SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Mark One
|X| Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2000
or
|_| Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file number: 0-22055
TTR TECHNOLOGIES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 11-3223672
(State or other Jurisdiction of I.R.S. Employer Number
Incorporation or Organization)
2 Hanagar Street, Kfar Saba, Israel
(Address of Principal Executive Offices)
011-972-9-766-2393
(Issuer's Telephone Number, Including Area Code)
The Corporation Trust Company
1209 Orange Street, Wilmington, Delaware, 19801 302-658-7581
(Name, address and telephone number of agent for service)
Indicate by check mark whether the registrant: (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes |X| No |_|
The number of shares outstanding of the registrant's Common Stock as of
August 14, 2000, is 16,855,485 shares.
<PAGE>
TTR INC. AND ITS SUBSIDIARY
(A Development Stage Company)
Index
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements *
Consolidated Balance Sheets
December 31, 1999 and June 30, 2000
Consolidated Statements of Operations
For the six and three months ended June 30, 2000 and 1999
Consolidated Statements of Comprehensive Loss
For the six and three months ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows
For the six months ended June 30, 2000 and 1999
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon senior securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-k
Exhibit 27 - Financial Data Schedule
Signatures
* The Balance Sheet at December 31, 1999 has been taken from the audited
financial statements at that date. All other financial statements are unaudited
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<PAGE>
TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1999 2000
---- (Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 209,580 $ 9,649,315
Accounts receivable 10,103 1,019
Other current assets 38,630 93,020
------------ ------------
Total current assets 258,313 9,743,354
Property and equipment - net 205,854 188,215
Investment in ComSign, Ltd. -- 2,000,000
Other assets 3,700 --
------------ ------------
Total assets $ 467,867 $ 11,931,569
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Current liabilities
Current portion of long-term debt $ 7,764 $ --
Accounts payable 409,521 451,704
Accrued expenses 335,772 144,155
------------ ------------
Total current liabilities 753,057 595,859
Long-term debt, less current portion 8,219 --
Accrued severance pay 37,587 144,467
------------ ------------
Total liabilities 798,863 740,326
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred Stock, $.001 par value;
5,000,000 shares authorized; none issued and outstanding -- --
Common stock, $.001 par value;
50,000,000 shares authorized; 10,653,560 and 16,855,485
issued and outstanding, respectively 10,654 16,856
Additional paid-in capital 24,710,602 38,928,038
Other accumulated comprehensive income 56,971 45,823
Deficit accumulated during the development stage (24,830,348) (27,420,021)
Less: deferred compensation (278,875) (379,453)
------------ ------------
Total stockholders' equity (deficit) (330,996) 11,191,243
------------ ------------
Total liabilities and stockholders' equity (deficit) $ 467,867 $ 11,931,569
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From
Inception
Six Months (July 14, Three Months
Ended 1994) to Ended
June 30, June 30, June 30,
1999 2000 2000 1999 2000
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Revenue 40,493 $ 2,014 $ 125,739 $ 13,509 $ --
Expenses
Research and development 198,620 756,722 3,697,569 48,438 394,403
Sales and marketing 268,791 364,095 3,683,537 116,674 190,218
General and administrative 438,933 946,877 4,287,647 205,418 485,307
Stock based compensation 689,755 760,478 9,583,419 267,586 158,299
---------- ------------ ------------ ------------ ------------
Total expenses 1,596,099 2,828,172 21,252,172 638,116 1,228,227
---------- ------------ ------------ ------------ ------------
Operating loss (1,555,606) (2,826,158) (21,126,433) (624,607) (1,228,227)
Other (income) expense
Legal settlement -- -- 232,500 -- --
Loss on investment -- -- 17,000 -- --
Other income -- -- (75,000) -- --
Amortization of deferred financing costs 381,788 -- 4,516,775 348,104 --
Interest income (544) (241,122) (303,117) (544) (202,429)
Interest expense 308,007 4,637 1,905,430 114,344 148
