<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
( x ) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to_______________
Commission file number 1-4324
------
ANDREA ELECTRONICS CORPORATION
------------------------------------
(Exact name of registrant as specified in its charter)
New York 11-0482020
--------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11-40 45th Road, Long Island City, New York 11101
------------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
1-800-442-7787
--------------------------------------------------------------
(Registrant's telephone number, Including area code)
Indicate by check mark whether the registrant: (1) filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date. 4,059,527.
Page 1
<PAGE>
PART I---FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
June 30, 1997 December 31,1996
-------------- ----------------
(unaudited) (audited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,735,194 $ 921,065
Marketable securities 97,031 197,697
Accounts receivable, net 4,259,418 2,678,449
Inventories, net 4,856,497 4,774,175
Deferred income taxes 836,265 1,222,000
Prepaid expenses and other current assets 274,342 132,691
------------ ------------
Total current assets 12,058,747 9,926,077
PROPERTY, PLANT AND EQUIPMENT, net 819,706 868,173
------------ ------------
Total assets $ 12,878,453 $ 10,794,250
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 1,245,650 $ 822,400
Accrued salaries and wages payable 34,204 62,920
Other current liabilities 229,756 204,683
------------ ------------
Total current liabilities 1,509,610 1,090,003
CONVERTIBLE DEBENTURE, net 1,797,945 2,157,786
OTHER LIABILITIES 30,886 38,500
------------ ------------
Total liabilities 3,338,441 3,286,289
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, $.50 par value; authorized: 15,000,000
shares; issued and outstanding: 4,048,277 and
3,792,197 shares, respectively 2,024,138 1,896,099
Additional paid-in capital 8,774,356 8,154,821
Accumulated deficit (1,258,482) (2,542,959)
------------ ------------
Total shareholders' equity 9,540,012 7,507,961
------------ ------------
Total liabilities and shareholders' equity $ 12,878,453 $ 10,794,250
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
Page 2
<PAGE>
<TABLE> ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
SALES $ 6,080,875 $ 994,526 $ 11,465,144 $ 2,744,409
COST OF SALES 3,579,233 900,366 6,775,141 2,181,663
------------- ----------- ------------- ------------
Gross Profit 2,501,642 94,160 4,690,003 562,746
RESEARCH AND DEVELOPMENT EXPENSES 88,809 237,950 241,633 522,833
GENERAL, ADMINISTRATIVE AND SELLING EXPENSES 1,546,168 752,265 2,799,242 1,399,007
------------- ----------- ------------- ------------
Income (loss) from operations 866,665 (896,055) 1,649,128 (1,359,094)
------------- ----------- ------------- ------------
OTHER INCOME (EXPENSE)
Interest income 22,236 10,372 41,284 28,701
Interest expense (60,380) (174,967) (126,907) (254,462)
Rent and miscellaneous income 58,033 70,503 115,783 116,799
------------- ----------- ------------- ------------
19,889 (94,092) 30,160 (108,962)
INCOME (LOSS) BEFORE INCOME TAXES 886,554 (990,147) 1,679,288 (1,468,056)
============= =========== ============= ============
PROVISION FOR INCOME TAXES (208,518) - (394,811) -
------------- ----------- ------------- ------------
NET INCOME (LOSS) $ 678,036 $ (990,147) $ 1,284,477 $(1,468,056)
============= =========== ============= ===========
NET INCOME (LOSS) PER SHARE $ .17 $(.28) $ .33 $(.43)
===== ===== ===== =====
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 4,030,175 3,503,950 3,940,020 3,399,608
========= ========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements
Page 3
<PAGE>
<TABLE>
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
Additional Total
Shares Common Paid-In Accumulated Shareholders'
Outstanding Stock Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1996 3,792,197 $ 1,896,099 $ 8,154,821 $ (2,542,959) $ 7,507,961
Exercise of Stock Options 216,250 108,125 204,813 - 312,938
Conversion of Convertible
Debentures 39,830 19,914 414,722 - 434,636
Net Income - - - 1,284,477 1,284,477
--------- ------------ ------------ ------------ ------------
BALANCE, June 30, 1997
(Unaudited) 4,048,277 $ 2,024,138 $ 8,774,356 $ (1,258,482) $ 9,540,012
========= ============ ============ ============= ============
