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Melville,
New York, November 12, 2002 - Andrea Electronics Corporation (Amex:
AND - News) announced today that revenues for the three months ended
September 30, 2002 were approximately $1.4 million, versus $2.9
million in the same period in 2001. Net loss applicable to common
shareholders for the three months ended September 30, 2002 was approximately
$3.5 million, or $0.18 per share on a diluted basis, compared to
a net loss of approximately $2.2 million, or $0.15 per share on
a diluted basis, for the three months ended September 30, 2001,
before giving effect to a special, one-time, non-cash equity charge(1).
For the nine months ended September 30, 2002, the Company reported
a net loss applicable to common shareholders of $7.2 million, or
$0.39 per share on a diluted basis, compared to a net loss of approximately
$7.4 million, or $0.50 per share on a diluted basis for the nine
months ended September 30, 2001, before giving effect to a special,
one-time, non-cash equity charge(1).
The principal
factors that contributed to the loss for the third quarter ended
September 30, 2002, continues to be lower than expected revenues,
significant investments in research and development activities primarily
associated with the Company's efforts in developing digital audio
far-field microphone technologies, amortization expense, expenses
associated with creating and maintaining strategic alliances, and
significant operating expenses related to marketing the Company's
digital audio far-field microphone technologies, particularly to
the automotive telematics and PC communications markets. Furthermore,
the loss applicable to common shareholders for the three months
ended September 30, 2002, includes the effect of an approximate
$1.8 million non-cash charge to provision for income taxes. This
charge was recorded due to the determination during the 2002 third
quarter, that the Company's current tax planning strategies, together
with the Company's recent, cumulative financial losses, do not support
a position that the Company would, more likely than not, be able
to realize the associated tax benefits. In addition, the loss applicable
to common shareholders for the three months ended September 30,
2002, includes approximately $115 thousand in preferred stock dividends.
Quarter Ended
September 30, September 30,
2002 2001
Total Revenues $1,370,029 $2,937,199
Loss before provision for income taxes (1,594,287) (2,069,151)
Provision for Income Taxes 1,806,615 --
Net Loss $(3,400,902) $(2,069,151)
Preferred Stock Dividends 115,328 140,755
(3,516,230) (2,209,906)
Non-Cash Charge Attributable to Beneficial
Conversion Feature(1) -- (7,500,000)
Net Loss Applicable to
Common Shareholders $(3,516,230) $(9,709,906)
PER SHARE INFORMATION:
Net Loss Applicable to Common Shareholders,
before special charge(1)
Basic and Diluted $ (.18) $ (.15)
Net Loss Applicable to Common Shareholders
Basic and Diluted $ (.18) $ (.64)
Common Shares Used in Computing Per Share Data:
Basic and Diluted 19,216,925 15,137,578
(1) Non-cash charge attributable to beneficial conversion feature -- The
net loss applicable to Common Shareholders reflects a one-time charge
for the intrinsic value of the realization, during the third quarter
of 2001, of a contingent beneficial conversion feature related to the
Company's Series C Redeemable Convertible Preferred Stock.
During the third
quarter ended September 30, 2002, general, administrative and selling
expenses decreased approximately 34% over the same period in 2001.
This decrease is attributable to cost reduction efforts, as well
as our adoption, on January 1, 2002, of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("FAS
142"). Under FAS 142, goodwill and intangible assets with indefinite
lives are no longer amortized but are reviewed for impairment from
time to time. The adoption of this pronouncement resulted in a $282
thousand decrease in amortization expense for the third quarter
of 2002 over the same period in the prior year.
During the third
quarter ended September 30, 2002, research and development expenses
increased approximately 14% over the same period in 2001. This increase
is due primarily to research efforts associated with the Company's
ongoing efforts to develop its digital, noise canceling far-field
microphone technologies, including patented and patent-pending DSDA®,
PureAudio®, DFTA(TM) and EchoStop(TM), among others. Management
believes that these technologies broaden Andrea Electronics' exposure
to key targeted industries, including the automotive telematics
market, the PC communications market and the audio and video conferencing
market. Accordingly, the Company anticipates continued significant
spending in research and development during the remainder of 2002.
KEY THIRD QUARTER 2002 EVENT
-- Andrea Electronics Announces Promotion of SoundMAX Superbeam Microphone
With Intel Desktop Boards at Leading PC Technical Conference
KEY FOURTH QUARTER 2002 EVENT TO DATE
-- Andrea Electronics Launches Call Center Amplifier at the 2002 American
Teleservices Association Convention and Exhibition
About Andrea
Electronics
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 Digital Super
Directional Array (DSDA®), patent-pending Directional Finding
and Tracking Array (DFTA®), patented PureAudio®, and patented
EchoStop(TM) far-field microphone technologies enhance a wide range
of audio products to eliminate background noise and ensure the optimum
performance of voice applications. Visit Andrea Electronics' website
at www.AndreaElectronics.com
or call 1-800-442-7787.
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"). 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; the Company's
continuing ability to enter and maintain collaborative relationships
with other manufacturers, software authoring and publishing companies,
and distributors; the emergence of new competitors in the marketplace;
the Company's ability to compete successfully against established
competitors with greater resources; the uncertainty of future governmental
regulation; the Company's ability to obtain additional funds; and
general economic conditions. No assurance can be given that the
Company will achieve any material sales or profits from the products
introduced in this release. 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 ELECTRONICS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
REVENUES
Net product
revenues $1,009,676 $2,937,199 $4,402,993 $8,170,767
License revenues 360,353 -- 536,686 --
Total revenues,
net $1,370,029 $2,937,199 $4,939,679 $8,170,767
COST OF SALES 671,631 2,105,848 2,984,500 5,897,960
Gross profit 698,398 831,351 1,955,179 2,272,807
RESEARCH AND
DEVELOPMENT EXPENSES 884,772 774,108 2,677,128 2,654,392
GENERAL,
ADMINISTRATIVE AND
SELLING EXPENSES 1,391,966 2,117,360 4,314,416 6,739,458
Loss from
operations (1,578,340) (2,060,117) (5,036,365) (7,121,043)
OTHER (EXPENSE)
INCOME:
Interest (expense)
income, net (30,756) (3,365) (13,538) 117,505
Other 14,809 (5,669) 34,372 20,220
(15,947) (9,034) 20,834 137,725
LOSS BEFORE PROVISION
FOR INCOME TAXES (1,594,287) (2,069,151) (5,015,531) (6,983,318)
PROVISION FOR INCOME
TAXES 1,806,615 -- 1,806,615 --
Net loss $(3,400,902) $(2,069,151) $(6,822,146) $(6,983,318)
PREFERRED STOCK
DIVIDENDS 115,328 140,755 357,854 430,653
NON-CASH CHARGE
ATTRIBUTABLE TO
BENEFICIAL
CONVERSION FEATURE -- 7,500,000 -- 7,500,000
Net loss
attributable to
common
shareholders $(3,516,230) $(9,709,906) $(7,180,000) $(14,913,971)
PER SHARE INFORMATION:
Net Loss Per Share:
Basic and Diluted $(.18) $(.64) $(.39) $(1.00)
Shares used in
computing net loss
per share:
Basic and
Diluted 19,216,925 15,137,578 18,356,233 14,848,707
AT ANDREA ELECTRONICS
Richard A. Maue, Chief Financial Officer
Lauren Rivera, Marketing Communications Manager
(800) 442-7787
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