's Warrants will  have no voting,  dividend or  other
rights  of  stockholders of  the Company  until such  time as  the Underwriter's
Warrants are exercised.
 
     At the request of a majority  of the holders of the Underwriter's  Warrants
and/or  underlying securities  during the  five-year period  commencing one year
after the  date of  this Prospectus,  the Company  has agreed  to file,  at  its
expense  and on  one occasion, and  to use its  best efforts to  cause to become
effective, a new  registration statement  or prospectus required  to permit  the
public  sale  of  the  securities  underlying  the  Underwriter's  Warrants.  In
addition, if at any  time during the six-year  period commencing one year  after
the  date of  this Prospectus,  the Company registers  any of  its securities or
exempts such securities from registration  under the provisions of Regulation  A
or  any equivalent thereto, the holders  of the Underwriter's Warrants will have
the right,  subject  to certain  conditions,  to include  in  such  registration
statement at the Company's expense, all or any part of the securities underlying
the Underwriter's Warrants.
 
     A  new registration  statement will  be required  to be  filed and declared
effective before distribution  to the  public of the  securities underlying  the
Underwriter's  Warrants.  The  Company  will  be  responsible  for  the  cost of
preparing such a registration statement.
 
     During  the  term  of  the  Underwriter's  Warrants,  the  holders  of  the
Underwriter's  Warrants are given the  opportunity to profit from  a rise in the
market price of the Common Stock. To the extent that the Underwriter's  Warrants
are  exercised, dilution  of the  interests of  the Company's  stockholders will
occur. The Underwriter and  its transferees may be  deemed to be  'underwriters'
under  the Securities  Act with respect  to the sale  of the Common  Stock to be
received upon exercise of  the Underwriter's Warrants,  and any profit  realized
upon  such  sale  may  be deemed  to  be  additional  underwriting compensation.
Further, the terms  upon which  the Company will  be able  to obtain  additional
equity  capital may be adversely affected  since the holder of the Underwriter's
Warrants can be expected to exercise them  at a time when the Company would,  in
all  likelihood, be able to obtain any needed capital on terms more favorable to
the Company than those provided in the Underwriter's Warrants.
 
     The Underwriting Agreement provides for reciprocal indemnification  between
the  Company and the Underwriters against certain liabilities in connection with
the Registration  Statement of  which this  Prospectus forms  a part,  including
liabilities  under the Securities Act. To the extent this section may purport to
provide  exculpation  from  possible  liabilities  arising  under  the   Federal
securities  laws, it is the opinion  of the Commission that such indemnification
is against public policy and is therefore unenforceable.
 
     The foregoing  is a  summary of  the principal  terms of  the  Underwriting
Agreement,  the Underwriter's Warrants and the Consulting Agreement and does not
purport to be  complete. Reference  is made to  the copies  of the  Underwriting
Agreement, the Underwriter's Warrants Agreement and the
 
                                       44
 <PAGE>
<PAGE>
Consulting  Agreement which are filed as  exhibits to the Registration Statement
of which this Prospectus forms a part.
 
     First Metropolitan Securities, Inc. commenced operations in November  1995,
and has acted as an underwriter of only one public offering of securities. First
Metropolitan's  lack of experience may have an adverse impact on the development
of a trading market  for the Company's securities  following this Offering.  See
'Risk Factors -- Lack of Experience of the Underwriter.'
 
     Prior  to  this Offering,  no  public market  exists  for the  Common Stock
offered hereby. Consequently, the public offering price of the Common Stock  has
been  determined by  the Company  and the  Underwriter; and  are not necessarily
related to  the  Company's asset  value,  earnings,  book value  or  other  such
criteria  of value. Factors considered in  determining the public offering price
of the Common Stock  include primarily the prospects  for the industry in  which
the  Company operates,  the Company's Management,  the general  condition of the
securities markets and the demand for securities in similar industries.
 
                       SELLING SECURITYHOLDERS' OFFERING
 
     Concurrently  with  this  Offering,  1,357,021  shares  of  Common   Stock,
including  217,473 shares of Common Stock  issuable upon the exercise of 217,473
warrants have been registered under the  Securities Act for resale on behalf  of
the Selling Securityholders. The Selling Securityholders have agreed (except for
a certain Selling Securityholder who has agreed to lock-up his 15,000 shares for
a  period of  18 months;  and except for  a certain  Selling Securityholder with
respect to up to  60,000 shares of Common  Stock included in the  Over-allotment
Option)  not to sell such securities for a period of 24 months after the date of
this Prospectus  without the  prior written  consent of  the Underwriter,  which
consent may be granted prior to the expiration of the lock-up period.
 
     The  Company will not  receive any proceeds  from the sales  of the Selling
Securityholders' Shares by  the Selling  Securityholders. Sales  of the  Selling
Securityholders'  Shares, or even the potential of such sales, would likely have
an adverse effect on the market price of the Company's securities.
 
                                 LEGAL MATTERS
 
     The legality of the  securities offered by this  Prospectus will be  passed
upon for the Company by Baer Marks & Upham LLP, New York, New York. In addition,
certain  other matters in connection with  this Offering with respect to Israeli
law will  be passed  upon for  the Company  by Aboudi  & Brounstein,  Tel  Aviv,
Israel. Certain legal matters will be passed upon for the Underwriter by Lampert
& Lampert, New York, New York.
 
                                       45
 <PAGE>
<PAGE>
                                    EXPERTS
 
     The  consolidated financial statements of TTR Inc. for the period from July
14, 1994 (date of inception)  to December 31, 1994  and the year ended  December
31,  1995 included in  this Prospectus have  been included in  reliance upon the
report of  Schneider  Ehrlich  & Wengrover  LLP,  independent  certified  public
accountants,  given upon the authority of said firm as experts in accounting and
auditing. The financial statements of TTR Technologies Ltd. for the period  from
December  5, 1994 (date  of inception) to  December 31, 1994  and the year ended
December 31,  1995 included  in this  Prospectus in  the consolidated  financial
statements  of TTR Inc.  have been included  in reliance upon  the report of BDO
Almagor  &  Co.,  independent  certified  public  accountants,  given  upon  the
authority of said firm as experts in accounting and auditing.
 
                             AVAILABLE INFORMATION
 
     The  Company has  filed with  the Securities  and Exchange  Commission (the
'Commission') a Registration  Statement on  Form SB-2  including all  amendments
thereto  (the 'Registration Statement') under the Securities Act with respect to
the Securities offered by this Prospectus. This Prospectus does not contain  all
of  the information  set forth in  the Registration Statement,  certain parts of
which are omitted in accordance with the rules and regulation of the Commission.
For further information with respect to the Company and the Offering,  reference
is  made to the Registration Statement,  including the exhibits filed therewith.
The Registration Statement may be inspected and copies may be obtained from  the
Public  Reference Section at the Commission's  principal office, located at Room
1024, Judiciary Plaza, 450  Fifth Street, N.W., Washington,  D.C. 20549, and  at
the  regional offices of the Commission  located at the Chicago Regional Office,
Northwestern Atrium  Center,  500  West Madison  Street,  Suite  1400,  Chicago,
Illinois  60611, and  the Northeast Regional  Office, Seven  World Trade Center,
Suite 1300, New York, New York 10048, upon payment of the fees prescribed by the
Commission. The Registration  Statement has been  filed electronically with  the
Commission. The Commission maintains a Web site that contains reports, proxy and
information  statements and  other information  regarding registrants  that file
electronically with the Commission, at http://www.sec.gov. Statements  contained
in  this Prospectus as to the contents of any contract or other document are not
necessarily complete and where the contract or other document has been filed  as
an  exhibit to the  Registration Statement, each such  statement is qualified in
all respects  by  such reference  to  the  applicable document  filed  with  the
Commission.
 
