Andrea Electronics Corporation

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Andrea Electronics Corporation Investor
Conference Call November 12, 2002
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Conference Call Agenda I. Introduction of
Participants II. Forward Looking
Statement III. Financial Analysis IV. Overview
of Post Q2 2002 Significant Events V. Update of
Targeted Goals for 2002 VI. Questions
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I. Introduction of Participants
Christopher P. Sauvigne, President and Chief
Executive Officer Richard A. Maue,
Executive Vice President, Chief Financial
Officer and Corporate Secretary
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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 and products are accepted in the
marketplace the competitiveness of Andrea
Anti-Noise, DSDA, DFTA and other Andrea products
and technologies 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. 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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III. Financial Analysis

• Income Statement Discussion Points
• Net revenue decreased approximately 23 and
  53, over Q22002 and Q32001, respectively
• Gross profit margin increased approximately
  16of sales and 23 of sales, over Q22002 and
  Q32001, respectively
• Research and development expenses remained flat
  over Q22002 and increased approximately 14
  over Q32001
• Selling, general and administrative expenses
  decreased approximately 2
• and 34, over Q22002 and Q32001, respectively
• Non-cash charge of 1.8 million recorded to
  Provision for Income Taxes.

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III. Financial Analysis (cont.)

• Balance Sheet Discussion Points
• Cash and cash equivalents of approximately 4.7
  million at
• September 30, 2002
• Generated positive operating cash flow during
  the 2002 First Nine Months - entirely
  attributable to our agreements with Analog
  Devices, Inc.
• Current Ratio of approximately 1.6 at September
  30, 2002
• Working capital of approximately 3.5 million
• Summary of Aggregate Series B Conversions During
  Q3 2002
• September 2002 - 34 Preferred Shares
  converted into
• 926 thousand Common Shares

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IV. Overview of Significant Post Q2 2002
Events - Andrea Announces Promotion of
SoundMax SuperBeam Microphone with Intel
Desktop Boards
- Andrea launches Call Center Amplifiers at
2002 American Teleservices Association
Convention
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V. Update on Targeted Goals for 2002
Business Line Goal Update Overall Create
Strategic Alliances for enhanced - Ongoing
discussions continue distribution,
manufacturing, and significant progress made
in access to working capital telematics,
video conferencing and hardware
manufacturers Restructure outstanding -
Ongoing effort convertible preferred
stock Digital Audio Technologies Leverage
technology platform. Distribution - Ongoing
discussions continue channels provided by
Analog Devices in U.S., Asia and Europe -
Intel Channel Conference Maintain RD
spending to - RD spending on track retain DAT
portfolio advantage Anti-Noise Products Launch
call center products - Products launched
(Headsets) - Amplifier Box launched Q3
Aircraft Communication Maintain Prior Years -
Revenues behind target due to Systems Revenue
Base delayed government funding
Continue Integration of DAT - Discussions
continue
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VI. Questions / Answers