---------- ------------ ------------ ------------ ------------
Total other (income) expenses 689,251 (236,485) 6,293,588 461,904 (202,281)
---------- ------------ ------------ ------------ ------------
Net loss (2,244,857) $ (2,589,673) $(27,420,021) $ (1,086,511) $ (1,025,946)
========== ============ ============ ============ ============
Per share data:
Basic and diluted (0.43) $ (0.17) $ (0.20) $ (0.06)
========== ============ ============ ============
Weighted average number
of common shares used in
basic and diluted loss per share 5,236,970 14,983,138 5,481,828 16,396,911
========== ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
<TABLE>
<CAPTION>
From
Inception
Six Months (July 14, Three Months
Ended 1994) to Ended
June 30, June 30, June 30,
1999 2000 2000 1999 2000
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
Net loss $ (2,244,857) $ (2,589,673) $(27,420,021) $ (1,086,511) $ (1,025,946)
Other comprehensive income (loss)
Foreign currency translation adjustments (16,350) (11,148) 45,823 (10,501) 22,994
------------ ------------ ------------ ------------ ------------
Comprehensive loss $ (2,261,207) $ (2,600,821) $(27,374,198) $ (1,097,012) (1,002,952)
============ ============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From
Inception
Six Months (July 14,
Ended 1994) to
June 30, June 30,
1999 2000 2000
---- ---- ----
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,244,857) $ (2,589,673) $(27,420,021)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization 438,803 43,840 4,945,247
Amortization of note discount 187,493 -- 486,463
Translation adjustment -- -- (1,528)
Amortization of deferred compensation 544,605 660,647 4,180,871
Beneficial conversion feature of convertible debt -- 0 572,505
Stock and warrants issued for services and legal settlement 163,660 104,625 5,580,303
Payment of common stock issued with guaranteed selling price -- -- (155,344)
Increase (decrease) in cash attributable
to changes in assets and liabilities
Accounts receivable (29,945) 9,272 (1,350)
Other current assets 10,711 (54,120) (85,006)
Other assets -- 3,700 --
Accounts payable (139,103) 47,177 251,773
Accrued expenses 182,191 (198,229) 605,685
Accrued severance -- 106,446 164,684
Interest payable 90,276 -- 251,019
------------ ------------ ------------
Net cash used by operating activities (796,166) (1,866,315) (10,624,699)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of fixed assets 2,748 4,143 10,241
Purchases of property and equipment -- (29,745) (712,330)
Investment in ComSign, Ltd. -- (2,000,000) (2,000,000)
Increase in organization costs -- -- (7,680)
------------ ------------ ------------
Net cash provided (used) by investing activities 2,748 (2,025,602) (2,709,769)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 239,994 13,347,788 21,012,188
Proceeds from officer loan -- -- --
Stock offering costs (132,530) -- (475,664)
Deferred financing costs -- -- (682,312)
Proceeds from short-term borrowings -- -- 1,356,155
Proceeds from long-term debt -- -- 2,751,825
Proceeds from convertible debentures 1,000,000 -- 2,000,000
Repayment of short-term borrowings (211,005) -- (1,357,082)
Repayments of long-term debt (57,617) (16,284) (1,615,801)
------------ ------------ ------------
Net cash provided by financing activities 838,842 13,331,504 22,989,309
------------ ------------ ------------
Effect of exchange rate changes on cash -- 148 (5,526)
------------ ------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS 45,424 9,439,735 9,649,315
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 74,445 209,580 --
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 119,869 $ 9,649,315 $ 9,649,315
============ ============ ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 2,500 $ 7,289 $ 479,446
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
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<PAGE>
TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements of TTR
Technologies, Inc. and its Subsidiary ("the Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the six
months ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Form 10K for the year ended December 31,
1999 as filed with the Securities and Exchange Commission.
Note 2 - Reclassifications
Certain prior period amounts have been reclassified to conform with the
current period presentation.
