Andrea Electronics Corporation Investor Conference Call August 3, 2000

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Andrea Electronics CorporationInvestor
Conference CallAugust 3, 2000
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Q2 2000 CONFERENCE CALL AGENDA
I. Introduction of Participants/Review
Agenda II. Forward Looking Statement III. Financia
l Analysis IV. Overview of Significant Q2 2000
Events V. Comparison of Year-to-Date Achievements
with Vision 2000 VI. Summary - Why Continue to
Invest in Andrea
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I. Introduction of Participants/Review Agenda

• Management
• Douglas Andrea, Co-Chairman Co-Chief
  Executive Officer
• Christopher Sauvigne, President Chief
  Operating Officer and
• Richard Maue, Chief Financial Officer and
  Corporate Secretary
• www.Vcall.com - Slide Presentation and Audio
  Replay Available for 90 Days

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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 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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III. Financial Analysis

• Income Statement Discussion Points
• Net revenue decreased 26 over Q299, and
  remained flat over Q12000
• Gross profit margin declined 5.2 of sales over
  Q299, and remained flat over Q12000
• Research Development expenses increased 31
  over Q299, and remained flat over Q12000
• Selling General Administrative expenses
  remained flat over both Q299 and Q12000.

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III. Financial Analysis - contd

• Balance Sheet Discussion Points
• Cash cash equivalents of approximately 4.1
  million at June 30, 2000
• Current Ratio of approximately 5 to 1
• Working Capital of approximately 12 million
• Additional funding resources to be solidified
  during the second half of 2000
• Series B Convertible Preferred Stock - no
  further conversions to date.

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IV. Overview of Significant Q2 2000 Events

• New Revenue-Generating Strategic Alliances
• Headset Products
• IBM Purchases and Ships New NC-7100 USB Headset
  for ViaVoice for Mac, Enhanced Edition
• Digital Audio Technologies
• IBM Purchases and Bundles DA-400 Desktop Array
  Microphone with ViaVoice Pro Elite
• New Strategic Alliances
• Andrea Electronics and ScreenFriends Execute
  Letter of Intent for License and Co-Marketing
  Agreement
• Technology Developments/Events/Awards
• Andrea Demonstrates Microphone Technologies at
  Communications Solutions Expo 2000
• Andrea Electronics DSDA Microphone Technology
  Wins Long Island Software Award
• Andrea Electronics Introduces Second Generation
  Desktop Array -- DA-400 2.0 at PC Expo 2000

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V. Comparison of Year-to-Date Achievements
with Vision 2000

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

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V. Comparison of Year-to-Date Achievements
with Vision 2000 - contd

• Continued Creation of Strategic Alliances
• Overall Goal for New Year 2000 Strategic
  Alliances
• Initial Goal 3
• Achievements as of May 2000 3
• Revised Goal as of May 2000 6
• Revised Goal as of August 2000 6
• Maintain Outlook for
• 100 Increase in Prospective New Strategic
  Alliances

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V. Comparison of Year-to-Date Achievements
with Vision 2000 - contd

• Continued Creation of Strategic Alliances -
  contd

Achievements Achievements Achievements as
of Feb. 3, 2000 as of May 4, 2000 as of August
4, 2000 Number of Number of Number
of Market Alliances Phase Alliances
Phase Alliances Phase Automotive
3 I 6 I 6 I,II Cellular 1 I
1 I 1 I Sound Cards 2 II 1
II 1 II PDA Companies 2 I 2
I 2 I Chip Manufacturers 2 I 4 I
4 I Videoconferencing 1 I 1 I
2 I Aircraft 1 II 1 II 1
II Speech Recognition 3 I, II 2 I 2
I Internet Telephony 3 I, II 4 I, II
4 I,II Hardware Manufacturers 0 - 2
I 4 I Total 18 24 27 Less Alliances
Announced lt3gt 0 0 Potential Alliances
Remaining 15 24 27 Phase I -
Assessment Phase II - Integration/Business
Relationship
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V. Comparison of Year-to-Date Achievements
with Vision 2000 - contd

• Continued Creation of Strategic Alliances -
  contd
• Observations
• Overall - 12.5 and 80 increase in new
  strategic alliances over first quarter and Vision
  2000, respectively
• Automotive
• Significant activity
• Favorable results
• Movement to Phase II
• Cautious optimism
• Videoconferencing
• PC camera market is exploding and represents a
  significant far-field microphone opportunity
• Hardware Manufacturers
• Speech applications are evolving
• Internet devices
• Need for far-field microphone technology

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V. Comparison of Year-to-Date Achievements
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 and Development related to
  integration activities for specific market
  applications.
• Digital audio technology effort is expected to
  generate overall financial statement losses.
• B. OEM Business
• Retain position as market leader in OEM headset
  sales.
• - Speech recognition companies
• IBMs primary provider
• Overall headset business is expected to remain
  profitable.
• .

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V. Comparison of Year-to-Date Achievements
with Vision 2000 - contd

• Optimize Financial Performance - contd
• C. Aircraft Communication Systems
• Process of reengineering product line with
  capability of accepting Digital Audio
  Technologies.
• Overall segment is expected to be profitable.
• D. Continued Streamlining of Operations
• Expect to reduce SGA expenses by approximately
  5 over 1999 revised to reflect increases in
  anticipated travel costs for the remainder of
  2000
• On a comparative period basis with calendar
  1999, we reduced SGA expenses by approximately
  3 for the first half of 2000.

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V. Comparison of Year-to-Date Achievements
with Vision 2000 - contd

• Other

• Address Financing Requirements

• - Continue to explore additional sources of
  capital with
• Strategic investor
• Existing capital providers
• Secondary market offering

• Analyst Coverage Update

• Investec Ernst Co. - June 21, 2000 -
  Reiterated Buy Rating
• Dain Rauscher Wessels - May 5, 2000 -
  Reiterated Buy Rating
• Continue to explore analyst coverage with
• appropriate sell-side and investment banking
  firms with
• the goal of obtaining future coverage

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V. Comparison of Year-to-Date Achievements
with Vision 2000 - contd

• Other - contd

• Institutional Ownership

• Institutional ownership as of March 31, 2000 -
  7.1
• Continue to seek to grow institutional
  ownership and diversify
• shareholder base

• Insider Buying or Selling - Second Quarter 2000

• No Sales by Executive Management
• Purchases by Executive Management and Board
  Member

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VI. Summary Why Continue to Invest in Andrea?

• Audio input applications growth is exponential
• Right markets/right time
• Andrea possesses leading-edge, flexible
  technology
• Right technology (embeddable and scalable)
• Comprehensive portfolio of digital audio
  software solutions for numerous, specific
  applications
• Strategic alliances with industry leaders
• Right partners

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