Andrea Electronics Corporation Investor Conference Call

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Andrea Electronics Corp.

• Andrea Electronics CorporationInvestor
  Conference Call
• March 1, 2001

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Andrea Electronics Corp.
I. Introduction of Participants

• 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.
Conference Call Agenda
A. Q42000 and Year End
I. Introduction of Participants/Review
Agenda II. Forward Looking Statement III. Financia
l Analysis IV. Overview of Significant Q42000
Events V. Overview of Post Q42000 Significant
Events VI. Comparison of Year-to-Date
Achievements with Vision 2000 VII. Observations
Regarding Strategic Alliances
B. Goals for 2001

• I. Minimize Need for External Capital Sources
• II. Focus on Execution of Phase II Strategic
  Alliances
• Other
• Investment Highlights/Conclusions

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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 2 over Q499, and
  decreased 9 over year-end 1999
• Gross profit margin declined 2.9 over year-end
  1999
• Research and development expenses increased 19
  and 40, over Q499 and year-end 1999,
  respectively
• Selling, General Administrative Expenses
  increased 19 and 4 over Q499 and year-end 1999,
  respectively

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Andrea Electronics Corp.
III. Financial Analysis (Contd)

• Balance Sheet Discussion Points
• Cash and cash equivalents of approximately 9
  million at year-end 2000
• Current Ratio of approximately 5 to 1 for the
  year-end 2000
• Working Capital of approximately 15 million for
  the year-end 2000
• additional funding resources to be explored
  during the second half of 2001
• Series B Convertible Preferred Stock 3 total
  conversions to date total aggregate preferred
  shares issued approximates 400.

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Andrea Electronics Corp.
IV. Overview of Significant Q4 2000 Events

• New Revenue-Generating Strategic Alliances
• - Far Field Digital Audio Technologies
• BMW purchased Andreas Microphone Array for
  use in Z8 Sports Car
• Headset Products
• Andrea endorsed by Centra to provide PC audio
  product to broad base of Fortune 1000 customers

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Andrea Electronics Corp.
IV. Overview of Significant Q4 2000 Events
(Contd)

• Technology Developments
• Andrea Microphone Array selected by Ford for
  use in demonstration vehicles at Convergence 2000
• Andrea develops Audio Technology for use with
  Microsofts Speech Toolkit Version 5.0
• Andrea announces ExactVoice to its growing
  portfolio of Digital Audio Technologies
• Other
• Andrea announces 7.5 Million Equity Private
  Placement
• Andrea announces new, world-class sales and
  marketing team

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Andrea Electronics Corp.
V. Overview of Post Q4 2000 Significant Events

• Technology Developments
• - Andrea introduces second generation Digital
  Auto Array at 2001 CES

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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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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievements with
Vision 2000 (Contd)
Continued Creation of Strategic Alliances
Digital Audio Technologies
Phase I Assessment Estimated Timeframe 1-6
Months Phase II Integration/Business
Relationship Estimated Timeframe 6-12
Months (D) Dormant (A) - Announced
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Andrea Electronics Corp.
VI. Comparison of Year-to-Date Achievements with
Vision 2000 (Contd)
Observations Regarding Strategic Alliances

• Significant interest in Digital Audio
  Technologies across high growth market spaces

• 40 Phase I discussions, in 11 different market
  segments, commenced during 2000

• 13 of the 40 initiated Phase I discussions
  moved into Phase II representing a 32.5
• advancement rate

• Of 13 strategic alliances that entered into
  Phase II, 31 have been concluded, 54
• remain active and only 15 have been abandoned.
  This represents an 85 advance
• rate for Phase II.

• Automotive and automotive related most active
  market segments as they represented
• 23 of Phase I activity, 31 of Phase II activity
  and 50 of announced 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

Initial overall goals 3 Revised goal as of
November (Q3 Call) 5 Actual strategic alliances
announced 4

• Results reflect achievement of 133 and 80
• of initial goal and latest revised goal,
  respectively

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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 second half 2001/2002
• As projected, significant investment in
  Research Development (4.8 Million)
• As projected, Digital Audio Technologies effort
  generated overall financial
• statement loss

B. OEM Business

• Retain position as market leader in OEM headset
  sales

• - Continued IBM wins (3rd Quarter USB products)
• Radio Shack relationship
• Centra Strategic Alliance
• Overall headset business was 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 (ACS)

• As projected, revised product line and
  delivered units capable of
• accepting Digital Audio Technologies
• As projected, ACS had small loss related to
  research
• and development associated with newly designed
  products

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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

• Initially projected 5 decrease in S,GA over
  1999 and later revised projection to state S,GA
  actually would be equal to 1999
• Actual 2000 S,GA is 4 higher than 1999 S,GA
  as a result of
• Increased travel associated with strategic
  alliances
• Increased sales/marketing salaries

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

• Address Financing Requirement
• Consummated 7.5 Million convertible preferred
  stock financing
• Although ongoing in-depth discussions regarding
  a specific strategic investment was not
  consummated, we continue with such efforts
• Analyst Coverage Update
• Institutional ownership 8
• Insider buying or selling 4th Quarter 2000
• - No Sales By Insiders
• - Purchases by John Larkin, Rich Maue
  and Chris Sauvigne

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Andrea Electronics Corp.
B. Goals for 2001

• I. Minimize Need for External Capital
• II. Execute Revenue Generating Phase II
• Digital Audio Technology Strategic Alliances
• Other
• Investment Highlights/Conclusions

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Andrea Electronics Corp.
I. Minimize Need for External Capital Sources

• Predictable Top Line Revenue Growth

• Refocus on Bricks Mortar Business
• (Headsets/Aircraft Communication Systems)

• Improved/Expanded Sales Force
• Improved/Expanded Product Line
• Targeted Sales Growth 15-25

• Cost Reduction Program

• Payroll - Reduction In Force
• Reduction in Executive Cash Compensation
• Detailed Review of Operating Expenses
• 2001 Goal to Achieve 4M in aggregate cost
  reductions

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Andrea Electronics Corp.
II. Focus on Execution of Phase II Strategic
Alliances

• Previously provided detail on all strategic
  alliance developments
• for our Digital Audio Technologies
• Key is no longer to generate interest in
  technology but to close
• Phase II discussions
• For 2001 focus on providing more detail
  regarding Phase II
• discussions

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Andrea Electronics Corp.
II. Focus on Execution of Phase II Strategic
Alliances
Status of Phase II Strategic Alliances as of
March 1, 2001
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Andrea Electronics Corp.
II. Focus on Executive of Phase II Strategic
Alliances
Status of Phase II Strategic Alliances as of
March 1, 2001
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Andrea Electronics Corp.
III. Other

• Continue process for solidifying a strategic
  investor
• Process of interviewing investment bank to
  evaluate all alternatives
• to maximize shareholder value
• Goal is to engage firm Q101

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Andrea Electronics Corp.
IV. Investment Highlights/Conclusions

• Comprehensive, flexible portfolio of Digital
  Audio Technologies which have been selected by
  industry leaders such as BMW, Ford, IBM and
  Donnelly
• In excess of 20 ongoing strategic alliance
  discussions, several of which are near
  consummation or completion in emerging high
  growth markets
• Implemented significant cost reductions and
  targeted sales projections to eliminate the need
  for external capital
• Executive and senior management committed to
  Companys future as evidenced by open market
  purchases as well as voluntary cash compensation
  reductions
• Companys stock is trading near historic 5-year
  low
• CONCLUSION Stock is grossly undervalued