                                       46
<PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
                                    CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                          PAGE
                                                                                                       -----------
 
<S>                                                                                                    <C>
Independent Auditors' Report.........................................................................      F-2
Report of Independent Public Accountants.............................................................      F-3
Consolidated Balance Sheet...........................................................................      F-4
Consolidated Statement of Operations.................................................................      F-5
Consolidated Statement of Stockholders' Deficit......................................................      F-6
Consolidated Statement of Cash Flows.................................................................   F-7 - F-8
Notes to Consolidated Financial Statements...........................................................  F-9 - F-18
</TABLE>
 
                                      F-1
 <PAGE>
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
 
To the Board of Directors and Stockholders of
TTR INC.
Immanuel, Israel
 
     We have audited the accompanying consolidated balance sheet of TTR Inc. and
its  Subsidiary (A Development Stage  Company) as of December  31, 1995, and the
related consolidated  statements of  operations, cash  flows, and  stockholders'
deficit  for the year ended  December 31, 1995 and for  the period from July 14,
1994 (Date  of Inception)  to December  31, 1994.  These consolidated  financial
statements   are   the   responsibility  of   the   Company's   management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits. We did not audit the financial statements of TTR
Technologies,  Ltd. a  wholly owned  subsidiary, which  statements reflect total
assets of $218,392  as of  December 31,  1995, and  net losses  of $571,924  and
$2,193  for the years  ended December 31,  1995 and the  period from December 5,
1994 to December 31, 1994, respectively. Those statements were audited by  other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for TTR Technologies Ltd. is based solely on the
reports of the other auditors.
 
     We  conducted  our audits  in accordance  with generally  accepted auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable  assurance about  whether the  consolidated financial  statements are
free of material  misstatement. An audit  includes examining, on  a test  basis,
evidence  supporting the amounts  and disclosures in  the consolidated 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 audits and the report  of
other auditors provide a reasonable basis for our opinion.
 
     In  our opinion, based on our audits  and the report of other auditors, the
consolidated financial  statements  referred to  above  present fairly,  in  all
material  respects, the financial position of TTR  Inc. and its Subsidiary as of
December 31, 1995 and the results of  their operations and their cash flows  for
the  year ended December 31, 1995 and for the period from July 14, 1994 (Date of
Inception) to December 31, 1994 in conformity with generally accepted accounting
principles.
 
     The accompanying financial statements have been prepared assuming that  the
Company  will continue as a going concern.  As shown in the financial statements
and as discussed in note 3 to the financial statements, the Company has incurred
recurring losses since its inception in 1994, and has an accumulated deficit  at
December  31, 1995 of  $938,748. These conditions  raise substantial doubt about
the Company's ability  to continue  as a  going concern.  Management's plans  in
regard  to these matters are also described  in Note 3. The financial statements
do not  include any  adjustments that  might  result from  the outcome  of  this
uncertainty.
 
                                          SCHNEIDER, EHRLICH & WENGROVER LLP
 
Woodbury, New York
July 1, 1996
 
                                      F-2
 <PAGE>
<PAGE>
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Shareholders of
T.T.R. TECHNOLOGIES LTD.
(A Development Stage Company)
 
     We  have audited the accompanying balance sheet of T.T.R. Technologies Ltd.
(a development stage company)  ('the Company') as of  December 31, 1995 and  the
related  statements of operations, changes  in shareholders' deficiency and cash
flows for the year ended December 31,  1995 and for the period December 5,  1994
(date  of inception)  to December 31,  1994. These financial  statements are the
responsibility of the Company's management. Our responsibility is to express  an
opinion on these financial statements based on our audits.
 
     We  conducted  our audit  in  accordance with  generally  accepted auditing
standards, including  those  prescribed  by the  Israeli  Auditor's  Regulations
(Auditor's Mode of Performance), 1973. Such auditing standards are substantially
identical  to generally accepted auditing standards  in the United States. Those
standards require  that we  plan  and perform  the  audit to  obtain  reasonable
assurance  that the financial  statements are free  of material misstatement. An
audit includes examining on  a test basis, evidence  supporting the amounts  and
disclosure  in the  financial statements. An  audit also  includes assessing the
accounting principles used and significant  estimates made by the management  of
the Company, 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 above  financial  statements present  fairly  in all
material respects, the financial  position of the  Company (a development  stage
company)  as of December 31, 1995 and  the results of its operations, changes in
shareholders' deficiency, and cash  flows for the year  ended December 31,  1995
and  for the period December 5, 1994 (date of inception) to December 31, 1994 in
conformity with accounting principles  generally accepted in  Israel and in  the
United  States.  As applicable  to these  financial statements,  such accounting
principles are substantially identical.
 
     The accompanying  financial  statements  have been  prepared  assuming  the
Company  will  continue  as a  going  concern. As  discussed  in Note  3  to the
financial statements, the Company has suffered recurring losses from  operations
and has a net working capital deficiency and shareholders' deficiency that raise
substantial  doubt  about  its  ability  to continue  as  a  going  concern. The
Company's plans are also referred to in Note 3. The financial statements do  not
include any adjustments that might result from the outcome of this uncertainty.
 
     The  financial statements have been translated into dollars for the purpose
of their inclusion in the financial statements of TTR Inc.
 
                                          BDO ALMAGOR & CO.
                                          Certified Public Accountants
 
Ramat-Gan, Israel
July 1, 1996
 
                                      F-3
<PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEET
 
<TABLE>
<CAPTION>
                                                                                      DECEMBER 31,    SEPTEMBER 30,
                                                                                          1995            1996
                                                                                      ------------    -------------
                                                                                                       (UNAUDITED)
<S>                                                                                   <C>             <C>
                                      ASSETS
Current assets
     Cash..........................................................................    $   87,866      $    19,336
     Accounts receivable...........................................................         1,680              596
     Other current assets..........................................................        15,939           22,379
                                                                                      ------------    -------------
          Total current assets.....................................................       105,485           42,311
Property and equipment -- net......................................................       175,619          354,184
Deferred financing costs, net of accumulated amortization of $76,175 and $154,979,
  for 1995 and 1996................................................................        77,256           63,432
Deferred stock offering costs......................................................       --               143,544
Due from officer...................................................................        26,000           26,000
Other assets.......................................................................        18,844           17,514
                                                                                      ------------    -------------
          Total assets.............................................................    $  403,204      $   646,985
                                                                                      ------------    -------------
                                                                                      ------------    -------------
                       LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Current liabilities
     Current portion of long-term debt.............................................    $  528,130      $ 1,512,639
     Bank loans payable............................................................       --                50,000
     Accounts payable..............................................................        34,958           89,014
     Accrued expenses..............................................................        63,213          157,726
     Interest payable..............................................................        96,023          188,213
                                                                                      ------------    -------------
          Total current liabilities................................................       722,324        1,997,592
Long-term debt, less current portion...............................................       552,103           28,785
                                                                                      ------------    -------------
          Total liabilities........................................................     1,274,427        2,026,377
                                                                                      ------------    -------------
Commitments and contingencies -- See Notes
Stockholders' deficit
Common stock, $.001 par value;
     20,000,000 shares authorized,
     2,200,000 and 3,050,000 issued and outstanding including 1,000,000 shares
      placed in escrow.............................................................         2,200            3,050
Additional paid-in capital.........................................................        42,673          405,356
Cumulative translation adjustments.................................................        22,652           47,989
Deficit accumulated during the development stage...................................      (938,748)      (1,835,787)
                                                                                      ------------    -------------
          Total stockholders' deficit..............................................      (871,223)      (1,379,392)
                                                                                      ------------    -------------
          Total liabilities and stockholders' deficit..............................    $  403,204      $   646,985
                                                                                      ------------    -------------
                                                                                      ------------    -------------
</TABLE>
 
                       See Notes to Financial Statements.
 
