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MELVILLE,
N.Y., November 13, 2003 -- Andrea Electronics Corporation
(AMEX: AND) today reported that revenues for the three months
ended September 30, 2003 were approximately $1.2 million,
versus revenues of $1.0 million, which have been restated
to exclude sales from discontinued operations relating to
the Aircraft Communications Products ("ACP") Division,
in the same three month period in 2002. The ACP Division was
sold by the Company on April 11, 2003. Net loss applicable
to common shareholders for the three months ended September
30, 2003 was approximately $1.2 million, or a loss per share
of $0.05 on a diluted basis, compared to a net loss of approximately
$3.5 million, or a loss per share of $0.18 on a diluted basis,
for the three months ended September 30, 2002. The loss applicable
to common shareholders for the three months ended September
30, 2002 included a non-cash charge to provision for income
taxes of approximately $1.8 million relating to a potential
non-realization of the associated deferred tax asset.
Revenues
were approximately $3.7 million for the nine months ended
September 30, 2003, versus revenues of $2.8 million, which
have been restated to exclude sales from discontinued operations
relating to the ACP Division, in the same nine month period
in 2002. Net loss applicable to common shareholders for the
nine months ended September 30, 2003 was approximately $1.0
million, or a loss per share of $0.05 on a diluted basis,
compared to a net loss of approximately $19.6 million, or
a loss per share of $1.07 on a diluted basis, for the nine
months ended September 30, 2002. In the nine month period
ended September 30, 2003, the Company recorded income from
discontinued operations relating to the sale of the ACP division
of approximately $2.5 million. In addition to the $1.8 million
non-cash charge to provision for income taxes, the loss applicable
to common shareholders for the nine months ended September
30, 2002 included an impairment charge of approximately $12.5
million relating to the determination that the carrying value
of the Andrea DSP Microphone and Audio Software business unit
exceeded its fair market value.
"Our
nine month revenues are up 33% on a comparative basis while
our year to date general, administrative and selling expenses
are down 27% as compared to last year," stated Paul E.
Donofrio, President and Chief Executive Officer. "While
the increase in revenues and decrease in costs are encouraging,
there is still much to be accomplished as we continue to develop
and finalize our key initiatives. These strategies are evolving
and are beginning to be centered around broader and deeper
sales channel penetrations, further expense reductions, asset
and technology rationalizations and balance sheet restructurings.
Although these critical targeted goals are becoming clearer,
there is no guarantee that we will ultimately be successful.
However, we greatly value and appreciate the continued support
of all of our employees, board members and shareholders,"
Mr. Donofrio concluded.
During
the third quarter ended September 30, 2003, total revenues
increased 14% over the same period in 2002. For the third
quarter of 2003, Andrea Anti-Noise Products revenues were
approximately $0.6 million compared to $0.5 million for the
third quarter of 2002. For the third quarter of 2003, Andrea
DSP Microphone and Audio Software Products revenues were approximately
$0.6 million compared to $0.5 million for the third quarter
of 2002. During the nine month period ended September 30,
2003, total revenues increased approximately 33% over the
same period in 2002. For the nine month period ending September
30, 2003, Andrea Anti-Noise Products revenues were approximately
$1.9 million compared to $1.8 million for the same period
in 2002. For the nine month period ending September 30, 2003,
Andrea DSP Microphone and Audio Software Products revenues
were approximately $1.8 million compared to $1.0 million for
the same period in 2002. The increases in the Andrea DSP Microphone
and Audio Software Products revenues are primarily attributable
to the recognition of deferred revenue relating to our licensing
agreements with Analog Devices Inc.
At September
30, 2003, we had total cash and cash equivalents of approximately
$2.4 million. Total assets were approximately $13.5 million
with total current assets of approximately $5.2 million. Total
liabilities were approximately $5.8 million with total current
liabilities of approximately $4.4 million. Total shareholder's
equity at September 30, 2003 was approximately $0.5 million.
The Company
has implemented several measures in an effort to reduce the
Company's expenses and to help preserve cash. The Company
continues to pursue additional sources of capital. These efforts
may include the sale of assets of the Company. There can be
no assurances that the Company will be successful in its attempts
to raise sufficient capital essential to the Company's survival.
To the extent that the Company is unable to raise the necessary
operating capital, it will not be able to develop and implement
a business plan, and it will become necessary to curtail or
cease operations. Additionally, even if the Company does raise
sufficient operating capital, there can be no assurances that
the net proceeds will be sufficient enough to enable it to
develop its business to a level where it will generate profits
and cash flows from operations. These matters raise substantial
doubt about its ability to continue as a going concern. As
such, the Company's third quarter condensed consolidated financial
statements have been prepared on a going concern basis, which
contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. The financial
statements do not include any adjustments relating to the
recoverability of the recorded assets or the classification
of the liabilities that might be necessary should the Company
be unable to continue as a going concern.
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),
patented PureAudio, patented EchoStop 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. Visit Andrea Electronics'
website at www.AndreaElectronics.com
or call 1-800-707-5779.