</TABLE>
See Notes to Consolidated Financial Statements
Page 4
<PAGE>
<TABLE>
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
For the Six Months Ended
June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,284,477 $ (1,468,056)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Investment securities - (92,992)
Depreciation and amortization 155,304 79,717
Deferred income taxes 385,735 -
Non-cash interest on convertible debt 126,907 -
(Increase) decrease in:
Accounts receivable (1,580,969) 260,679
Inventories (82,322) (2,964,633)
Prepaid expenses and other current assets (189,157) 31,384
Trade accounts payable 423,250 (212,976)
Accrued salaries and wages payable (28,716) 11,974
Other current and long term liabilities (34,653) (170,220)
------------ ------------
Net cash provided by (used in) operating activities 459,856 (4,525,123)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment, net (59,331) (48,835)
Maturities of investment securities 100,666 -
------------ ------------
Net cash provided by (used in) investing activities 41,335 (48,835)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments of capital lease obligations - (33,188)
Net proceeds from convertible debentures - 2,222,784
Exercise of stock options 312,938 140,750
------------ ------------
Net cash provided by financing activities 312,938 2,330,346
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 814,129 (2,243,612)
CASH AND CASH EQUIVALENTS - beginning of period 921,065 3,400,829
------------ ------------
CASH AND CASH EQUIVALENTS - end of period $ 1,735,194 $ 1,157,217
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Conversion of debt into common stock $ 434,636 $ -
See Notes to Consolidated Financial Statements
Page 5
<PAGE>
Notes to Consolidated Financial Statements
I. Basis of Presentation. The accompanying consolidated financial
statements include the accounts of the Company and its subsidiaries
(collectively, "Andrea Electronics" or the "Company"). All intercompany
balances and transactions have been eliminated in consolidation.
The consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial
reporting. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for any interim
period are not necessarily indicative of the results to be expected for the
fiscal year. For further information, refer to the consolidated financial
statements and accompanying footnotes included in the Company's annual report
on Form 10K for the year ended December 31, 1996.
II. Recently Issued Accounting Pronouncement. In March 1997, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards ("SFAS") No. 128, Earnings Per Share. This statement establishes
standards for computing and presenting earnings per share ("EPS"), replacing
the presentation of currently required EPS with a presentation of Basic EPS.
For entities with complex capital structures, the statement requires the dual
presentation of both Basic EPS and Diluted EPS on the face of the statement
of operations. Under this new standard, Basic EPS is computed based on
weighted average shares outstanding and excludes any potential dilution;
diluted EPS reflects potential dilution from the exercise or conversion of
securities into common stock or from other contracts to issue common stock
and is similar to the currently required fully diluted EPS. SFAS No. 128 is
effective for financial statements issued for periods ending after December
15, 1997, including interim periods, and earlier application is not
permitted. When adopted, the Company will be required to restate its EPS
data for all prior periods presented. The Company does not expect the impact
of the adoption of this statement to be material to previously reported EPS
amounts.
III. Litigation. In December 1994, a subpoena duces tecum was issued to the
Company by the United States Department of Defense, Office of the Inspector
General, seeking certain documents pertaining to contracts relating to audio
frequency amplifiers. Documents responding to the subpoena were delivered by
the Company in the first quarter of 1995. As of August 12, 1997, the Company
and claimant reached an agreement to settle certain claims relating to the
contracts for an amount that is not material to the Company's financial
statements taken as a whole.
IV. Reclassifications. Certain prior year amounts have been reclassified to
conform with current year presentation.
