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Sequential and Comparative Revenues are Improving, Losses are Narrowing
MELVILLE,
N.Y., March 16, 2004 -- Andrea Electronics Corporation (AND)
today reported that revenues for the quarter ended December
31, 2003 were approximately $1.4 million, versus revenues
of $1.2 million, which were restated to exclude sales from
discontinued operations, in the same quarter in 2002. The
discontinued Aircraft Products division was sold by the Company
on April 11, 2003. Net loss attributable to common shareholders
for the quarter ended December 31, 2003 was approximately
$3.7 million, or a basic and diluted loss per share of $0.14,
compared to a net loss of approximately $1.5 million, or a
basic and diluted loss per share of $0.07, for the quarter
ended December 31, 2002. The loss attributable to common shareholders
for the quarter ended December 31, 2003 included a non- cash
impairment charge of approximately $2.7 million predominately
relating to the determination that the carrying value of the
Andrea DSP Microphone and Audio Software Core Technology exceeded
its fair value. Excluding this impairment charge, the Company's
net loss attributable to common shareholders for the quarter
ended December 31, 2003 was approximately $0.9 million, or
a basic and diluted loss per share of $0.03.
Revenues were approximately $5.1 million for the year ended
December 31, 2003, versus revenues of $3.9 million, which
were restated to exclude sales from discontinued operations,
in the same period in 2002. Net loss attributable to common
shareholders for the year ended December 31, 2003 was approximately
$4.7 million, or a basic and diluted loss per share of $0.20,
compared to a net loss of approximately $21.1 million, or
a basic and diluted loss per share of $1.12, for the year
ended December 31, 2002. In the year ended December 31, 2003,
the Company recorded a $2.7 million non-cash impairment charge,
as well as income from discontinued operations of the Aircraft
Products division of approximately $2.5 million. Excluding
the non-cash impairment charge, the Company's net loss attributable
to common shareholders for the year ended December 31, 2003
was approximately $2.0 million, or a basic and diluted loss
per share of $0.08. In the year ended December 31, 2002, the
Company recorded a $1.8 million non-cash charge to provision
for income taxes and 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 value. Excluding these non-cash charges,
the Company's net loss attributable to common shareholders
for the year ended December 31, 2002 was approximately $6.9
million, or a basic and diluted loss per share of $0.36.
"Revenues
in the fourth quarter of 2003 increased 22% from both the
fourth quarter of last year and the third quarter of this
year while full year revenues increased 30%," stated
Corisa L. Guiffre, Vice President and Chief Financial Officer.
"In addition, combined research and development costs
and general, administrative and selling expenses declined
21% for the full year and decreased 25% this quarter as compared
to the same quarter last year. As a result, our losses are
narrowing which is certainly an encouraging sign," Ms.
Guiffre concluded.
"In
November 2003, I outlined a number of strategic initiatives
for Andrea which revolved around balance sheet restructurings,
asset and technology rationalizations, further expense reductions
and broader and deeper sales channel penetrations," stated
Paul. E. Donofrio, President and Chief Executive Officer.
"As previously reported in February 2004, a group of
new investors were brought into the Company which resulted
in a successful balance sheet conversion of a restrictive
mezzanine position into permanent equity and which provided
for $2.5 million of critical new equity financing for Andrea.
In addition, our Lamar Signal Processing operation in Israel
has been transformed and streamlined into an engineering and
customer support center. The Company needed to place less
emphasis on research and development, since most of the core
technology is already embedded in our portfolio of products,
and focus more heavily on sales and marketing since expansion
of our top line remains a key strategic goal for Andrea Electronics,"
Mr. Donofrio concluded.
During
the fourth quarter ended December 31, 2003, total revenues
increased 22% over the same period in 2002. For the fourth
quarter of 2003, Andrea Anti-Noise Products revenues were
approximately $0.8 million compared to $0.5 million for the
fourth quarter of 2002. For the fourth quarter of 2003, Andrea
DSP Microphone and Audio Software Products revenues were approximately
$0.6 million compared to $0.7 for the fourth quarter of 2002.
During the year ended December 31, 2003, total revenues increased
approximately 30% over the same period in 2002. For the year
ended December 31, 2003, Andrea Anti-Noise Products revenues
were approximately $2.8 million compared to $2.3 million for
the same period in 2002. For year ended December 31, 2003,
Andrea DSP Microphone and Audio Software Products revenues
were approximately $2.3 million compared to $1.6 million for
the same period in 2002. The increases in the Andrea Anti-Noise
Products revenues are predominately related to an increasing
number of businesses utilizing distance learning and on-line
collaboration software which uses our noise canceling headset
products as well as higher sales to OEM customers. The annual
increase in the Andrea DSP Microphone and Audio Software Products
revenues is primarily attributable to the recognition of deferred
revenue relating to our licensing agreements with Analog Devices
Inc.