                                      F-4
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF OPERATIONS
 
<TABLE>
<CAPTION>
                                          FROM                            FROM                                        FROM
                                       INCEPTION                       INCEPTION                                    INCEPTION
                                       (JULY 14,                       (JULY 14,         NINE MONTHS ENDED          (JULY 14,
                                        1994) TO       YEAR ENDED       1994) TO           SEPTEMBER 30,            1994) TO
                                      DECEMBER 31,    DECEMBER 31,    DECEMBER 31,    ------------------------    SEPTEMBER 30,
                                          1994            1995            1995           1995          1996           1996
                                      ------------    ------------    ------------    ----------    ----------    -------------
                                                                                            (UNAUDITED)           (UNAUDITED)
 
<S>                                   <C>             <C>             <C>             <C>           <C>           <C>
Revenue............................    $  --           $  --           $  --          $   --        $   --         $   --
Expenses
    Research and development.......                       276,248         276,248        193,363       339,769         616,017
    Sales and marketing............        15,800         248,158         263,958        169,572       101,121         365,079
    General and administrative.....        20,641         241,461         262,102        182,715       319,982         582,084
                                      ------------    ------------    ------------    ----------    ----------    -------------
        Total expenses.............        36,441         765,867         802,308        545,650       760,872       1,563,180
                                      ------------    ------------    ------------    ----------    ----------    -------------
Operating loss.....................       (36,441)       (765,867)       (802,308)      (545,650)     (760,872)     (1,563,180)
Other (income) expense
    Loss on investment.............                        17,000          17,000         10,000                        17,000
    Interest income................          (500)        (12,324)        (12,824)       (12,324)                      (12,824)
    Interest expense...............         6,144         126,120         132,264         69,485       136,167         268,431
                                      ------------    ------------    ------------    ----------    ----------    -------------
        Total other (income)
          expenses.................         5,644         130,796         136,440         67,161       136,167         272,607
                                      ------------    ------------    ------------    ----------    ----------    -------------
Net loss...........................    $  (42,085)     $ (896,663)     $ (938,748)    $ (612,811)   $ (897,039)    $(1,835,787)
                                      ------------    ------------    ------------    ----------    ----------    -------------
                                      ------------    ------------    ------------    ----------    ----------    -------------
Net loss per share.................    $    (0.02)     $    (0.37)     $    (0.39)    $    (0.26)   $    (0.34)    $     (0.70)
                                      ------------    ------------    ------------    ----------    ----------    -------------
                                      ------------    ------------    ------------    ----------    ----------    -------------
Weighted average number of shares
  outstanding......................     2,778,533       2,399,793       2,399,793      2,339,337     2,641,034       2,641,034
                                      ------------    ------------    ------------    ----------    ----------    -------------
                                      ------------    ------------    ------------    ----------    ----------    -------------
</TABLE>
 
                       See Notes to Financial Statements.
 
                                      F-5
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
 
<TABLE>
<CAPTION>
                                                                                                         DEFICIT
                                                                                          FOREIGN      ACCUMULATED
                                                                          ADDITIONAL     CURRENCY        DURING
                                               COMMON STOCK                PAID-IN      TRANSLATION    DEVELOPMENT
                                                  SHARES       AMOUNT      CAPITAL      ADJUSTMENT        STAGE          TOTAL
                                               ------------    -------    ----------    -----------    -----------    -----------
 
<S>                                            <C>             <C>        <C>           <C>            <C>            <C>
Balances at July 14, 1994
  (date of inception).......................       --          $ --        $ --           $--          $   --         $   --
Issuances of common stock, par value $.001
    Services rendered at $.001 per share....     1,200,000      1,200                                                       1,200
    Cash at $.0208 per share................     1,200,000      1,200        23,800                                        25,000
Net loss....................................                                                              (42,085)        (42,085)
                                               ------------    -------    ----------    -----------    -----------    -----------
Balances at December 31, 1994...............     2,400,000      2,400        23,800        --             (42,085)        (15,885)
Common stock contributed....................      (561,453)      (561)          561
Issuances of common stock, par value $.001
    Services rendered at $.05 per share.....       361,453        361        17,712                                        18,073
Issuance of common stock purchase warrants
    Services rendered at $.04 per warrant...                                    600                                           600
Foreign currency translation adjustment.....                                               22,652                          22,652
Net loss....................................                                                             (896,663)       (896,663)
                                               ------------    -------    ----------    -----------    -----------    -----------
Balances at December 31, 1995...............     2,200,000      2,200        42,673        22,652        (938,748)       (871,223)
Issuances of common stock, par value $.001
    Cash at $.307 per share.................       650,000        650       199,350                                       200,000
    Cash at $.50 per share (net of stock
      offering costs of $11,467)............       150,000        150        63,383                                        63,533
    Cash at $2.00 per share.................        50,000         50        99,950                                       100,000
Foreign currency translation adjustment.....                                               25,337                          25,337
Net loss....................................                                                             (897,039)       (897,039)
                                               ------------    -------    ----------    -----------    -----------    -----------
Balances at September 30, 1996
  (unaudited)...............................     3,050,000     $3,050      $405,356       $47,989     $(1,835,787)    $(1,379,392)
                                               ------------    -------    ----------    -----------   ------------    -----------
                                               ------------    -------    ----------    -----------   ------------    -----------
</TABLE>
 
                       See Notes to Financial Statements.
 