V. Subsequent Event. On August 13, 1997, the Company entered into an
agreement with International Business Machines and its subsidiaries ("IBM")
to produce and procure certain products, as defined. The agreement
is effective as of August 1, 1997, replaces all previous agreements and
will continue in full force and effect unless terminated earlier for
material breach by either party, as provided in the agreement.
Page 6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Andrea Electronics Corporation's mission is to provide state-of-the-art
communications products for the "voice interface" markets that are rapidly
emerging from the convergence of the telecommunications and computer
industries, and for the defense electronics markets that are requiring
increasingly higher quality voice communication products. The Company's
strategy for serving these markets is to leverage its expertise in audio
communications technology, including its patented Active Noise Cancellation
("ANC") and Active Noise Reduction ("ANR") technology (together referred to
as "Andrea Anti-Noise/Registered Trademark/ technology"), and to develop,
manufacture and market either directly or through licensees a line of Andrea
Anti-Noise/Registered Trademark/ headsets, handsets and other communication
devices to cost-effectively enhance voice communications for end users of the
growing number of new, voice-based computer and computer telephony
applications and interfaces.
Examples of the applications and interfaces include: Internet and other
computer-based speech; telephony communications; multi-point conferencing;
multi-player Internet and CD ROM interactive games; speech recognition;
multimedia; military and industrial communications; and other applications
and interfaces that incorporate natural language processing. The Company
believes that end users of these applications and interfaces will require
high quality microphone and earphone products that enhance voice
transmission, particularly to and from noisy environments, for use with
personal computers, business and residential telephones, military headsets,
cellular and other wireless telephones, personal communication systems and
avionics communications systems.
An important element of the Company's strategy for expanding the channels of
distribution and broadening the base of users for its ANC and ANR products is
its set of collaborative arrangements with hardware OEMs, software
publishers, distributors and retailers actively engaged in the various
markets in which the Company's ANC and ANR products have application. Under
some of these arrangements, the Company supplies its products for sale by the
collaborative partners. Under others, the collaborative partners supply the
Company with software that the Company includes with its ANC and ANR
technology. In addition, the Company is also seeking to increase its own
direct marketing efforts.
The Company outsources the manufacture of its ANC and ANR products for its
OEM, consumer and commercial customers. The Company also manufactures and
distributes intercom systems and related components for military applications
("Traditional Military Products") and industrial applications ("Traditional
Industrial Products"; together with Traditional Military Products,
"Traditional Products"). In contrast to the outsourced manufacture of its
ANC and ANR products for the non-military markets, the Company has
historically manufactured its Traditional Products in its own facility. The
Company is engaged in developing a new line of products for military use that
incorporate ANC and ANR technology and anticipates that it will manufacture
these new military products through both outsourcing and self-manufacturing.
The interim results of operations of the Company presented in this report are
not necessarily indicative of the actual sales or results of operations to be
realized for the full year.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operations for the three and six months
ended June 30, 1997 (the "1997 Second Quarter" and the "1997 First Half") are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. The words "believe", "expect",
"anticipate", and similar expressions identify forward-looking statements.
In order to obtain the benefits of these "safe harbor" provisions for any
Page 7
<PAGE>
such forward-looking statements, the Company wishes to caution investors and
prospective 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 such forward-looking
statements. These factors include:
first, the rate at which the Company's Anti-Noise/Registered
Trademark/ technology is accepted by the diverse range of users and
applications within the global communications and informatics marketplace;
second, the ability of the Company to maintain a competitive
position for its Anti-Noise/Registered Trademark/ products in terms of
technical specifications, quality, price, reliability and service;
third, the ongoing ability of the Company to enter into and maintain
collaborative relationships with larger companies in the fields of
telecommunications, computer manufacturing, software design and publishing,
Internet and online services, defense-related manufacturers and system
providers, and retail and direct marketing distributors; and
fourth, in the event that the Company experiences continued
significant growth in demand for its Anti-Noise/Registered Trademark/
technology, the ability of the Company to raise sufficient external capital
to fund the working capital requirements for meeting such demand.