Note 3 - Licensing and Investment Agreement
In November 1999, we signed an agreement with Macrovision Corporation to
jointly develop and market music copy protection technology for optical
based media. In connection with the agreement we granted to Macrovision an
exclusive world-wide, royalty-bearing license to use our proprietary
technology through December 31, 2009. We will be entitled to a 30% royalty
which may be adjusted to 25%, under certain conditions. Also under certain
conditions, the exclusive license may revert to a non-exclusive license as
of the second anniversary of the Commercial Launch, as defined. If certain
conditions relating to the timing of the Commercial Launch transpire, we
will be entitled to minimum annual guaranteed royalty advances, commencing
on the first anniversary of the Commercial Launch and continuing through
the ninth year, aggregating $ 25 million.
Under the Agreement, in January 2000, Macrovision made a $ 4 million
equity investment in the Company for an 11.4% interest and received an
exclusive license to our proprietary DiscGuard(TM) technology. Also under
the agreement, we have agreed to reimburse Macrovision for up to $ 1
million of research and development and sales and marketing expenses
incurred within the first year of the joint development
Note 4 - Private Placement
In February 2000, we completed a private placement of 1,800,000 shares of
our Common Stock and 900,000 Class A Warrants for an aggregate purchase
price of $ 10,000,000. The Class A Warrants are exercisable for a period
of 60 months at an exercise price per share of $8.84. We may redeem the
Class A Warrants for $ 0.10 per warrant commencing 6 months following
issuance if the underlying common stock is registered and our common
shares have traded at or above 200% of the exercise price for a period of
twenty consecutive trading days. Upon exercise of the
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<PAGE>
TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Class A Warrants, we will issue Class B Warrants for an additional 450,000
shares. The Class B Warrants are exercisable for a period of 36 months
from the date of issuance at an exercise price per share of $21.22. The
Class B Warrants may be redeemed by us if the underlying common stock is
registered and the common shares have trade at $ 26 or above for a period
of twenty consecutive trading days. We paid a placement agent a fee of
$500,000 and issued 180,000 warrants exercisable at $5.56 per share,
90,000 Class A Warrants exercisable at $8.84 and upon exercise an
additional 45,000 Class B Warrants exercisable at $21.22. Also in
connection with the private placement, we paid $200,000 and issued 275,000
warrants, exercisable at $2.75, as a finder fee.
Note 5 - Stock Option Grants
In January 2000, we issued to our CEO 347,000 options under the 1996 Stock
Option Plan which are exercisable at a price per share of $4.00. Of this
amount, 173,000 were fully vested upon grant and 174,000 will vest over 12
months. In January 2000, we also issued to our Chief Technology Office
70,000 options under the Plan. Of this amount 30,000 were fully vested
upon grant with an exercise price of $4 per share, 20,000 were fully
vested upon grant with an exercise price of $.01 per share and the
remaining 20,000 options with an exercise price of $.01 per share will
vest upon the commercial launch of the audio content protection product
being jointly developed by us and Macrovision.
The exercise prices of these grants were below the fair value of the
underlying common stock. This resulted in a charge to deferred
compensation in the amount of $628,725 which is being amortized over the
vesting period of the related grants.
Note 6 - Authorized Shares
In July 2000, the Company's stockholders voted to increase the number of
authorized shares of Common Stock to 50,000,000.
Note 7 - Investment in ComSign, Inc.
On June 4, 2000, the Company and Comda Ltd. ("Comda") established a joint
venture, ComSign LTD ("ComSign"), in Israel to act as VeriSign's sole
principal affiliate in Israel and the Palestinian Authority. ComSign will
market VeriSign's digital authentication certificates and act as
VeriSign's certification authority in Israel and the Palestinian
Authority. Under the provisions of the agreement, we invested $2.0 million
for a 50% equity interest. The agreement further provides that 60% of any
dividends up to an accumulated amount of $2,000,000 will first be
distributed to TTR and 40% to Comda. Thereafter, 60% of dividends up to an
accumulated amount of $2,000,000 will first be distributed to Comda and
40% to TTR. Thereafter, all distributions will be 50% to each. The Company
applies the equity method of accounting for its investment in the joint
venture.