                                      F-6
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                           FROM                            FROM
                                                                        INCEPTION                       INCEPTION
                                                                        (JULY 14,                       (JULY 14,
                                                                         1994) TO       YEAR ENDED       1994) TO
                                                                       DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                                                           1994            1995            1995
                                                                       ------------    ------------    ------------
 
<S>                                                                    <C>             <C>             <C>
Cash flows from operating activities
     Net loss.......................................................    $  (42,085)     $ (896,663)     $ (938,748)
     Adjustments to reconcile net loss to net cash used by operating
       activities:
          Depreciation and amortization.............................         5,470          95,298         100,768
          Translation adjustment....................................       --                 (561)           (561)
          Stock and warrants issued for services....................       --               18,673          18,673
          Increase (decrease) in cash attributable to changes in
            assets and liabilities
               Accounts receivable..................................          (203)         (1,422)         (1,625)
               Escrow...............................................       (14,572)         14,572         --
               Other current assets.................................       --              (13,492)        (13,492)
               Accounts payable.....................................           161          40,183          40,344
               Accrued expenses.....................................         1,070          74,638          75,708
               Interest payable.....................................         4,808          91,215          96,023
                                                                       ------------    ------------    ------------
          Net cash used by operating activities.....................       (45,351)       (577,559)       (622,910)
                                                                       ------------    ------------    ------------
Cash flows from investing activities
     Loans receivable...............................................      (125,500)        125,500         --
     Purchases of property and equipment............................        (1,402)       (193,655)       (195,057)
     Increase in organization costs.................................        (7,680)        --               (7,680)
                                                                       ------------    ------------    ------------
          Net cash used by investing activities.....................      (134,582)        (68,155)       (202,737)
                                                                       ------------    ------------    ------------
Cash flows from financing activities
     Proceeds from issuance of common stock.........................        26,200         --               26,200
     Loans to officer...............................................       (20,000)         (6,000)        (26,000)
     Deferred financing costs.......................................       (75,319)        (78,112)       (153,431)
     Proceeds from long-term debt...................................       483,277         605,764       1,089,041
     Payments on long-term debt.....................................       --              (21,613)        (21,613)
                                                                       ------------    ------------    ------------
          Net cash provided by financing activities.................       414,158         500,039         914,197
                                                                       ------------    ------------    ------------
Effect of exchange rates on cash....................................          (334)           (350)           (684)
                                                                       ------------    ------------    ------------
Increase (decrease) in cash.........................................       233,891        (146,025)         87,866
Cash at beginning of period.........................................       --              233,891         --
                                                                       ------------    ------------    ------------
Cash at end of period...............................................    $  233,891      $   87,866      $   87,866
                                                                       ------------    ------------    ------------
                                                                       ------------    ------------    ------------
Supplemental disclosures of cash flow information
     Cash paid during the period for:
          Interest..................................................    $      207      $    2,461      $    2,668
                                                                       ------------    ------------    ------------
                                                                       ------------    ------------    ------------
</TABLE>
 
                       See Notes to Financial Statements.
 
                                      F-7
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                                          FROM
                                                                                                        INCEPTION
                                                                              NINE MONTHS ENDED         (JULY 14,
                                                                                SEPTEMBER 30,           1994) TO
                                                                           -----------------------    SEPTEMBER 30,
                                                                              1995         1996           1996
                                                                           ----------    ---------    -------------
                                                                                 (UNAUDITED)           (UNAUDITED)
 
<S>                                                                        <C>           <C>          <C>
Cash flows from operating activities
     Net loss...........................................................   $(612,811)    $(897,039)    $(1,835,787)
     Adjustments to reconcile net loss to net cash used by operating
       activities:
          Depreciation and amortization.................................      69,401       110,965         211,733
          Amortization of discount on long-term debt....................      --            23,854          23,854
          Translation adjustment........................................        (190)        3,408           2,847
          Stock and warrants issued for services........................      18,673        --              18,673
          Increase (decrease) in cash attributable to changes in assets
            and liabilities
               Accounts receivable......................................        (505)        1,181            (444)
               Escrow...................................................      14,572        --             --
               Other current assets.....................................      (6,743)        1,600         (11,892)
               Accounts payable.........................................      14,636        54,577          94,921
               Accrued expenses.........................................      47,300       101,356         177,064
               Interest payable.........................................      65,073        92,190         188,213
                                                                           ----------    ---------    -------------
          Net cash used by operating activities.........................    (390,594)     (507,908)     (1,130,818)
                                                                           ----------    ---------    -------------
Cash flows from investing activities
     Loans receivable...................................................       1,800        --             --
     Purchases of property and equipment................................    (178,217)     (201,232)       (396,289)
     Increase in organization costs.....................................                                    (7,680)
                                                                           ----------    ---------    -------------
          Net cash used by investing activities.........................    (176,417)     (201,232)       (403,969)
                                                                           ----------    ---------    -------------
Cash flows from financing activities
     Proceeds from issuance of common stock.............................      --           363,533         389,733
     Loans to officer...................................................      (6,000)       --             (26,000)
     Deferred financing costs...........................................     (78,112)      (64,980)       (218,411)
     Deferred stock offering costs......................................                  (143,544)       (143,544)
     Proceeds from bank loans payable...................................                    50,000          50,000
     Proceeds from long-term debt.......................................     606,008       452,705       1,541,746
     Payments on long-term debt.........................................     (17,760)      (16,612)        (38,225)
                                                                           ----------    ---------    -------------
          Net cash used by financing activities.........................     504,136       641,102       1,555,299
                                                                           ----------    ---------    -------------
Effect of exchange rates on cash........................................       1,109          (492)         (1,176)
                                                                           ----------    ---------    -------------
Increase (decrease) in cash.............................................     (61,766)      (68,530)         19,336
Cash at beginning of period.............................................     233,891        87,866         --
                                                                           ----------    ---------    -------------
Cash at end of period...................................................   $ 172,125     $  19,336     $    19,336
                                                                           ----------    ---------    -------------
                                                                           ----------    ---------    -------------
Supplemental disclosures of cash flow information
Cash paid during the period for:
     Interest...........................................................   $     249     $  --         $     2,668
                                                                           ----------    ---------    -------------
                                                                           ----------    ---------    -------------
</TABLE>
 
                       See Notes to Financial Statements.
 
                                      F-8
<PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 1 -- DESCRIPTION OF BUSINESS
 
     TTR  Inc. (the 'Company') was incorporated on  July 14, 1994 under the laws
of the State of Delaware.  TTR Technologies Ltd., was  formed under the laws  of
the  State  of  Israel  on December  5,  1994  as a  wholly  owned  research and
development subsidiary of the Company.
 
     The Company  is engaged  in  the development  and enhancement  of  computer
software products which it intends to market.
 
     The  Company is considered to be in the development stage and has earned no
revenues to  date. Business  activities  to date  have  focused on  product  and
marketing research, product development, and raising capital.
 
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNT POLICIES
 
PRINCIPLES OF CONSOLIDATION
 
     The  consolidated financial statements include  the accounts of the Company
and  its  wholly  owned  subsidiary,  TTR  Technologies  Ltd.  All   significant
intercompany accounts and transactions have been eliminated in consolidation.
 
USE OF ESTIMATES
 
     Management  uses  estimates and  assumptions  in preparing  these financial
statements in accordance  with generally accepted  accounting principles.  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.
 
REVENUE RECOGNITION
 
     The Company anticipates that revenues from software will be recognized upon
delivery to the customer, provided that  the Company's obligations, if any,  are
insignificant  and  collectability is  probable.  Revenues from  maintenance and
engineering services  will  be  recognized  over  the  term  of  the  respective
contracts.
 
FOREIGN CURRENCY TRANSLATIONS
 
     The  financial  statements of  the Company's  Israeli subsidiary  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 statement of  operations
have   been  translated  at  average  rates  prevailing  during  the  year.  The
translation  adjustments  have  been  recorded   as  a  separate  component   of
shareholders' deficit (cumulative translation adjustment).
 