The failure of the Company to surmount the challenges posed by any one or
more of these factors could have a material adverse effect on the Company's
results of operations and growth.
RESULTS OF OPERATIONS
Sales
Sales for the 1997 Second Quarter were $6,080,875, an increase of 511% over
the three months ended June 30, 1996 (the "1996 Second Quarter"). Sales for
the 1997 First Half were $11,465,144, an increase of 318% over the six months
ended June 30, 1996 (the "1996 First Half"). These increases in sales over
both the three month and six month periods primarily reflect increasing
market acceptance of voice interface computer applications that incorporate
the Company's Anti-Noise technology, coupled with the strength of new product
launches during the latter part of the 1997 Second Quarter. The increase in
sales during the 1997 Second Quarter reflected an approximate 987% increase in
sales of Andrea Anti-Noise/Registered Trademark/ products to $4,823,835 or
79% of total sales, and an approximate 128% increase in sales of the
Company's Traditional Military Products to $1,257,040 or 21% of total sales.
The increase in sales during the 1997 First Half reflected an approximate
654% increase in sales of Andrea Anti-Noise/Registered Trademark/ products to
$9,148,312 or 80% of total sales, and an approximate 51% increase in sales of
the Company's Traditional Military Products to $2,316,832 or 20% of total
sales. During the 1997 First Half, sales of the Company's computer headsets
to IBM and certain of IBM's affiliates, distributors, licensees, and
integrators accounted for 63% of the Company's total sales.
Cost of Sales
Cost of sales as a percentage of sales for the 1997 Second Quarter decreased
to 59% from 91% for the 1996 Second Quarter. Cost of sales as a percentage of
sales for the 1997 First Half decreased to 59% from 79% for the 1996 First
Half. The improvement principally reflects the efficiencies resulting from
the Company's continuing efforts to globalize its sourcing and manufacturing
activities as well as maximizing the benefits of shifts in product mix. The
higher cost of sales for the 1996 Second Quarter and 1996 First Half
reflected the higher costs incurred during the initial production runs of new
Andrea Anti-Noise/Registered Trademark/ computer products during the 1996
Second Quarter and 1996 First Half.
Page 8
<PAGE>
Research and Development
Research and development expenses decreased 63% to $88,809 for the 1997
Second Quarter from $237,950 for the 1996 Second Quarter. Research and
development expenses decreased 54% to $241,633 for the 1997 First Half from
$522,833 for the 1996 First Half. These decreases in research and
development expenses are attributable to increased allocations of engineering
and technician time to production costs and decreased allocations of
engineering and technician time to design and development, reflecting the
migration of the Company's Andrea Anti-Noise/Registered Trademark/ products
from design and development to commercial production. Management expects that
research and development expenses will increase significantly during the
third and fourth quarters of 1997, primarily related to product enhancements.
General, Administrative and Selling Expenses
General, administrative and selling expenses increased 106% to $1,546,168 for
the 1997 Second Quarter from $752,265 for the 1996 Second Quarter. General,
administrative and selling expenses increased 100% to $2,799,242 for the 1997
First Half from $1,399,007 for the 1996 First Half. These increases,
primarily attributable to the ANC and ANR product lines, reflect increased
business development expenses relating to existing and prospective
collaborative arrangements with hardware OEMs, software publishers,
distributors and retailers. In addition, the Company incurred
increased promotional, marketing and sales expenses to promote product and
awareness and acceptance of the ANC and ANR product lines. As a percentage
of sales, however, general, administrative and selling expenses decreased to
25% for the 1997 Second Quarter from 76% for the 1996 Second Quarter, and
decreased to 24% for the 1997 First Half from 51% for the 1996 First Half.
Other Income (Expense)
Other income for the 1997 Second Quarter was $19,889 compared to other
expense of $94,092 for the 1996 Second Quarter. Other income for the 1997
First Half was $30,160 compared to other expense of $108,962 for the 1996
First Half. These changes are primarily attributable to decreases in
interest expense as a result of conversion rights exercised in the 1997
Second Quarter and the lower effective interest rate on the outstanding
convertible debentures during the 1997 First Half compared to the 1996 First
Half.
