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Net Revenues Up, Net Loss Down, Balance Sheet Reflects Restructuring and New Financing
MELVILLE,
N.Y., May 11, 2004 -- Andrea Electronics Corporation (AND) today
reported that net revenues for the quarter ended March 31, 2004
were approximately $1.6 million, inclusive of sales return recovery
-- restructuring of $0.2 million, as compared to net revenues
of $1.3 million for the same quarter in 2003. Net loss for the
quarter ended March 31, 2004 was approximately $0.5 million,
or a basic and diluted loss attributable to common shareholders
per share of $0.05, as compared to a net loss of approximately
$0.8 million, or a basic and diluted loss attributable to common
shareholders per share of $0.04, for the same quarter in 2003.
The net loss for the quarter ended March 31, 2003 included income
from discontinued operations of approximately $0.3 million,
or basic and diluted income attributable to common shareholders
per share of $0.01.
"On a comparative basis, net revenues in the first quarter
of 2004, inclusive of sales return recovery -- restructuring
of $0.2 million, increased 22% from the first quarter of last
year and also rose 9% sequentially from the fourth quarter
of 2003," stated Corisa L. Guiffre, Vice President and Chief
Financial Officer. "Furthermore, research and development
and general, administrative and selling expenses, on a combined
basis, decreased 17% as compared to the same quarter last
year and 4% from the fourth quarter of 2003. Overall, Andrea
has experienced three consecutive quarters of rising net revenues
and declining non-impairment related operating losses, which
remains encouraging," Ms. Guiffre concluded.
"During the first quarter of 2004, our balance sheet restructuring
initiative was successfully accomplished when a group of new investors
converted mezzanine debt into permanent equity while also providing $1.25
million of critical new equity financing for Andrea, and with another $1.25
million capital infusion due upon shareholder approval and registration,"
stated Paul E. Donofrio, President and Chief Executive Officer. "In addition,
our asset and technology rationalization goal was recently achieved through
the transformation and streamlining of our Lamar Signal Processing operation
in Israel into a digital engineering and customer support center. Significant
strides have also been made in reducing our overall expenditures, another of
our key milestones, especially in such areas as payroll and related expenses,
legal and professional fees and insurance costs, but a focused and dedicated
effort must still be put forth. Broadening our sales channels, and deepening
our overall penetration into these markets, remains the most critical
strategic initiative that the Company currently faces. Initial progress in
this area was recently reported with the Centra Software Summit keynote
speaker sponsorship, as this partnership should provide ample opportunity for
Andrea to increase its overall headset revenues," Mr. Donofrio concluded. For the first quarter of 2004, Andrea Anti-Noise Products revenues were
approximately $0.8 million, inclusive of sales return recovery --
restructuring of $0.2 million, as compared to $0.8 million for the first
quarter of 2003. For the first quarter of 2004, Andrea DSP Microphone and
Audio Software Products revenues were approximately $0.8 million as compared
to $0.5 for the first quarter of 2003. The increase in the Andrea DSP
Microphone and Audio Software Products revenues is primarily attributable to
increased product shipments to several of our OEM customers. At March 31, 2004, we had total cash and cash equivalents of approximately
$1.8 million. Total assets were approximately $8.8 million with total current
assets of approximately $3.7 million. Total liabilities were approximately
$3.5 million with total current liabilities of approximately $2.9 million.