NET LOSS PER SHARE
 
     Net  loss  per share  of common  stock  is computed  based on  the weighted
average number of common  stock and common  stock equivalent shares  outstanding
during  the period. Pursuant to SEC rules,  common stock and warrants issued for
consideration below the proposed  public offering price  within the last  twelve
months  have been included in the calculation of common stock equivalents, using
the treasury  stock method,  as if  they had  been outstanding  for all  periods
presented.  Shares  held in  escrow are  not treated  as outstanding  during any
period (Note 12).
 
                                      F-9
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNT POLICIES -- (CONTINUED)
 
STATEMENT OF CASH FLOWS
 
     For purposes of  the Statement  of Cash  Flows, the  Company considers  all
highly liquid debt instruments with an original maturity of three months or less
to be cash equivalents.
 
PROPERTY AND EQUIPMENT
 
     Property  and equipment are stated at cost. Fixed assets are depreciated on
a straight-line basis over their estimated useful lives as follows:
 
<TABLE>
<S>                                                            <C>
Office furniture and equipment..............................      5 - 7 years
Computer equipment..........................................          5 years
Vehicles....................................................        6.5 years
</TABLE>
 
RESEARCH AND DEVELOPMENT COSTS
 
     Research  and  development  expenditures  are  charged  to  operations   as
incurred.  Software  development costs  are required  to  be capitalized  when a
product's technological  feasibility has  been established  by completion  of  a
working  model of the product and ending when a product is available for general
release to customers. To  date, completion of a  working model of the  Company's
products  and general  release have  substantially coincided.  As a  result, the
Company has not capitalized any software development costs since such costs have
not been significant.
 
INCOME TAXES
 
     The Company accounts for  its income taxes  using the Financial  Accounting
Standards Board Statement of Financial Accounting Standards No. 109, 'Accounting
for Income Taxes' (SFAS No. 109), which requires the establishment of a deferred
tax  asset  or liability  for the  recognition of  future deductible  or taxable
amounts and operating  loss carryforwards.  Deferred tax expense  or benefit  is
recognized  as a result of the changes  in the assets and liabilities during the
year. Valuation allowances  are established when  necessary, to reduce  deferred
tax assets to amounts expected to be realized.
 
INTERIM FINANCIAL STATEMENTS
 
     In  the  opinion  of management  of  the Company,  the  unaudited financial
statements as of September 30, 1996, and for the nine months ended September 30,
1995 and 1996, have  been prepared on  the same basis  as the audited  financial
statements  and  include all  adjustments, consisting  only of  normal recurring
adjustments necessary for  a fair  presentation of  the results  of the  interim
periods.
 
NOTE 3 -- GOING CONCERN
 
     The accompanying financial statements have been prepared on a going concern
basis  which  contemplates the  realization of  assets  and the  satisfaction of
liabilities in  the  normal  course  of business.  The  Company  has  a  limited
operating  history, has sustained losses since its inception and the accumulated
deficit at December 31, 1995 and at September 30, 1996 (unaudited) are  $938,748
and  $1,835,787, respectively.  The Company faces  a number  of risks, including
uncertainties regarding demand and market acceptance of the Company's  products,
dependence  on  a  single product  line,  the effects  of  technological change,
competition and the development of  new products. Additionally, there are  other
risk  factors such as the nature of the Company's distribution channels, ability
to manage growth, loss of key personnel and the effects of planned expansion  of
operations on the future results of the Company.
 
                                      F-10
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 3 -- GOING CONCERN -- (CONTINUED)
 
     The  Company  anticipates  that  it  will  continue  to  incur  significant
operating costs and losses  in connection with the  development of its  products
and  increased marketing  efforts and  is subject  to other  risks affecting the
business of  the Company,  as discussed  above. The  Company is  not  generating
sufficient  revenues from its operations to fund its activities and is therefore
dependent on  additional  financing  from  external  sources.  In  addition,  in
November  1996,  the  Company will  be  required  to commence  repayment  of its
long-term debt (see Note 9 and 18). The ability of the Company to continue as  a
going  concern is dependent  upon the success  of the Company's  product and its
access to sufficient funding to enable it to continue operations. The Company is
investigating various possibilities for long-term financing including a proposed
initial public  offering. There  is no  assurance that  such financing  will  be
available to the Company and the inability to obtain such financing would have a
material adverse effect on the Company.
 
NOTE 4 -- PROPERTY AND EQUIPMENT
 
     Property and equipment consist of the following:
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,    SEPTEMBER 30,
                                                                      1995            1996
                                                                  ------------    -------------
                                                                                   (UNAUDITED)
 
<S>                                                               <C>             <C>
Leasehold improvements.........................................     $ --            $  77,531
Office equipment...............................................       22,646           86,852
Computer equipment.............................................      112,941          144,982
Vehicles.......................................................       59,470           95,266
                                                                  ------------    -------------
                                                                     195,057          404,631
Less: Accumulated depreciation.................................       19,438           50,447
                                                                  ------------    -------------
                                                                    $175,619        $ 354,184
                                                                  ------------    -------------
                                                                  ------------    -------------
</TABLE>
 
     Depreciation  expense was $57, $13,560, $8,654  and $24,012 for the periods
ended December 31, 1994, December 31, 1995, September 30, 1995 and September 30,
1996.
 
NOTE 5 -- DUE FROM OFFICER
 
     This amount represents non-interest bearing  advances to an officer of  the
Company.
 
NOTE 6 -- OTHER ASSETS
 
     Other assets consist of the following:
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,    SEPTEMBER 30,
                                                                      1995            1996
                                                                  ------------    -------------
                                                                                   (UNAUDITED)
<S>                                                               <C>             <C>
Loan receivable, employee......................................     $ 13,468         $13,290
Organization costs, net of accumulated amortization............        5,376           4,224
                                                                  ------------    -------------
     Total.....................................................     $ 18,844         $17,514
                                                                  ------------    -------------
                                                                  ------------    -------------
</TABLE>
 
     The loan receivable represents non-interest bearing advances to an employee
of  the Company. The loan is to be  repaid over a four year period commencing in
1996.
 
     Organization costs are being  amortized over a five  year period using  the
straight-line method.
 
                                      F-11
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 7 -- ACCRUED EXPENSES
 
     Accrued expenses consist of the following:
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,    SEPTEMBER 30,
                                                                      1995            1996
                                                                  ------------    -------------
                                                                                   (UNAUDITED)
<S>                                                               <C>             <C>
Accrued payroll and payroll taxes..............................     $ 20,128        $  56,864
Deferred stock offering costs..................................       --               54,150
Other..........................................................       43,085           46,712
                                                                  ------------    -------------
                                                                    $ 63,213        $ 157,726
                                                                  ------------    -------------
                                                                  ------------    -------------
</TABLE>
 
NOTE 8 -- BANK LOAN PAYABLE
 
     The  Company's subsidiary borrowed a total of $50,000 from a bank. The loan
bears interest  at the  rate of  8% per  annum and  must be  repaid in  full  by
December 31, 1996.
 