Provision for Income Taxes
The provision for income taxes of $208,518 in the 1997 Second Quarter
represents an effective tax rate of 23.5%, which is comprised of tax expense
at the Company's combined statutory rate of approximately 42%, partially
offset by a reduction in the Company's reserve on previously-generated,
fully-reserved deferred income tax assets in light of management's
expectations as to future profitability. No income tax benefit was recorded
in the 1996 Second Quarter, as the Company had not yet achieved profitable
performance. The Company was, at that time, providing a full reserve against
deferred income tax assets. The Company will continue to assess its reserves
on deferred income tax assets as the year progresses.
Net Income (Loss)
Net income for the 1997 Second Quarter was $678,036, compared to a net loss
of $990,147 for the 1996 Second Quarter. Net income for the 1997 First Half
was $1,284,477, compared to a net loss of $1,468,056 for the 1996 First Half.
The levels of net income for the 1997 Second Quarter and 1997 First Half
principally reflect the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds have historically been, and are
expected to continue to be, cash flow from operations and borrowings provided
by certain financial institutions. At June 30, 1997, the Company had cash
and cash equivalents of $1,735,194 compared with $921,065 at December 31,
1997.
Page 9
<PAGE>
Working capital at June 30, 1997 was $10,549,137 compared to $8,836,074 at
December 31, 1996. The increase in working capital reflects an increase in
total current assets of $2,132,670 offset by an increase in total current
liabilities of $419,607. The increase in total current assets reflects an
increase in cash of $814,129, an increase in accounts receivable of
$1,580,969, an increase in inventory of $82,322, a decrease in deferred
income taxes of $385,735 and an increase of $141,651 in prepaid expenses and
other current assets. The increase in current liabilities reflects a $423,250
increase in trade accounts payable, a $28,716 decrease in accrued salaries
and wages payable and a $25,073 increase in other current liabilities.
The increase in cash of $814,129 reflects $459,856 of net cash provided by
operating activities, $41,335 of cash provided by investing activities and
$312,938 of cash provided by financing activities. The cash provided by
operating activities, excluding non-cash charges, is primarily attributable
to the Company's trade payable management policy for the production of its
Anti-Noise/Registered Trademark/computer headsets. The cash provided by
investing activities was a result of the maturity of one of the Company's
marketable securities, partially offset by capital expenditures, which
primarily includes the continued upgrade of manufacturing tooling dies and
molds for Andrea Anti-Noise/Registered Trademark/ products. The cash
provided by financing activities resulted from the exercise of stock options.
The increase in accounts receivable primarily reflects the significant
increase in sales during the 1997 First Half. Generally, the Company
collects receivables from sales within three months.
The increase in prepaid expenses and other current assets includes the
recognition of increased premiums for prepaid property taxes and insurance,
increased fulfillment costs as well as increases in other service costs
related to the remainder of fiscal 1997.
The decrease in the deferred tax asset represents the realization of
previously recognized benefit as a result of ordinary income, as well as a
reduction of the valuation allowance on previously-reserved deferred tax
assets in light of the Company's profitability over recent quarters and the
expectation of realizing those assets through continued earnings. The
Company will be continually re-assessing its reserves on deferred income tax
assets as the year progresses.
The increase in trade accounts payable primarily reflects differences in the
timing related to both the payments for and the acquisition of raw materials
for the Andrea Anti-Noise/Registered Trademark/ products.
Demand for Andrea Anti-Noise/Registered Trademark/ products has required the
Company to raise additional working capital to support its production
operations. Since December 1995, the Company has raised additional working
capital through the issuance of convertible subordinated debentures. In
addition, the Company has been exploring various forms of other bank debt and
equity financing. The Company believes that its ability to remedy its
existing accumulated deficit will depend primarily on the profitable growth
of its Andrea Anti-Noise/Registered Trademark/ products. Notwithstanding
growth in sales of Andrea Anti-Noise/Registered Trademark/ products during
the 1997 First Half, no assurance can be given that demand will continue to
increase for these products or any of the Company's other products or, that
if such demand does increase, that the Company will be able to obtain the
necessary working capital to increase production and marketing resources to
meet such demand on favorable terms, or at all.