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<PAGE>
TTR TECHNOLOGIES INC. AND ITS SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8 - Consulting Agreements
In May 2000, the Company granted a total of 250,000, three-year incentive
stock options to a consultant pursuant to a one-year consulting agreement.
The first 100,000 options vest immediately then each of the next 50,000
will vest when the closing bid price of the Company's Common Stock exceeds
$8, $12, and $16, respectively, for fifteen trading days out of any
twenty.
In June 2000, the Company granted a total of 350,000 five-year warrants to
a consultant pursuant to a one-year consulting agreement. The warrants
become exercisable when the average weighted bid price of the Company's
Common Stock exceeds $10 per share for twenty consecutive trading days.
The exercise prices of the warrants are $6.50, $7.50 and $8.50 for
125,000, 125,000 and 100,000 respectively.
-8-
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and exposition should be read in conjunction with
the Financial Statements and related Notes contained elsewhere in this Form
10-Q. Certain statements made in this discussion are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements can be identified by terminology such as
"may," "will," "should," "expects," "intends," "anticipates," "believes,"
"estimates," "predicts," or "continue" or the negative of these terms or other
comparable terminology and include, without limitation, the statements below
regarding: our joint venture with Macrovision; ComSign's intended business
plans; our expectations as to sources of revenue; our intentions to develop or
acquire other technologies; and our belief as to the sufficiency of our cash
reserves. Forward-looking statements are speculative and uncertain and not based
on historical facts. Because forward-looking statements involve risks and
uncertainties, there are important factors that could cause actual results to
differ materially from those expressed or implied by these forward-looking
statements. These factors include, but are not limited to, the competitive
environment in the copy protection industry in general and in the Company's
specific market areas; demographic changes; changes in federal, state and/or
local government law and regulations; changes in operating strategy or
development plans; the ability to attract and retain qualified personnel; labor
disturbances; and changes in the Company's acquisition and capital expenditure
plans. Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
performance or achievements. Moreover, neither we nor any other person assumes
responsibility for the accuracy and completeness of these forward looking
statements. We are under no duty to update any of the forward-looking statements
after the date of this Quarterly Report to conform such statements to actual
results.
General
We design and develop anti-piracy software technologies that provide copy
protection for electronic content distributed on optical media and over the
Internet. Our proprietary anti-piracy technology, MusicGuard, is a unique
hardware-based technology designed to prevent the unauthorized copying of audio
content distributed on CDs.
As of November 24, 1999, we entered into an agreement with Macrovision
Corporation to jointly design and develop and market a copy protection product
designed to thwart the illegal copying of audio content on CDs, DVDs and other
optical media. Optical media store data which may be retrieved by utilizing a
laser and include compact discs which are commonly referred to as CDs and
digital versatile discs which are commonly referred to as DVDs. The new product
will be based primarily upon our MusicGuard technology, as well as related
Macrovision technology, and will be jointly owned by us and Macrovision. We
expect that the immediate application of the technology we are developing with
Macrovision will be of interest for the music distribution business and
recording studios whose products are customarily distributed on CDs. We granted
to Macrovision an exclusive world-wide royalty bearing license to design,
develop and market the copy protection technology which we are jointly
developing. The license to Macrovision relates to all technologies and products
designed to prevent the illicit duplication of audio programs (including the
audio portion of music videos, movies and other video or audio content)
distributed on optical media (not limited to CDs and DVDs) and technologies for
Internet digital rights management for audio applications. The proposed copy
protection technology we are developing with Macrovision will be transparent to
the legitimate end-user.
Our immediate goal is to establish the proposed audio content protection
technology which we and Macrovision are developing as the leading product in the
target market of audio content copy protection for the high-volume recording
industry. Additionally, we are actively
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<PAGE>
developing other technologies and looking to acquire technologies which are
synergistic with our current business and will enable us to leverage our
knowledge base and skill.
In June 2000, we established a joint venture with Comda Ltd. ("Comda),
ComSign LTD ("ComSign") in Israel, to be Verisign's sole principal affiliate in
Israel and the Palestinian Authority, market its digital authentication
certificates and act as the local certifying authority. ComSign intends market
these products and services to leading e-commerce sites, banks and other
financial institutions, government organizations and a full range of commercial
entities.