NOTE 9 -- LONG-TERM DEBT
 
     Long-term debt consists of the following:
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,    SEPTEMBER 30,
                                                                      1995            1996
                                                                  ------------    -------------
                                                                                   (UNAUDITED)
<S>   <C>                                                         <C>             <C>
(1)   Bank loans...............................................    $   39,153      $    51,490
(2)   Promissory notes.........................................     1,041,080        1,041,080
(3)   Promissory notes (net of unamortized discount of
        $51,146)...............................................       --               448,854
                                                                  ------------    -------------
                                                                    1,080,233        1,541,424
      Current portion..........................................       528,130        1,512,639
                                                                  ------------    -------------
      Non-current portion......................................    $  552,103      $    28,785
                                                                  ------------    -------------
                                                                  ------------    -------------
</TABLE>
 
- ------------
 
(1) These  loans are denominated in NIS, bear interest at the rate of prime plus
    2.4%-3% per annum  and are secured  by substantially all  the assets of  the
    Company's  subsidiary. Principal  payments are  due in  various installments
    through 1998.
 
(2) The Company issued  two-year promissory  notes aggregating  $1,041,080 in  a
    private  placement. The  notes bear  interest at the  rate of  10% per annum
    payable at the maturity date. In  connection with this offering the  Company
    issued  warrants to  the noteholders  to purchase up  to a  total of 174,548
    shares of the Company's  common stock for $.01  per share. The warrants  are
    exercisable  from the date on which a registration statement with respect to
    an initial public offering (IPO) becomes effective until the IPO closes.  In
    addition the Company utilized the services of Shane, Alexander, Unterburgher
    Securities,  Inc. (SAU) as  a placement agent. SAU  received a commission of
    10% of  the gross  proceeds  and an  additional 4%  of  such proceeds  as  a
    non-accountable   expense  allowance.  These  fees,  totaling  approximately
    $145,000, have been capitalized  as deferred financing  costs and are  being
    amortized   over  a   two-year  period   using  the   straight-line  method.
    Amortization was $4,645, $71,530, $55,887 and $60,467 for the periods  ended
    December  31, 1994,  1995, September 1995  and September  1996. The maturity
    date of certain notes have been extended (See Note 18).
 
(3) In June 1996, the Company realized  net proceeds of $423,552 from a  private
    placement  of 10 units of its securities  at a purchase price of $50,000 per
    unit. Each unit consisted of $50,000 Principal
 
                                              (footnotes continued on next page)
 
                                      F-12
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 9 -- LONG-TERM DEBT -- (CONTINUED)
 
(footnotes continued from previous page)
   Amount 10%  promissory notes  and  15,000 shares  of  its common  stock.  The
    Company  has  allocated $7,500  per unit  to  the Common  Stock sold  in the
    private placement,  and  the  balance  to  promissory  note  principal.  The
    difference  between the  face value  of the  notes ($50,000)  and the amount
    allocated to note principal represents  a discount which is being  amortized
    over  the term of the note based upon the interest method. The principal and
    accrued interest become due and  payable at the earlier  of one year or  the
    date the Company receives proceeds from any form of public or private equity
    financing or debt financing exceeding $350,000.
 
    In  connection with this offering a placement agent received a commission of
    10% of  the gross  proceeds  and an  additional 3%  of  such proceeds  as  a
    non-accountable  expense allowance. Certain of  the investors in the private
    placement have an ownership interest in the placement agent.
 
    The aggregate maturities of long-term debt  for the next three years  ending
    December  31,  are as  follows:  1996 --  $536,786;  1997 --  $1,047,273 and
    1998 -- $8,511.
 
NOTE 10 -- LOSS ON INVESTMENT
 
     In August 1994, the Company's president contributed to the Company his  22%
interest  in the common stock  of TBR, Inc. (TBR),  a Florida corporation. TBR's
only asset is a software product developed by its shareholders. TBR has no other
assets or liabilities and  has had no significant  business operations to  date.
During fiscal 1995, the Company purchased an additional 4.8% of TBR common stock
for  $17,000, which  funds were  used in a  marketing effort  for TBR's software
product. As  of  December  31,  1995,  the Company  elected  to  write  off  its
investment in TBR in full.
 
NOTE 11 -- INCOME TAXES
 
     At  December 31, 1995, the Company  had available $364,000 of net operating
loss carryforwards for  U.S. federal  income tax  purposes which  expire in  the
years 2009 through 2010 and $325,000 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 and liabilities
for U.S. federal and Israel income taxes are as follows:
 
<TABLE>
<CAPTION>
                                                                  DECEMBER 31,    SEPTEMBER 30,
                                                                      1995            1996
                                                                  ------------    -------------
                                                                                   (UNAUDITED)
<S>                                                               <C>             <C>
Deferred tax assets:
     Net operating loss carryforwards..........................    $  225,000       $ 434,000
     Research and developments costs...........................        65,000         119,900
     Accrued vacation and severance............................        13,000          39,700
                                                                  ------------    -------------
          Total deferred tax assets............................       303,000         593,600
          Valuation allowance..................................      (303,000)       (593,600)
                                                                  ------------    -------------
     Net deferred tax assets...................................    $  --            $ --
                                                                  ------------    -------------
                                                                  ------------    -------------
</TABLE>
 
     Pre-tax  losses from  foreign (Israeli)  operations were  $2,193, $571,924,
$378,727 and $661,031 for the periods  ended December 31, 1994, 1995,  September
1995 and September 1996, respectively.
 
                                      F-13
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 12 -- STOCKHOLDERS' DEFICIT
 
CONTRIBUTED SHARES
 
     In  January 1995,  the Company's President  contributed a  total of 561,453
shares of common  stock held by  him. The Company  subsequently cancelled  these
shares.
 
WARRANTS
 
     On  May  15,  1995,  the  Company  issued  warrants  as  compensation  to a
consultant to purchase up to  a total of 15,000  shares of the Company's  common
stock for $.01 per share. The warrants are exercisable until January 15, 2001.
 
PRIVATE PLACEMENT
 
     In  April 1996, the Company completed a private placement of 650,000 shares
of its Common  Stock and  warrants for an  additional 1,000,000  shares, for  an
aggregate  purchase price  of $200,000.  The warrants  are exercisable  after an
initial public offering of the Company's Common stock at an exercise price equal
to the exercise  price of any  warrants issued at  the IPO. The  terms of  these
warrants were subsequently amended. (See note 18).
 
ESCROW SHARES
 
     An  aggregate  of 1,000,000  shares of  the  Company's common  stock, owned
beneficially by its President, have been designated as escrow shares. The escrow
shares are  not assignable  nor transferable  until certain  earnings or  market
price  criteria have been met. If the  conditions have not been met, such shares
will be cancelled and contributed to the Company's capital.
 
     The escrow shares will be released from escrow on a pro-rata basis, if  and
only if, one or more of the following conditions are met:
 
          1.  250,000 shares will  be released if  the Company's pre-tax income,
     exclusive of extraordinary  items amounts  to at least  $1,800,000 for  the
     year  ended December 31, 1997 or the  average bid price of the Common Stock
     averages in excess of $15 per share  for 30 consecutive days during the  12
     month period commencing on the date of a proposed public offering.
 
          2.  300,000 shares will  be released if  the Company's pre-tax income,
     exclusive of extraordinary  items amounts  to at least  $4,000,000 for  the
     year  ended December 31, 1998 or the  average bid price of the Common Stock
     averages in excess of $20 per share  for 30 consecutive days during the  12
     month  period  commencing 12  months  from the  date  of a  proposed public
     offering.
 