At December
31, 2003, we had total cash and cash equivalents of approximately
$1.7 million. Total assets were approximately $9.5 million
with total current assets of approximately $4.2 million. Total
liabilities were approximately $5.3 million with total current
liabilities of approximately $4.4 million. Total shareholder's
deficit at December 31, 2003 was approximately $2.5 million.
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
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarter Ended For the Years Ended
December 31, December 31,
2003 2002 2003 2002
(restated)* (restated)*
Revenues
Net Product
Revenues $1,011,942 $749,751 $3,452,744 $2,981,294
License Revenues 416,670 416,670 1,666,680 953,356
Revenues 1,428,612 1,166,421 5,119,424 3,934,650
Cost of revenues 792,098 861,983 2,734,077 2,564,528
Gross margin 636,514 304,438 2,385,347 1,370,122
Research and
development expenses 585,988 869,349 2,763,966 3,239,627
General, administrative
and selling expenses 951,551 1,189,497 3,911,174 5,241,966
Impairment of
intangible assets 2,733,230 - 2,733,230 -
Loss from
operations (3,634,255) (1,754,408) (7,023,023) (7,111,471)
Other income
Interest income
(expense) 1,248 6,019 42,287 (7,519)
Rent and
miscellaneous
income (expense) 65,734 (3,115) 174,245 31,257
Other Income 66,982 2,904 216,532 23,738
Loss from continuing
operations before
provision for income
taxes and cumulative
effect of change in
accounting principle
for goodwill (3,567,273) (1,751,504) (6,806,491) (7,087,733)
Provision for
income taxes - - - (1,806,615)
Loss from continuing
operations before
cumulative effect
of change in
accounting principle
for goodwill (3,567,273) (1,751,504) (6,806,491) (8,894,348)
Income from
discontinued operations - 367,194 2,534,824 687,892
Cumulative effect of
change in accounting
principle for
goodwill, net of $0 Tax - - - (12,458,872)
Net loss (3,567,273) (1,384,310) (4,271,667) (20,665,328)
Preferred stock
dividends 83,504 108,841 417,686 466,695
Net loss
attributable
to common
shareholders $(3,650,777) $(1,493,151) $(4,689,353) $(21,132,023)
Basic and diluted
(loss) income
per share:
Loss from continuing
operations
attributable to
common shareholders
before cumulative
effect of change in
accounting principle
for goodwill $ (0.14) $(0.09) $ (0.31) $(0.50)
Income from
discontinued operations - 0.02 0.11 0.04
Cumulative effect of
change in accounting
principle for
goodwill, net - - - (0.66)
Net loss attributable
to common
shareholders $ (0.14) $(0.07) $ (0.20) $(1.12)
Shares used in
computing net loss
per share - Basic
and Diluted 26,524,994 20,320,427 23,727,767 18,851,317
* Restated to reflect discontinued operations relating to the Aircraft
Communications Products Division
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2003 2002
ASSETS
Current assets:
Cash and cash equivalents $1,725,041 $3,307,437
Accounts receivable, net of allowance for
doubtful accounts of $56,697 and
$70,831, respectively 611,422 412,849
Note receivable 354,986 -
Inventories, net 1,301,791 2,222,450
Prepaid expenses and other current assets 181,018 309,705
Assets from discontinued operations - 1,487,482
Total current assets 4,174,258 7,739,923
Property and equipment, net 219,182 543,572
Intangible assets, net 4,805,630 8,208,638
Other assets, net 268,090 282,582
Total assets $9,467,160 $16,774,715
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Trade accounts payable $731,092 $1,023,353
Current portion of long-term debt 16,527 21,056
Accrued restructuring charges 238,391 364,577
Deferred revenue 1,666,680 1,666,680
Other current liabilities 1,714,439 2,409,526
Liabilities from discontinued operations - 122,903
Total current liabilities 4,367,129 5,608,095
Long-term debt - 16,572
Deferred revenue 713,284 2,379,964
Other liabilities 238,671 249,677
Total liabilities 5,319,084 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: 677
and 749 shares, respectively; liquidation
value: $6,771,876 and $7,491,876,
respectively 6,692,603 7,381,508
Commitments and contingencies
Shareholders' (deficit) equity:
Preferred stock, $.01 par value; authorized:
4,997,500 shares; none issued and outstanding - -
Common stock, $.01 and $0.50 par value,
respectively; authorized: 200,000,000 shares;
issued and outstanding: 27,245,932 and
21,127,918 shares, respectively 272,459 10,563,959
Additional paid-in capital 65,578,653 54,074,247
Deferred stock compensation (2,673) (23,099)
Accumulated deficit (68,392,966) (64,121,299)
Total shareholders' (deficit) equity (2,544,527) 493,808
Total liabilities and shareholders'
(deficit) equity $9,467,160 $16,774,715
AT ANDREA
ELECTRONICS CORPORATION
Corisa L. Guiffre
Chief Financial Officer
1-800-447-7787
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