Andrea Electronics Corporation Investor Conference Call

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Andrea Electronics Corp.

• Andrea Electronics CorporationInvestor
  Conference Call
• November 2, 2000

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Andrea Electronics Corp.
I. Introduction of Participants

• Management

• Christopher P. Sauvigne, President Chief
  Operating Officer
• Richard A. Maue, Chief Financial Officer and
  Corporate Secretary

A Replay of Todays Conference Call Will Be
Available at www.AndreaElectronics.com
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Andrea Electronics Corp.
Q3 2000 Conference Call Agenda
I. Introduction of Participants/Review
Agenda II. Forward Looking Statement III. Financia
l Analysis IV. Overview of Significant Q3 2000
Events V. Overview of Post Q3 2000 Significant
Events VI. Comparison of Year-to-Date
Achievements with Vision 2000 VII. Summary Why
Continue to Invest in Andrea?
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Andrea Electronics Corp.
II. Forward Looking Statement
This presentation 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. 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.
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Andrea Electronics Corp.
III. Financial Analysis
Income Statement Discussion Points

• Net Revenue increased 23 over Q399, and
  increased 67 over Q22000
• Gross profit margin declined 2.6 of sales over
  Q399, and increased 3.5 of sales over Q22000
• Research and development expenses increased 67
  over Q399, and increased 15 over Q22000
• Selling, general and administrative expenses
  increased 4 over Q399, and increased 6 over
  Q22000

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Andrea Electronics Corp.
III. Financial Analysis (Contd)
Balance Sheet Discussion Points

• Cash and cash equivalents of approximately 3.5
  million at September 30, 2000
• Current Ratio of approximately 3.3 to 1 at
  September 30, 2000
• Working capital of approximately 10 million
• 7.5 million financing announced on October 12,
  2000
• Series B Convertible Preferred Stock - no
  further conversions to date.

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Andrea Electronics Corp.
III. Financial Analysis (Contd)
Subsequent Event

• 7.5 Private Placement of Series C Convertible
  Preferred Stock
• Pro-forma, for the effects of the Private
  Placement, as of September 30, 2000
• Cash and cash equivalents, approximately 11
  million
• Current Ratio - 5 to 1
• Working capital of approximately 17 million.

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Andrea Electronics Corp.
IV. Overview of Significant Q3 2000 Events

• New Revenue-Generating Strategic Alliances
• - Headset Products
• IBM purchases and ships new NC-7100
• USB headset for ViaVoice for MAC,
• Enhanced Edition
• IBM purchases and ships new USB Adapter for
• ViaVoice Windows Edition

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Andrea Electronics Corp.
IV. Overview of Significant Q3 2000 Events
(Contd)

• Technology Developments
• Andrea launches USB far-field array at Intel
  Developer Forum
• Andrea awarded patent for noise canceling
  acoustic improvement to a communication device
  (MicroAcoustics)
• Andrea announces new patent for Active Noise
  Reduction technologies

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Andrea Electronics Corp.
V. Overview of Post Q3 2000 Significant Events

• Technology Developments
• - Andrea microphone array selected by Ford for
  inclusion in demonstration vehicles at
  Convergence 2000
• - Andrea Electronics develops audio technology
  for use with Microsofts Speech Toolkit Version
  5.0
• Other
• - Andrea announces 7.5 million equity private
  placement
• - New, world-class sales and marketing team
• - Andrea Electronics endorsed by Centra to
  provide
• products to Fortune 1000 companies

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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievements with
Vision 2000

• Continued Creation of Strategic Alliances
• Optimize Financial Performance
• Other

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VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)
Continued Creation of Strategic Alliances
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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievements with
Vision 2000 (Contd)

• Continued Creation of Strategic Alliances
• - Overall Goal 3
• - Achievements to Date 3
• - Revised Goal as of August 6
• - Revised Goal as of November 5
• Reduce outlook from 100 increase in Year 2000
  New Strategic
• Alliances to a 67 increase in Year 2000 New
  Strategic Alliances

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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)

• Continued Creation of Strategic Alliances

Observations

• Overall 11.1 and 113 increase in new
  strategic
• alliances over second quarter and Vision 2000
• Automotive
• - Continued significant activity
• - Continued favorable results
• - Phase II update
• - Cautious optimism

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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)

• Continued Creation of Strategic Alliances

Observations

• Video Conferencing

- 100 increase in Phase I activity

• Hardware Manufacturers

- 50 increase in Phase I activity - Internet
devices/monitor companies
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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)
Optimize Financial Performance
A. Digital Audio Technologies

• As projected, value creation cycle will delay
  significant revenue from new strategic
• Alliances at least until 2001
• As projected, continued significant investment
  in Research Development
• Digital audio technology effort is expected to
  generate overall financial statement loss

B. OEM Business

• Retain position as market leader in OEM headset
  sales

- Continued IBM wins - Overall headset business
is expected to be profitable

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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)
Optimize Financial Performance (Contd)
C. Aircraft Communication Systems

• Process of re-engineering product line with
  capability of
• accepting Digital Audio Technologies
• As projected, our target to deliver units is Q4
  of this year
• Revised projection overall segment not
  expected to be profitable due to increases in
  research and development expenses.

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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)
Optimize Financial Performance (Contd)
D. Continued Streamlining of Operations

• Initial projection reduce SGA expenses by
  approximately 5 over 1999
• Revised projection anticipate overall SGA to
  remain consistent with 1999
• Based upon
• Increase in travel expenses associated with
  strategic alliance efforts
• Increase in salaries associated with additions
  to Sales and Marketing team both
• Offset by ongoing cost-reduction efforts.
• On a comparative period basis with first nine
  months of 1999, SGA expenses have been reduced
  by 1.

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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)
Other

• Address Financing Requirement
• As indicated, consummated 7.5 million
  convertible
• preferred stock financing
• In-depth discussions regarding strategic
  investment continue
• Analyst Coverage Update
• Investec Ernst Co. August 4 - Raised
  recommendation to a Strong Buy rating
• Dain Rauscher Wessels August 4 - Reiterated
  Buy rating
• Continue to explore analyst coverage with
  appropriate sell side firms

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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievement with
Vision 2000 (Contd)
Other (Contd)

• Institutional ownership as of September 30, 2000
  - 7.5
• Continue to seek to grow institutional ownership
  and diversify shareholder base

• Insider Buying or Selling - Third Quarter 2000
• - No activity to report

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Andrea Electronics Corp.
VII. Summary Why Continue to Invest in Andrea?

• Overview
• - Right Market/Right Time
• - Leading Edge/Flexible Technology
• - Right Strategic Partners

• Specific Comments
• - Stock price near bottom of 52-week range -
  undervalued
• - Strategic alliance opportunities are
  progressing and increasing in number
• - World-class sales/marketing team in place
• - Significant revenue growth - up 67 on
  sequential basis