SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 28, 1999
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ANDREA ELECTRONICS CORPORATION
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(Exact Name of Registrant as Specified in Charter)
New York 1-4324 11-0482020
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
45 Melville Park Road, Melville, New York 11747
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 719-1800
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On October 28, 1999, Andrea Electronics Corporation (the "Registrant")
released financial information with respect to the three and nine month periods
ended September 30, 1999. A copy of this press release containing such
financial information is attached as Exhibit 99.1 to this Report.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits:
Exhibit
Number Description
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99.1 Press Release dated October 28, 1999.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: October 28, 1999 ANDREA ELECTRONICS CORPORATION
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(Registrant)
/s/ Patrick D. Pilch
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Patrick D. Pilch
Executive Vice President,
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
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99.1 Press Release dated June 22, 1999.
Exhibit 99.1
ANDREA ELECTRONICS CORPORATION ANNOUNCES THIRD QUARTER 1999 RESULTS
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Melville, New York, October 28, 1999 - Andrea Electronics Corporation
(Amex: AND) announced today that net revenues for the three months ended
September 30, 1999 approximated $4.3 million, versus $5.3 million in the same
period in 1998. Net loss for the three months ended September 30, 1999 was
approximately $1.7 million, or $0.13 per common share on a diluted basis,
compared to a net loss of approximately $1.7 million, or $0.15 per common
share on a diluted basis, for the three months ended September 30, 1998. For
the nine months ended September 30, 1999, the Company reported net revenues of
approximately $13.3 million, compared to $14.2 million in the first nine
months of 1998. For the nine months ended September 30, 1999, the Company
reported a net loss of approximately $5.2 million, or $0.40 per common share
on a diluted basis, compared to a net loss of $3.1 million, or $0.31 per
common share on a diluted basis, for the nine months ended September 30, 1998.
Included in the $3.1 million net loss of for the first nine months of 1998 was
a $1.8 million net gain from the sale of the Company's then primary operating
facility.
The principal factors that contributed to the $1.7 million loss for the
three months ended September 30, 1999 continue to be lower price/lower margin
sales of PC headsets to the Company's original equipment manufacturer (OEM)
customers, significant investments in research and development activities
primarily associated with the Company's efforts in developing digital audio
technologies, goodwill amortization expense, promotional/advertising
activities, expenses associated with creating and maintaining strategic
alliances and significant operating expenses related to marketing the
Company's digital signal processing (DSP) technologies.
During the three months ended September 30, 1999, research and development
expenses increased approximately 102% over the same period in 1998. For the
nine months ended September 30, 1999, research and development expenses
increased 83% over the first nine months of 1998. These significant increases
are due to the Company's continuing efforts to develop its DSP technologies,
including patented and patent-pending DSDA(TM), DFTA(TM), PureAudio(TM),
SuperBeam(TM), EchoStop(TM) and USB-PCA.
During the three months ended September 30, 1999, general, administrative
and selling expenses decreased approximately 30% over the same period in 1998.
For the nine months ended September 30, 1999, general, administrative and
selling expenses decreased 22% over the first nine months of 1998. These
decreases are primarily attributable to cost reduction efforts and, to a
lesser extent, a reallocation of resources to research and development
activities.
"This is an exciting time for Andrea Electronics as we continue to create
strategic alliances and expand our portfolio of digital array audio input
technologies," said Christopher P. Sauvigne, President and Chief Operating
Officer of Andrea Electronics Corporation. "Although we do not expect to
achieve our goal of profitability for the fourth quarter of 1999, we believe
our continued investments in our technologies and strategic alliances will
enhance long-term shareholder value."
ANDREA DESKTOP ARRAY DA-400 MICROPHONE ACHIEVES MILESTONE
IBM Corporation ("IBM") has added the Andrea Electronics' Digital Signal
Processor (DSP)-based Desktop Array(TM) DA-400 microphone, with newly
developed SuperBeam(TM) software technology, to its list of approved
microphones for use with its ViaVoice(R) Millennium continuous dictation
products. Specifically, IBM has tested for compatibility and approved the
Array microphone as a far-field microphone solution for use in text dictation
in quiet and normal office environments. In higher noise environments, IBM
recommends close talking, noise canceling microphones.
"Today, we are pleased to announce that IBM has added Andrea's Desktop
Array DA-400 microphone to their approved microphone list for use with its
ViaVoice Millennium continuous speech dictation products and we look forward
to the opportunity to offer this revolutionary interface to IBM's customers,"
said Douglas J. Andrea, Co-Chairman and Co-Chief Executive Officer of Andrea
Electronics Corporation.