          3. 450,000 shares will  be released if  the Company's pre-tax  income,
     exclusive  of extraordinary  items amounts to  at least  $6,000,000 for the
     year ended December 31, 1999 or the  average bid price of the Common  Stock
     averages  in excess of $25 per share  for 30 consecutive days during the 12
     month period  commencing 24  months  from the  date  of a  proposed  public
     offering.
 
     The shares will also be released under certain circumstances if the Company
is acquired or merged.
 
     As  restriction on such shares  are removed, they will  be accounted for as
reissued for services rendered and the fair value of such shares will be charged
to operations as compensation expense. The charge will not affect the  Company's
equity, nor will it be deductible for income tax purposes.
 
                                      F-14
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 13 -- FAIR VALUE OF FINANCIAL INSTRUMENTS
 
     Effective  December 31, 1995, the Company  adopted SFAS 107, which requires
disclosing fair value to the extent practicable for financial instruments  which
are  recognized or  unrecognized in  the balance  sheet. The  fair value  of the
financial instruments disclosed  therein are not  necessarily representative  of
the  amount that could  be realized or  settled, nor does  the fair value amount
consider the tax consequences of realization or settlement. The following  table
summarizes  financial  instruments by  individual balance  sheet accounts  as of
December 31, 1995.
 
<TABLE>
<CAPTION>
                                                                      CARRYING        FAIR
                                                                       AMOUNT        VALUE
                                                                     ----------    ----------
<S>                                                                  <C>           <C>
Debt maturing within one year.....................................   $  528,130    $  528,130
Long-term debt....................................................      552,103       552,103
                                                                     ----------    ----------
     Totals.......................................................   $1,080,233    $1,080,233
                                                                     ----------    ----------
                                                                     ----------    ----------
</TABLE>
 
     For debt classified  as current, it  was assumed that  the carrying  amount
approximated fair value for these instruments because of their short maturities.
The  fair value of long-term debt is based on current rates at which the Company
could borrow funds  with similar  remaining maturities. The  carrying amount  of
long-term debt approximates fair value.
 
NOTE 14 -- RELATED PARTY TRANSACTIONS
 
     In  November 1994, the Company entered into a fourteen month agreement with
SAU to assist in the establishment of  a U.S. based sales office and to  provide
marketing  consulting  services to  the Company.  Pursuant  to the  contract SAU
received a fee of  $7,900 per month  and was issued Warrants  to purchase up  to
185,000  shares  of the  Company's  Common Stock  under  the same  terms  as the
promissory note holders. SAU subsequently assigned its rights to the Warrants to
certain of the promissory note holders.
 
     The Company loaned  a total  of $256,000  to SAU  under a  short term  loan
agreement.  The loan  was repaid  in 1995 with  interest at  the rate  of 8% per
annum.
 
NOTE 15 -- COMMITMENTS AND CONTINGENCIES
 
CONSULTING AND EMPLOYMENT AGREEMENT
 
     a) In  August 1994,  the Company's  subsidiary entered  into an  employment
agreement  with one of its  officers. The agreement has  a three-year term which
provides  for  annual  compensation  of  $60,000,  subject  to  adjustment.  The
agreement  may terminate  with 60  days prior notice  and if  the termination is
without cause then the general manager  will be entitled to continue to  receive
his salary for an additional twelve months. At the end of the initial three-year
term the agreement automatically renews for one-year periods.
 
     b)  In December 1995,  the Company's subsidiary  entered into an employment
agreement with its director of  product research and development. The  agreement
has  a one-year term,  renewable for additional one-year  terms and provides for
annual  base  compensation  of  $60,000  plus  incentive  compensation,  payable
quarterly,  equal to 1% of the initial $1,000,000 of gross receipts from certain
products of the  Company and 2%  for gross  receipts in excess  thereof. In  the
event  the  agreement is  terminated  or not  renewed  without cause,  and  if a
properly registered patent, as defined,  is in effect, the Company's  subsidiary
will  be required to pay  royalties in the amount  of the incentive compensation
for the duration of the patent.
 
                                      F-15
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 15 -- COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
 
     c) The Company has entered into a three-year marketing consulting agreement
which is due  to expire  in October 1998.  Under the  agreement, the  consultant
receives a monthly fee of $4,800 per month.
 
     d)  In  July  1996,  the Company's  subsidiary  entered  into  a three-year
employment agreement with its new President  and general manager to commence  no
later  than September 8, 1996. The agreement provides for annual compensation of
approximately $100,000, subject  to adjustment and  is renewable for  additional
one-year  periods at the  end of the  initial term. Within  the initial term the
employee may terminate the agreement with 60 days prior notice and with 90  days
notice thereafter.
 
     In  addition the  Company has  agreed to  grant, on  the date  on which the
Company's IPO Registration Statement is declared effective, warrants to purchase
up to 217,473 shares of Common Stock at an exercise price of $.01 per share. The
Company estimates that it will record deferred compensation expense amounting to
$1,522,300, or $7.00 per  share, and will amortize  this amount over the  period
that  services are to be provided. The options will vest over a four year period
commencing with the date of grant.
 
OPERATING LEASES
 
     On June 1, 1996, the Company entered into an operating lease agreement  for
office  space. Future  minimum rentals on  this lease  as of December  31 are as
follows:
 
<TABLE>
<CAPTION>
DECEMBER 31,
 
<S>                                                                        <C>
    1996................................................................   $ 22,218
    1997................................................................     48,624
    1998................................................................     48,624
    1999................................................................     24,312
                                                                           --------
                                                                           $143,778
                                                                           --------
                                                                           --------
</TABLE>
 
NOTE 16 -- STOCK OPTION PLAN
 
     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.  The  Plan provides  for  the
granting  of  options  to officers,  directors,  employees and  advisors  of the
Company. The exercise of  incentive stock options  ('ISOs') issued to  employees
who  are less than 10% stockholders shall not be less than the fair market value
of the underlying shares on the date of grant or not less than 100% of the  fair
market  value of the shares in the case of an employee who is a 10% stockholder.
The exercise price of restricted  stock options shall not  be less than the  par
value of the shares to which the option relates. Options are not exercisable for
a  period  of  one year  from  the date  of  grant. Thereafter,  options  may be
exercised as determined by the Board of Directors, with maximum terms of ten and
five years, respectively,  for ISOs issued  to employees who  are less than  10%
stockholders  and employees  who are  10% stockholders.  In addition,  under the
plan, no individual will  be given the opportunity  to exercise ISO's valued  in
excess  of $100,000, in any calendar year,  unless and to the extent the options
have first become exercisable in the preceding year. The Plan will terminate  in
2006.
 
     In  July 1996, the Company issued 5,000  options under the plan to a former
director. The options are exercisable at $6.00 per share until January 15, 2001.
 
                                      F-16
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 17 -- PROPOSED PUBLIC OFFERING
 
     On September 3, 1996, the Company's board of directors approved the  filing
of  a  registration  statement by  TTR  Inc.  with the  Securities  and Exchange
Commission covering the proposed sale of its common stock to the public.
 
NOTE 18 -- SUBSEQUENT EVENTS -- (UNAUDITED)
 
LEGAL MATTER
 
     In October 1996, a claim was made against the Company's subsidiary alleging
intellectual  property  rights  infringement.   The  claim  threatens  to   seek
injunctive  relief as well as  damages in the amount  of $1,000,000. The Company
has denied any  liability and its  legal advisors believe  the claim is  totally
without merit.
 