We have not had any significant revenues to date. As of June 30, 2000 we
had an accumulated deficit of approximately $27.4 million. Our expenses have
related primarily to expenses related to and expenditures on research and
development, marketing, recruiting and retention of personnel, costs of raising
capital and operating expenses.
Revenue Sources
We expect, for the near-term, that our primary source of revenue will be
royalties under our license agreements with Macrovision and distributions from
our joint venture, ComSign. We are currently seeking to develop or acquire other
technologies that will provide other sources of revenue. However, there can be
no assurance that we will develop or acquire other technologies or if we do,
that such technologies will generate any revenue or profits.
Stock Based Compensation
Compensation expense arising from stock grants, and options and warrants
issued at exercise prices below the quoted market price as of the date of grant
is recognized over the period that services are rendered. As more fully
described below in "Results of Operations," we have recorded expense in
connection with stock based compensation during 1999 and 2000.
Results of Operations
Six months ended June 30, 2000 ("2000 Period") compared to six months ended June
30, 1999 ("1999 Period") and the three months ended June 30, 2000 compared to
the three months ended June 30, 1999.
Revenues for the 2000 Period and 1999 Period were $2,014 and $ 40,493,
respectively, and were derived from licensing fees of our DiscGuard product.
There were no revenues for the three month period ended June 30, 2000 as
compared to $13,509 for the comparable period in 1999.
Pursuant to our agreement with Macrovision, we have agreed to reimburse
Macrovision for up to $1 million for research and development and sales and
marketing expenses incurred within the first year of the joint development. As
of June 30, 2000, we have reimbursed Macrovision an aggregate of $805,000 out of
a maximum obligation of $1,000,000.
Research and development costs for the 2000 Period were $756,722 as
compared to $198,620 for the 1999 Period. Research and development costs for the
three-month period ended June 30, 2000 were $394,403 compared to $48,438 for the
comparable period in 1999. This increase is a result of our joint development
efforts with Macrovision on the development of a copy protection product for
audio content.
Sales and marketing expenses for the 2000 Period were $364,095 as compared
to $268,791 for the 1999 Period and $190,218 for the three-month period ended
June 30, 2000 compared to $116,674 for the comparable period in 1999. This
increase is a result of joint sales and marketing efforts with Macrovision.
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<PAGE>
General and administrative expenses for the 2000 Period were $946,877 as
compared to $438,933 for the 1999 Period and $485,307 for the quarter ended June
30, 2000 as compared to $205,418 in the same quarter in 1999. This increase was
due primarily to increased consulting and general operations.
Stock-based compensation for the 2000 Period was $760,478 as compared to
$689,755 for the 1999 Period and $158,299 for the three-month period ended June
30, 2000 compared to $267,586 for the same period in 1999.
Amortization of deferred financing costs for the 1999 Period was $381,788.
This was a result of warrants issued in connection with our 10% Convertible
Debentures.
Interest income for the 2000 Period increase to $241,122 as compared to
$544 for the 1999 Period. Interest income for the three months ended June 30,
2000 was $202,429 as compared to $544 in the comparable period in 1999. The
increase is attributable to the higher cash and cash equivalent balances,
primarily resulting from the February 2000 private placement.
Interest expense for the 2000 Period decreased to $4,637 as compared to
$308,007 for the 1999 Period. Included in interest expense for the 1999 period
is non-cash amortization of note discount of $187,493. Note discounts were
imputed to reflect the equity component of the related financings. Interest
expense for the three months ended June 30, 2000 were $148 as compared to
$114,344 in the comparable period in 1999. The decrease is attributable to the
reduction in debt.
We reported a net loss for the 2000 period of $2,589,673 or $(.17) per
share on a basic and diluted basis, as compared to a net loss of $2,244,857 or
$(.43) per share for the 1999 period and $1,025,946 or $(.06) per share for the
three-month period ended June 30, 2000 compared to $1,086,511 or ($.20) per
share for the comparable three month period in 1999. Of the net loss for the
2000 Period, $805,000 is attributable to our reimbursement commitment to
Macrovision.
