Melville, New York, October 12, 2000 - Andrea Electronics Corporation (AMEX: AND) announced today the private placement to an investor of $7.5 million of its Series C Convertible Preferred Stock. The Series C Convertible Preferred Stock is convertible into the Company’s Common Stock. The proceeds from the private placement will be used primarily for costs associated with technology development, tooling costs, payment of certain debt obligations, maintaining and creating strategic alliances and other general working capital requirements. During the 548 day period beginning on October 10, 2000, the investor, subject to certain conditions, may exercise an option to purchase up to an additional $2.5 million of the Company’s Series C Convertible Preferred Stock.

Each share of Series C Convertible Preferred Stock has a stated value of $10,000 plus an additional amount of 5% per annum, which sum is convertible into Common Stock at a conversion price initially equal to 110% of the average of the two lowest closing bid prices of the Common Stock during the 5 consecutive trading days immediately preceding the issuance date for the first nine months and will be reset every six months thereafter to the lesser of the then existing conversion price and the average of the two lowest closing bid prices of the Common Stock during the 5 consecutive trading days immediately preceding the six-month reset dates or, for the period beginning on the day two years after the initial issuance and ending on the maturity of the Series C Convertible Preferred Stock, the least of (i) the then existing conversion price (ii) the average of the two lowest closing bid prices of the Common Stock during the 15 consecutive trading days immediately preceding such two year date and (iii) the closing bid price on the day of conversion, subject in each case to certain adjustments. The 5% additional amount may, at the option of the Company, be paid in cash. The Series C Convertible Preferred Stock is convertible or redeemable at maturity by the Company, based upon certain circumstances at that time, and is redeemable by the holder upon certain events. The Company has the right to require the conversion of the Series C Convertible Preferred Stock after one year upon the satisfaction of certain conditions.

The issuance of the Series C Convertible Preferred Stock has not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act. The Company has undertaken to seek to register under the Securities Act the underlying Common Shares issuable upon conversion of the Series C Convertible Preferred Stock.

Andrea Electronics Corporation designs, develops and manufactures audio technologies and equipment for enhancing applications that require high performance and high quality voice input. The Company’s patented Active Noise Reduction (ANR READY®) earphone, Active Noise Cancellation (ANC) near-field microphone, patented Digital Super Directional Array (DSDA®) and patent-pending Directional Finding and Tracking Array (DFTA™) far-field microphone technologies enhance a wide range of audio products to eliminate background noise and ensure the optimum performance of voice applications. Applications for the Company's technologies include: speech recognition programs, Internet telephony, video/audio conferencing, automobile PCs, home automation systems, hand-held devices and multiplayer online games, among others. OEM and software publisher customers and strategic partners of Andrea Electronics' include: IBM Corporation, Intel Corporation, Donnelly Corporation, Symbol Technologies, Inc., Clarion Corporation of America, Microsoft Corporation, Lernout & Hauspie, ScreenFriends Corporation, Audio-Technica, U.S., Inc., J. D’Addario & Co., DeltaThree.com, Lotus Development Corporation, Fonix Corporation, HearMe, Centra Software, Inc., Logitech, Inc., Net2Phone, Inc., Voyetra Turtle Beach, Inc. and ZeroPlus.com, among others.

This press release may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "anticipates," "believes," "estimates," "expects," "intends," "plans," "seeks," variations of such words, and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve matters that are subject to certain risks, uncertainties and assumptions that are difficult to predict, including economic, competitive, governmental, technological and other factors, that may affect the business and prospects of Andrea Electronics Corporation. The Company cautions investors about the following significant factors, which, among others, have in some cases affected the Company's actual results and are in the future likely to affect the Company's actual results and could cause them to differ materially from those expressed in any forward- looking statements: the rate at which Andrea Anti-Noise, DSDA, DFTA and other Andrea technologies are accepted in the marketplace; the competitiveness of Andrea Anti-Noise, DSDA, DFTA and other Andrea products in terms of technical specifications, quality, price, reliability and service; the sufficiency of the Company's funds for research and development, marketing and general and administrative expenses; infringement and other disputes relating to patents and other intellectual property rights held or licensed by the Company or third parties; and the Company's continuing ability to enter and maintain collaborative relationships with other manufacturers, software authoring and publishing companies, and distributors. These and other similar factors are discussed under the heading "Cautionary Statement Regarding Forward-looking statements" included in the Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's Annual Report on Form 10-K and in the Company's Annual Report to shareholders, and in documents subsequently filed by the Company with the Securities and Exchange Commission.

"Andrea Anti-Noise", "DSDA," DSDA-PRO" and "DFTA" are trademarks of Andrea Electronics Corporation or an Andrea Electronics Corporation subsidiary.

SOURCE: Andrea Electronics Corporation

CONTACT: At Andrea Electronics - Richard A. Maue, Chief Financial Officer, or Lauren Smith, Marketing Communications Manager, 800-442-7787/