SHORT-TERM BORROWINGS
 
     In  October 1996, the Company  borrowed a total of  $66,700, evidenced by a
loan agreement executed in September 1996. Pursuant to the agreement the Company
may borrow, at  the exclusive discretion  of the lender,  an additional  $66,700
every  30 days up to a total of $200,100. The loans bear interest at the rate of
22% per annum. The principal and accrued interest become due and payable at  the
earlier  of the date  the Company receives  the proceeds from  a proposed IPO or
March 31, 1997.
 
     In December 1996 and January 1997, the Company issued short-term promissory
notes aggregating  $300,000. The  notes bear  interest at  the rate  of 15%  per
annum.  The notes  and accrued  interest thereon become  due and  payable at the
earlier of the date the Company receives the proceeds from a proposed IPO or one
year from the date of issue.
 
WARRANTS
 
     In January 1997, the Company amended  the 1,000,000 warrants issued in  the
April 1996 private placement, to provide that the exercise price of the warrants
will be equal to the IPO price of the Company's Common Stock.
 
RESEARCH AND DEVELOPMENT GRANT
 
     In January 1997, the Company's Israeli Subsidiary received an approval from
the  Office of the Chief Scientist of the Government of Israel (OCS) whereby the
OCS will fund certain research and development of the Company by way of  grants.
The  amount of the  approved budget is  $195,000 and the  amount of the approved
grant is 50% of the budget or $97,500. The Company has since received an advance
on the account of the grant in the amount of $23,000.
 
     The Company will be required to pay  royalties to the OCS on proceeds  from
the  sale of products derived from the research and development in which the OCS
has participated by way of its grant. The royalties are computed at the rate  of
3% of the proceeds from such sales, up to a maximum of the amount of the grant.
 
PROMISSORY NOTES
 
     As  of January  15, 1997,  a total  of $514,081  of the  Company's two-year
promissory notes  plus accrued  interest  thereon of  $112,122 became  due.  The
Company has obtained extensions to March 1997 with respect to note principal and
interest totaling $619,525 and is awaiting a response from one other noteholder.
 
                                      F-17
 <PAGE>
<PAGE>
                          TTR INC. AND ITS SUBSIDIARY
                         (A DEVELOPMENT STAGE COMPANY)
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
  [INFORMATION AS OF AND FOR THE PERIODS ENDED SEPTEMBER 30, 1995 AND 1996 ARE
                                   UNAUDITED]
 
NOTE 19 -- RECENTLY ISSUED ACCOUNTING STANDARDS
 
     In  March 1995, SFAS No. 121,  'Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of' was issued which establishes
accounting  standards  for   the  impairment  of   long-lived  assets,   certain
identifiable  intangibles, and goodwill  related to those assets  to be held and
used and for long-lived assets and  certain intangibles to be disposed of.  SFAS
No.  121 requires that long-lived assets and  certain intangibles to be held and
leased by an  entity be reviewed  for impairment whenever  events or changes  in
circumstances  indicate  that  the  carrying  amount of  the  asset  may  not be
recoverable. SFAS No. 121 must be implemented  by the Company no later than  the
year  ended December 31, 1996.  The adoption of SFAS No.  121 is not expected to
have material impact on the Company's financial position or operating results.
 
     In October 1995,  SFAS No. 123,  'Accounting for Stock-Based  Compensation'
was  issued which establishes  financial accounting and  reporting standards for
stock-based employee compensation plans. SFAS No. 123 defines a fair value based
method of accounting for an employee  stock option or similar equity  instrument
and  encourages all entities to adopt that method of accounting for all of their
employee stock compensation plans. However, SFAS No. 123 permits the Company  to
continue  to measure  compensation costs  for its  stock option  plans using the
intrinsic value based method of  accounting prescribed by Accounting  Principles
Board Opinion No. 25, 'Accounting for Stock Issued to Employees'.
 
     If  the Company elects to  remain with its current  accounting, in 1996 the
Company must make pro forma disclosures of  1995 and 1996 net income (loss)  and
earnings  (loss) per share as  if the fair value  based method of accounting had
been applied. The Company  has not yet determined  the valuation method it  will
employ  or the  effect on  operating results  of implementing  SFAS No.  123. In
addition, SFAS No. 123 requires that transactions whereby the Company issues its
equity instruments to acquire goods or services from non-employees entered  into
after December 15, 1995 must be accounted for based on the fair value.
 
                                      F-18
<PAGE>
<PAGE>
_____________________________                      _____________________________
 
     NO  DEALER, SALESMAN OR  ANY OTHER PERSON  HAS BEEN AUTHORIZED  TO GIVE ANY
INFORMATION OR TO MAKE  ANY REPRESENTATIONS OTHER THAN  THOSE CONTAINED IN  THIS
PROSPECTUS,  AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY SECURITY  OTHER THAN THE  SECURITIES OFFERED BY  THIS PROSPECTUS, OR  AN
OFFER  TO SELL OR A SOLICITATION OF AN  OFFER TO BUY ANY SECURITY, BY ANY PERSON
IN ANY  JURISDICTION IN  WHICH SUCH  OFFER OR  SOLICITATION WOULD  BE  UNLAWFUL.
NEITHER  THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION  IN THIS PROSPECTUS IS CORRECT  AS
OF BY ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
 
                            ------------------------
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                                                                              PAGE
                                                                                                                              ----
 
<S>                                                                                                                           <C>
Prospectus Summary.........................................................................................................      3
Summary Financial Information..............................................................................................      6
Risk Factors...............................................................................................................      7
Use of Proceeds............................................................................................................     15
Dividend Policy............................................................................................................     16
Dilution...................................................................................................................     17
Capitalization.............................................................................................................     18
Plan of Operation..........................................................................................................     18
Business...................................................................................................................     21
Management.................................................................................................................     33
Principal Stockholders.....................................................................................................     36
Certain Transactions.......................................................................................................     38
Description of Securities..................................................................................................     39
Shares Eligible for Future Sale............................................................................................     41
Underwriting...............................................................................................................     42
Selling Securityholders' Offering..........................................................................................     45
Legal Matters..............................................................................................................     45
Experts....................................................................................................................     46
Available Information......................................................................................................     46
Index to Financial Statements..............................................................................................    F-1
</TABLE>
 
                            ------------------------
     UNTIL  MAY 12, 1997,  ALL DEALERS EFFECTING  TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING  IN THIS DISTRIBUTION, MAY BE  REQUIRED
TO  DELIVER A PROSPECTUS.  THIS IS IN  ADDITION TO THE  OBLIGATION OF DEALERS TO
DELIVER A  PROSPECTUS WHEN  ACTING AS  UNDERWRITERS AND  WITH RESPECT  TO  THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
 
                               800,000 SHARES OF
                                  COMMON STOCK
 
                                    TTR INC.
 
                           --------------------------
                                   PROSPECTUS
                           --------------------------
                               FIRST METROPOLITAN
                                SECURITIES, INC.
 
                               FEBRUARY 10, 1997
 
_____________________________                      _____________________________


                            STATEMENT OF DIFFERENCES
                The trademark symbol shall be expressed as ....'tm'


<PAGE>



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