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 Three Months Ended For the Nine Months Ended
September 30 September 30
2003 2002 2003 2002
REVENUES (restated)* (restated)*
Net Product Revenues $749,888 $662,560 $2,440,802 $2,231,543
License Revenues 416,670 360,353 1,250,010 536,686
Revenues 1,166,558 1,022,913 3,690,812 2,768,229
COST OF REVENUES 653,251 458,326 1,941,979 1,702,545
Gross margin 513,307 564,587 1,748,833 1,065,684
RESEARCH AND
DEVELOPMENT EXPENSES 667,207 780,006 2,177,978 2,370,278
GENERAL, ADMINISTRATIVE
AND SELLING EXPENSES 949,938 1,308,236 2,959,623 4,052,469
Loss from
operations (1,103,838) (1,523,655) (3,388,768) (5,357,063)
OTHER INCOME (EXPENSE)
Interest income (expense),
net 508 (30,756) 41,039 (13,538)
Rent and miscellaneous
income, net 30,873 14,809 108,511 34,372
Other income
(expense) 31,381 (15,947) 149,550 20,834
LOSS FROM CONTINUING
OPERATIONS (1,072,457) (1,539,602) (3,239,218) (5,336,229)
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS - (54,685) 2,534,824 320,698
PROVISION FOR INCOME
TAXES - (1,806,615) - (1,806,615)
CUMULATIVE EFFECT OF
A CHANGE IN ACCOUNTING
PRINCIPLE FOR GOODWILL,
NET OF $0 TAX - - - (12,458,872)
Net loss (1,072,457) (3,400,902) (704,394) (19,281,018)
PREFERRED STOCK
DIVIDENDS 113,892 115,328 334,182 357,854
Net loss attributable
to common
share-holders $(1,186,349) $(3,516,230) $(1,038,576) $(19,638,872)
PER SHARE INFORMATION
Loss from continuing
operations -
Basic and Diluted $(.04) $(.17) $(.14) $(.39)
Income from discontinued
operations -
Basic and Diluted - - .11 .02
Cumulative effect of a
change in accounting
principle for
goodwill-
Basic and Diluted - - - (.68)
Net loss - Basic and
Diluted (.04) (.17) (.03) (1.05)
Preferred stock
dividends -
Basic and Diluted (.01) (.01) (.02) (.02)
Net loss per share
attributable to common
shareholders -
Basic and Diluted $(.05) $(.18) $(.05) $(1.07)
Shares used in computing
net loss per share -
Basic and
Diluted 24,310,003 19,216,925 22,785,111 18,356,233
Restated to reflect cumulative effect of a change in accounting principle
and to reflect discontinued operations relating to the Aircraft Communications
Products Division.
Andrea Electronics Corporation And Subsidiaries
Condensed Consolidated Balance Sheets
ASSETS September 30, December 31,
2003 2002
(unaudited) (audited)
CURRENT ASSETS:
Cash and cash equivalents $2,352,532 $3,307,437
Accounts receivable, net of allowance
for doubtful accounts of $59,465
and $70,831 465,971 412,849
Notes receivable 709,970 -
Inventories, net 1,505,629 2,222,450
Prepaid expenses and other current assets 173,635 309,705
Assets from discontinued operations - 1,487,482
Total current assets 5,207,737 7,739,923
PROPERTY AND EQUIPMENT, net 277,439 543,572
INTANGIBLE ASSETS, net 7,720,365 8,208,638
OTHER ASSETS, net 271,318 282,582
Total assets $13,476,859 $16,774,715
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $609,196 $1,023,353
Current portion of long-term debt 20,488 21,056
Accrued restructuring charges 360,565 364,577
Deferred revenue 1,666,680 1,666,680
Other current liabilities 1,787,706 2,409,526
Liabilities from discontinued operations - 122,903
Total current liabilities 4,444,635 5,608,095
LONG-TERM DEBT 1,161 16,572
DEFERRED REVENUE 1,129,954 2,379,964
OTHER LIABILITIES 236,754 249,677
Total liabilities 5,812,504 8,254,308
SERIES B REDEEMABLE CONVERTIBLE PREFERRED
STOCK, net, $.01 par value; authorized:
1,000 shares; issued and outstanding:
0 and 66 shares, respectively; liquidation
value: $0 and $660,000, respectively - 645,091
SERIES C REDEEMABLE CONVERTIBLE PREFERRED
STOCK, net, $.01 par value; authorized:
1,500 shares; issued and outstanding:
730 and 749 shares, respectively;
liquidation value: $7,301,876 and
$7,491,876, respectively 7,210,257 7,381,508
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value;
authorized: 4,997,500 shares; none issued
and outstanding - -
Common stock, $.01 par value and $.50
par value, respectively; authorized:
200,000,000 shares; issued and
outstanding: 25,149,166 and 21,127,918
shares, respectively 251,492 10,563,959
Additional paid-in capital 65,033,999 54,074,247
Deferred stock compensation (5,700) (23,099)
Accumulated deficit (64,825,693) (64,121,299)
Total shareholders' equity 454,098 493,808
Total liabilities and
shareholders' equity $13,476,859 $16,774,715
AT ANDREA ELECTRONICS CORP.
Corisa L. Guiffre
Vice President, Chief Financial Officer
1-800-447-7787
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