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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
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Andrea Electronics Corporation
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(Name of Registrant as Specified in Its Charter)
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AT ANDREA ELECTRONICS
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Corisa L. Guiffre, Chief Financial Officer
(631) 719-1800
(800) 707-5779
FOR IMMEDIATE RELEASE
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May 6, 2004
ANDREA ELECTRONICS ANNOUNCES DATE FOR ANNUAL MEETING OF STOCKHOLDERS
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SHAREHOLDERS ARE ENCOURAGED TO SIGN AND RETURN PROXY CARDS PROMPTLY
MELVILLE, NEW YORK, MAY 6, 2004 - Andrea Electronics Corporation (AMEX: AND)
announced today that its annual meeting of stockholders would be held on Friday,
May 21, 2004 at 2:00 p.m. local time at the Company's main office in Melville,
Long Island, New York. Holders of record as of the close of business on April
20, 2004 are entitled to receive notice of and to vote at the Annual Meeting of
Stockholders. Andrea's annual meeting notice, proxy statement and 2003 Annual
Report were mailed to shareholders of record on April 29, 2004.
At the annual meeting, Andrea's stockholders will consider and act on the
following:
1) The election of eight directors to hold office until the next annual
meeting of shareholders;
2) The ratification of the selection of Marcum & Kliegman LLP as the
Company's independent accountants for the year ending December 31,
2004;
3) The ratification and approval of the issuance of 1,250,000 shares of
Series D Convertible Preferred Stock and related warrants, including
the terms and provisions of the Series D Convertible Preferred Stock
providing for adjustment to the number of shares of common stock into
which a share of Series D Convertible Preferred Stock may be
converted;
4) The approval of the issuance of an additional 1,250,000 shares of
Series D Convertible Preferred Stock and related warrants;
5) The approval of an amendment to Andrea Electronics' restated
certificate of incorporation, as amended, to eliminate a limitation
on the conversion of the Series C Convertible Preferred Stock; and
6) Such other business as may properly come before the meeting.
The Board of Directors recommends a vote "FOR" each of the nominees for
director, "FOR" ratification of Marcum & Kliegman LLP as independent auditors,
"FOR" the issuance of 1,250,000 shares of Series D Convertible Preferred Stock
and the related warrants, including the terms and provisions of the Series D
Convertible Preferred Stock providing for adjustment to the number of shares of
common stock into which a share of Series D Convertible Preferred Stock may be
converted, "FOR" the issuance of an additional 1,250,000 shares of Series D
Convertible Preferred Stock and the related warrants; and "FOR" the amendment to
Andrea Electronics' certificate of incorporation, as amended, to eliminate a
limitation on the conversion of the Series C Convertible Preferred Stock.
Andrea's stockholders are encouraged to sign and return their proxy cards
promptly.
Andrea's 2003 Annual Report includes a President's letter to shareholders which
is reprinted as follows:
Dear Shareholders,
As many of you are aware, the Board of Directors of Andrea Electronics
Corporation appointed me to the position of President and Chief Executive
Officer of the Company in August 2003. I invested the first few months with
Andrea gaining a thorough understand of the Company's history, namely where
Andrea came from, where it now finds itself and what the expectations were for
its future. During this time, the Company's products and markets were reviewed
and an in depth analysis was conducted of the Company's overall operations and
finance. Once this was accomplished, a number of strategic initiatives began to
emerge with an eye towards eventually achieving desirable levels of performance.
In November 2003, I outlined four key strategies that revolved around balance
sheet restructurings, asset and technology rationalizations, further expense
reductions and broader and deeper sales channel penetrations. As reported in
February 2004, the first initiative was successfully accomplished when a group
of new investors converted a restrictive mezzanine position in the Company into
permanent equity. This "debt" elimination on our balance sheet immediately paved
the way for a fresh infusion of capital, which took the form of $1.25 million of
immediate financing for Andrea and another $1.25 million upon shareholder
approval and registration.
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In March 2004, we reported that the second key strategy was completed through
the transformation and streamlining of our Lamar Signal Processing operation in
Israel into an engineering and customer support center. The Company needed to
place less emphasis on research and development activities, since much of
Andrea's core technology is already embedded in our portfolio of products, and
needs to place heightened emphasis on sales and marketing in order to further
expand revenues.
Full year revenues in 2003 increased 30% as compared to 2002 and full year
combined research and development costs and general, administrative and selling
expenses in 2003 decreased 21% as compared to 2002. While these results are
encouraging, further top line revenue increases and continued expense reductions
remain key strategic initiatives for the Company. Our revenue is improving and
our losses are narrowing, especially as evidenced by our reported financial
performance in the past few quarters, but much work still needs to be done
especially in the top line revenue generating area.
Andrea's core competency is in headsets and it is my intention to exploit that
potential as much as possible. An increasing number of businesses are utilizing
distance learning and on-line collaboration software, which uses our noise
canceling headset products. In addition, the Company still maintains a healthy
and vibrant portfolio of audio software products that will continue to be
marketed, especially in the personal computing market. Our patented technologies
and algorithms, which include ANR, PureAudio, DSDA, DFTA and EchoStop, continue
to draw attention from the marketplace in a variety of current uses and
potential future applications.
Andrea Electronics celebrates its 70th year in business in 2004. The Company has
an illustrious history and it is one in which I am now proud to be a part of. In
my short tenure here at the Company, I have found a very dedicated staff of
employees that share a common vision of what Andrea can again become. I enjoy
working along side each of these individuals and I am cautiously optimistic
about the Company's prospects for the future. I remain very appreciative of the
continued support of Andrea's Board of Directors, stockholders and especially
its customers as we continue to strive towards a more prosperous future for our
Company.
Very Truly Yours,
/s/Paul E. Donofrio
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Paul E. Donofrio
President and Chief Executive Officer
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(R)), patent-pending Directional Finding and Tracking
Array (DFTA(R)), patented PureAudio(R), 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 1-800-707-5779.
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-KSB AND IN THE COMPANY'S
ANNUAL REPORT TO SHAREHOLDERS, AND IN DOCUMENTS SUBSEQUENTLY FILED BY THE
COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.