Total shareholders' equity at March 31, 2004 was approximately $5.4 million,
which increased approximately $7.9 million from the December 31, 2003 total
shareholders' deficiency of approximately $2.5 million. This increase is
primarily due to the balance sheet restructuring and initial capital infusion
that took place during the first quarter of 2004. 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-KSB 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 Three Months Ended
March 31, 2004 March 31, 2003
Revenues
Product revenues $927,652 $864,405
License revenues 416,670 416,670
revenues 1,344,322 1,281,075
Sales Returns recovery - restructuring 215,325 --
Net Revenues 1,559,647 1,281,075
Cost of revenues 692,129 571,478
Gross margin 867,518 709,597
Research and development expenses 399,467 780,720
General, administrative and
selling expenses 1,080,360 1,011,748
Loss from operations (612,309) (1,082,871)
Other income
Interest income, net 1,350 27,997
Rent and miscellaneous income 77,472 5,117
Other income 78,822 33,114
Loss from continuing operations (533,487) (1,049,757)
Income from discontinued operations,
net of $0 tax -- 292,251
Net loss (533,487) (757,506)
Basic and diluted (loss) income per share:
Numerator for (loss) income per share:
Loss from continuing operations $(533,487) $(1,049,757)
Series C Redeemable Convertible
Preferred Stock dividends 45,518 110,519
Series C Convertible
Preferred Stock deemed dividend 469,465 --
Series D Convertible Preferred Stock
beneficial conversion feature 753,012 --
Loss from continuing operations
attributable to common shareholders
- basic and diluted (1,801,482) (1,160,276)
Income from discontinued operations,
net of $0 tax -- 292,025
Net loss attributable to common
shareholders - basic and diluted $(1,801,482) $(868,025)
Denominator for (loss) income per share:
Basic and diluted weighted
average shares 35,008,088 21,320,935
Basic and diluted loss from continuing
operations attributable to common per share $(.05) $(.05)
Basic and diluted income from discontinued
operations per share -- $.01
Basic and diluted net loss attributable to
common shareholders per share $(.05) $(.04)
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 2004 December 31, 2003
ASSETS (unaudited) (audited)
Current Assets
Cash and cash equivalents $1,788,196 $1,725,041
Accounts receivable, net of
allowance for doubtful accounts
of $41,404 and $56,697, respectively 491,228 611,422
Note receivable -- 354,986
Inventories, net 1,133,501 1,301,791
Prepaid expenses and other
current assets 249,601 181,018
Total current assets 3,662,526 4,174,258
Property and equipment, net 186,748 219,182
Intangible assets, net 4,690,357 4,805,630
Other assets, net 265,135 268,090
Total assets $8,804,766 $9,467,160
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Trade accounts payable $ 350,729 $ 731,092
Current portion of long-term debt 11,405 16,527
Accrued restructuring charges -- 238,391
Deferred revenue 1,658,453 1,666,680
Other current liabilities 902,556 1,714,439
Total current liabilities 2,923,143 4,367,129
Deferred revenue 304,841 713,284
Other liabilities 225,751 238,671
Total liabilities 3,453,735 5,319,084
Series C Redeemable Convertible
Preferred Stock, net, $.01 par value;
authorized: 1,500 shares; issued and
outstanding: 0 and 677 shares,
respectively; liquidation value:
$0 and $6,771,876, respectively -- 6,692,603
Commitments and contingencies
Shareholders' equity (deficiency):
Preferred stock, $.01 par value;
authorized: 3,747,500 and 4,997,500
shares, respectively; none issued and
outstanding -- --
Series C Convertible Preferred Stock,
net, $.01 par value; authorized:
1,500 shares; issued and outstanding:
247 and 0 shares, respectively;
liquidation value: $2,471,256 and $0,
respectively 2 --
Series D Convertible Preferred Stock,
net, $.01 par value; authorized:
1,250,000 shares; issued and outstanding:
1,250,000 and 0 shares, respectively;
liquidation value: $1,250,000 and $0
respectively 12,500 --
Common stock, $.01 par value and $.01
par value, respectively; authorized:
200,000,000 shares; issued and
outstanding: 46,269,763 and
27,245,932 shares, respectively 462,697 272,459
Additional paid-in capital 75,024,762 65,578,653
Deferred stock compensation -- (2,673)
Accumulated deficiency (70,148,930) (68,392,966)
Total shareholders' equity
(deficiency) 5,351,031 (2,544,527)
Total liabilities and
shareholders' equity
(deficiency) $8,804,766 $9,467,160
AT ANDREA
ELECTRONICS CORPORATION
Corisa L. Guiffre
Chief Financial Officer
1-800-447-7787
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