Page 10
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At the annual meeting of shareholders of the Company on June 19, 1997
the shareholders were asked to vote on the following four proposals: Proposal
One to elect Frank A.D. Andrea, Jr., Douglas J. Andrea, John N. Andrea,
Christopher Dorney, Gary Jones, Scott Koondel, Paul Morris and Patrick D.
Pilch as directors of the Company; Proposal Two to authorize an amendment to
the Certificate of Incorporation of the Company to increase the authorized
shares of Common Stock to 15,000,000 shares from 10,000,000 shares; Proposal
Three to authorize an amendment to the Company's 1991 Performance Equity Plan
to increase the number of shares issuable thereunder to 2,000,000 shares from
1,500,000 shares; and Proposal Four to ratify the selection of Arthur
Andersen LLP as the Company's independent accountants for the year ending
December 31, 1997.
</TABLE>
<TABLE>
<CAPTION>
Matter For Against or Withheld Absentions Broker Nonvotes
<S> <C> <C> <C> <C>
Proposal One:
Election of Directors
Frank A.D. Andrea, Jr. 3,790,389 114,069 -0- -0-
Douglas J. Andrea 3,789,647 114,811 -0- -0-
John N. Andrea 3,789,089 115,369 -0- -0-
Christopher Dorney 3,790,309 114,149 -0- -0-
Gary A. Jones 3,790,809 113,649 -0- -0-
Scott Koondel 3,789,867 114,591 -0- -0-
Paul M. Morris 3,790,309 114,149 -0- -0-
Patrick D. Pilch 3,790,447 114,011 -0- -0-
Proposal Two:
Authorization of
amendment to
Certificate of
Incorporation 3,738,311 157,277 8,870 -0-
Proposal Three
Authorization of
amendment to 1991
Performance Equity
Plan (1) 1,697,769 450,599 29,656 1,726,434
Proposal Four
Ratification of
Selection Independent
Accountants 3,856,717 17,401 30,340 -0-
- -----------------
(1) The meeting was adjourned to July 24, 1997, and subsequently adjourned
to August 28, 1997 in order to afford an opportunity to non-voting shares to
vote on this Proposal.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit
Number Description
27 Financial Data Schedule
(b) Reports on Form 8-K.
The registrant did not file any reports on Form 8-K during the
three-month period ended June 30, 1997.
Page 11
<PAGE>
SIGNATURES
In accordance with the requirements of Section 13 and 15(d) of the Exchange
Act, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANDREA ELECTRONICS CORPORATION
/s/ John N. Andrea Co-President August 14, 1997
- ------------------------
John N. Andrea
/s/ Patrick D. Pilch Executive Vice President, August 14, 1997
- ------------------------ and Chief Financial Officer
Patrick D. Pilch
Page 12
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,735,194
<SECURITIES> 97,031
<RECEIVABLES> 4,311,939
<ALLOWANCES> 52,521
<INVENTORY> 4,856,497
<CURRENT-ASSETS> 12,058,747
<PP&E> 1,994,055
<DEPRECIATION> 1,174,349
<TOTAL-ASSETS> 12,878,453
<CURRENT-LIABILITIES> 1,509,610
<BONDS> 1,797,945
0
0
<COMMON> 2,024,138
<OTHER-SE> 7,515,874
<TOTAL-LIABILITY-AND-EQUITY> 12,878,453
<SALES> 11,465,144
<TOTAL-REVENUES> 11,622,211
<CGS> 6,775,141
<TOTAL-COSTS> 6,775,141
<OTHER-EXPENSES> 3,040,875
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 126,907
<INCOME-PRETAX> 1,679,288
<INCOME-TAX> 394,811
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