KEY THIRD QUARTER 1999 EVENTS
-- Andrea Electronics Unveils Pentium(R) Processor-based Andrea USB
Microphone Array (DSDA(TM)) at 1999 Intel Developers Forum;
-- Xybernaut Corporation Selects Andrea Electronics Headsets To Be
Incorporated In the Xybernaut(R) Mobile Assistant(R) IV;
-- John R. Larkin Elected To Andrea Electronics' Board of Directors;
-- ViA, Inc. Endorses Andrea Electronics' Universal Serial Bus (USB) Full
Duplex Audio Technology
KEY ANNOUNCEMENTS MADE FOLLOWING THIRD QUARTER 1999
-- Andrea Electronics Launches New DSP-based Desktop Array(TM) DA 400 with
SuperBeam(TM) Technology for Continuous Speech Recognition;
-- Andrea Electronics Announces Joint Venture Agreement with J. D'Addario
& Co., Inc.;
-- Andrea Electronics Introduces Apple(R) iMac(TM)-Compatible Headset
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 Active Noise
Reduction (ANR READY (R)) earphone, Active Noise Cancellation (ANC) near-field
microphone, patented Digital Super Directional Array (DSDA(TM)) and
patent-pending Directional Finding and Tracking Array (DFTA(TM)) 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. OEM and software publisher customers and strategic partners of Andrea
Electronics' include: IBM Corporation, Intel Corporation, Clarion Corporation
of America, Microsoft Corp., Lernout & Hauspie, AVR Communications, Lotus
Development Corporation, Conversational Computing Corporation, Mpath,
Net2Phone, ILINC and iSight, among others.
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; and the Company's continuing ability to enter and maintain
collaborative relationships with other manufacturers, software authoring and
publishing companies, and distributors. 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 Anti-Noise," "ANR Ready," "DSDA," DSDA-PRO" and "DFTA" are
trademarks of Andrea Electronics Corporation or an Andrea Electronics
Corporation subsidiary. Visit Andrea Electronics' website at
http://www.AndreaElectronics.com.
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ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS September 30, December 31,
1999 1998
(unaudited) (audited)
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CURRENT ASSETS:
Cash and cash equivalents $9,348,688 $5,437,423
Accounts receivable, net of allowance
for doubtful accounts of $202,251 4,243,275 4,867,782
Inventories, net 7,647,839 8,014,323
Prepaid expenses and other current assets 239,179 498,662
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Total current assets 21,478,981 18,818,190
PROPERTY, PLANT AND EQUIPMENT, net 2,114,020 1,919,966
DEFERRED INCOME TAXES 1,806,615 1,806,615
OTHER ASSETS 2,022,008 1,751,501
GOODWILL 25,005,825 26,385,668
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Total assets $52,427,449 $50,681,940
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $2,335,399 $2,221,912
Other current liabilities 1,449,191 1,745,041
Current portion of long term debt 505,000 514,121
Convertible Notes 1,477,616 --
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Total current liabilities 5,767,206 4,481,074
LONG TERM DEBT 713,327 1,126,390
CONVERTIBLE NOTES, net -- 1,455,231
OTHER LIABILITIES -- 40,345
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Total liabilities 6,480,533 7,103,040
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SERIES B REDEEMABLE CONVERTIBLE PREFERRED
STOCK, $.01 par value; 750 and 0 shares
issued and outstanding, respectively 7,170,523 --
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SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value;
authorized: 5,000,000 shares -- --
Common stock, $.50 par value;
authorized: 25,000,000 shares; issued
and outstanding: 13,242,538 and
13,210,038 shares, respectively 6,621,269 6,605,019
Additional paid-in capital 42,991,330 42,548,399
Accumulated deficit (10,836,206) (5,574,518)
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Total shareholders' equity 38,776,393 43,578,900
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Total liabilities and shareholders' equity $52,427,449 $50,681,940
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<PAGE>
ANDREA ELECTRONICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
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NET SALES $4,326,098 $5,341,719 $13,314,312 $14,187,148
COST OF SALES 2,953,516 3,466,280 9,244,906 9,040,435
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Gross Profit 1,372,582 1,875,439 4,069,406 5,146,713
RESEARCH AND
DEVELOPMENT EXPENSES 747,848 369,806 2,494,294 1,359,905
GENERAL,
ADMINISTRATIVE AND
SELLING EXPENSES 2,306,481 3,302,466 6,691,252 8,592,915
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Loss from
operations (1,681,747) (1,796,833) (5,116,140) (4,806,107)
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OTHER INCOME (EXPENSE)
Interest income 107,731 113,554 181,481 186,870
Interest expense (82,070) (326,816) (224,407) (436,935)
Rent and
miscellaneous income -- -- -- 1,924,967
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25,661 (213,262) (42,926) 1,674,902
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LOSS BEFORE
INCOME TAXES (1,656,086) (2,010,095) (5,159,066) (3,131,205)
PROVISION FOR
INCOME TAXES -- (329,043) -- --
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NET LOSS (1,656,086) $(1,681,052) $(5,159,066) $(3,131,205)
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PREFERRED
STOCK DIVIDENDS 94,097 -- 102,622 --
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NET LOSS APPLICABLE
TO COMMON
SHAREHOLDERS $(1,750,183) $(1,681,052) $(5,261,688) $(3,131,205)
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PER SHARE INFORMATION:
Net Loss Applicable to Common Shareholders:
Basic $(.13) $(.15) $(.40) $ (.31)
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Diluted $(.13) $(.15) $(.40) $ (.31)
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Shares used in computing net loss per share:
Basic 13,235,908 11,105,730 13,225,185 10,130,198
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Diluted 13,235,908 11,105,730 13,225,185 10,130,198
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