Liquidity and Capital Resources
At June 30, 2000, we had cash of approximately $9.6 million, representing
an increase of approximately $9.4 million over December 31, 1999. Cash used by
operating activities during the 2000 Period was $1.8 million compared to $.8
million during the 1999 Period. During the 2000 period we used $2 million of our
cash for our investment in ComSign and we raised approximately $13.3 million in
additional sales of our common stock. We believe that cash is sufficient to meet
our requirements for the next 12 months.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
Market risks relating to changes in interest rates and foreign currency
exchanges rates were reported in Item 7A of the Company's Annual Report on Form
10-K for the year ended December 31, 1999. There has been no material change in
these market risks since the end of the fiscal year 1999.
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<PAGE>
PART II
Item 1. Legal Proceedings
N/A
Item 2. Change in Securities & Use of Proceeds
Sale of Unregistered Securities
Set forth below is certain information concerning sales by the Company of
unregistered securities during the second quarter of 2000. The issuances by the
Company of the securities sold in the transactions referenced below were not
registered under the Securities Act of 1933, pursuant to the exemption
contemplated by Section 4(2) thereof for transactions not involving a public
offering.
1. In May 2000, TTR issued to a service provider an immediately vested
option to purchase 100,000 shares of Common Stock at an exercise price per share
of $4.13 and an option to purchase an 150,000 shares of Common Stock at an
exercise price per share of $4.13, the vesting of which is tied to the
performance of the Common Stock.
2. In June 2000, TTR issued to a service provider a warrant to purchase
125,000 shares of Common Stock at an exercise price of $6.50 per share, a
warrant to purchase 125,000 shares of Common Stock at an exercise price of $7.50
per share and a warrant to purchase 100,000 shares of Common Stock at an
exercise price of $8.50 per share. Each of these warrants becomes exercisable
only when the average weighted bid price of the Common Stock exceeds $10.00 for
twenty consecutive days.
Item 3. Default Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Notice of the Company's 2000 annual general meeting of stockholders were
first mailed to the Company's stockholders on June 14, 2000. The Company held
its Annual Meeting of Shareholders on July 11, 2000 and the stockholders voted
as to the following: (a) election of Marc D. Tokayer, Dr. Baruch Sollish,
Michael Fine and Michael Braunold as directors to serve for a term of one (i)
year or until a successor is duly elected; (ii) to increase the number of shares
of common stock that the Company is authorized to issue from time to time
50,000,000 shares of common stock; (iii) the approval of a new company plan for
employees, consultants and directors known as the 2000 Equity Incentive Plan (in
respect of which 1,500,000 shares of common stock were reserved; and (iv) the
ratification of Brightman Almagor & Co., a member of Deloitte Touche Tohmatsu,
as auditors for the year ending December 31, 2000. All matters were approved by
the stockholders.
Voting Results were as follows:
FOR VOTES WITHHELD
1. Directors
Marc D. Tokayer 10,293,810 24,990
Dr. Baruch Sollish 10,293,835 24,990
Michael Fine 10,293,810 24,990
Michael Braunold 10,293,810 24,990
BROKER
FOR AGAINST ABSTAIN NON-VOTES
2. Increase in
Authorized Shares of
Common Stock 10,205,305 103,350 10,170 N/A
3. Approval of the 2000
Equity Incentive Plan 5,219,791 310,720 25,743 4,762,881
4. Ratification of
Brightman Almagor
&Co 10,271,150 33,025 14,650 N/A
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<PAGE>
Item 5. Other Information
N/A
Item 6. Exhibits and Reports on 8-K
a) Reports on 8-K
N/A
b) Exhibit 27 - - Financial Data Schedule
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<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
TTR TECHNOLOGIES, INC.
Date: August 14, 2000 By /s/ Marc D. Tokayer
Marc D. Tokayer
Chief Executive Officer
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