Chester & all: some details on AND.
The co. is an early-stage affair dealing with anti-noise technology.
Latest revenues were sequentially down a lot. They burn cash. Their
cash was about gone ($3 M cash in March, $1.7 M per quarter burn from
operations), so they recently did the $10 M discounted convert deal
with a single institution. This new cash should last them a while
based on present burn rates, so their liquidity situation is okay for
now. The private placement represents 11% of market cap at the
present stock price. There's no 8-k or S-3 yet for the deal, so full
details aren't available, but overall the deal looks fairly average
for discounted converts, based on what the news release says.
At the bottom you will find a MarketGuide report for AND.
A few odds and end DD stuff I noticed about the co.:
Vicker's shows significant insider sales this year by many officers.
The DEF-14 shows 3 directors with the last name "Andrea". That raises
the flag that Kathryn Staley mentions in her book.
A more recent preliminary proxy shows that mgmt. requests
shareholders approve an increase in shares out, both common and
preferred (presumably because they anticipate needing to do more
private placements).
Telescan shows the RS is quite low. I did a ProSearch screeen and
found that the 18-week stock price performance is amongst the lowest
in a universe of >$5 small-cap stocks with negative cashflow and low
cash positions. In this universe, only KNSY was worse, and ZITL was a
close third.
This stock is held primarily by individuals:
MarketGuide shows 5.7% of shares are held by institutions.
Zacks shows no analyst coverage.
A multi-year chart shows the stock is extremely volatile, and prone
to extreme upward spikes, thereby posing a risk shorts should know
about.
The latest earnings news release (which was a disappointment) shows
inventory up and AR flat, even though revenues are down, suggesting
room for future disapppointments.
R&D spending levels look low to me for an early-stage tech stock. R&D
runs about $1 M per year, vs. about 4X that much for the GS&A
expenses. The market cap exceeds the cumulative R&D expenses by a
large factor (at least an order of magnitude).
Here's the MG report:
Andrea Electronics Corp. Ticker: AND CUSIP: 034393108
BRIEF
Andrea Electronics designs, develops and produces
electronic audio systems, intercommunication systems,
Anti-Noise products for voice-activated computing and
telecommunications, and related electronic equipment. For
the three months ended 3/98, sales fell 17% to $4.5M. Net
income fell 28% to $436K. Revenues reflect lower anti-noise
product sales and price erosion. Earnings reflect higher
marketing & selling expenses for Anti-Noise product lines.
RATIOS AND STATISTICS AT A GLANCE
(As of 07/24/98)
Price $ 12.25 Avg Monthly Vol. 1.905 Mil.
52W High $ 34.25 Avg Daily Vol. 0.145 Mil.
52W Low $ 6.31Beta -0.20
TTM EPS $ 0.38 Ann. Div. Rate $ 0.00
P/E 32.49 Div. Yield 0.00 %
5 Yr High P/E NA 5 Yr Avg Yield 0.00 %
5 Yr Low P/E NA Last Dividend Decl. $ NA
Last Div Ex-Date NA
Last Div Pay Date NA
INSTITUTIONAL OWNERSHIP# of Institutions 19
% Shares Out. Owned 5.72 %3 Month Net purchases -0.11 Mil.
COMPANY COMPARISON
TO THE TELECOMMUNICATIONS AND S&P 500 AGGREGATES
COMPANY INDUSTRY % S&P 500
PROFITABILITY RATIOS:
Net Profit Margin 12.72 7.05 180.3% 10.15
Return on Equity 25.82 11.22 230.1% 22.13
Interest Coverage 8.41 7.13 118.0% 10.09
VALUATION RATIOS:
P/E Ratio 32.49 34.41 94.4% 29.78
Dividend Yield 0.00 1.30 0.0% 1.38
Price to Tangible Book 6.47 9.67 66.9% 10.72
Price to Book 6.47 7.51 86.2% 7.81
Price to Free Cash Flow -27.84 36.43 -76.4% 45.47
FINANCIAL STRENGTH RATIOS:
Current Ratio 6.10 1.39 438.8% 1.48
LT Debt to Equity 0.03 0.80 3.1% 0.78
Total Debt to Equity 0.03 1.01 2.5% 1.04
GROWTH STATISTICS:
3 Yr Rev Growth 100.52 19.22 523.0% 15.00
3 Yr EPS Growth NM 10.96 NM% 16.16
3 Yr Div Growth NM 12.25 NM% 11.07
Reinvestment Rate 100.00 65.71 152.2% 67.55
EQUITY
Common Stock $.50 Par, 5/98, 15M auth., 11,070,675 issd.
Insiders control approx. 20%. Public Offering 6/61, 13,600
shares @ $22 by Hayden Stone & Co. (As of 12/97) LT debt:
$1.2M @ 10%. 9/97, 2-for-1 stock split; 6/93, 5-for-1 stocksplit.
ANALYST FOOTNOTES
FY'94 Q's and FY'95 B/S are reclassified. 5/98, Company
acquiried Lamar Signal Processing for 1.8M shares of
restricted Commmon and $3M in cash.
HISTORICAL QUARTERLY RESULTS
REVENUE
(Thousands of U.S. Dollars)
1995 1996 1997 1998
1st Qtr MAR 1,287 1,750 5,384 4,475
2nd Qtr JUN 1,374 995 6,081
3rd Qtr SEP 1,403 2,745 7,211
4th Qtr DEC 1,377 3,754 7,754
EARNINGS PER SHARE
(U.S. Dollars per share)
1st Qtr MAR -0.025 -0.075 0.070 0.050
2nd Qtr JUN 0.000 -0.140 0.085
3rd Qtr SEP -0.080 0.040 0.170
4th Qtr DEC -0.100 0.130 0.070
SELECTED INCOME STATEMENT ITEMS
(Thousands of U.S. Dollars)
ANNUAL YEAR TO DATE
12 MONTHS 12 MONTHS 3 MONTHS 3 MONTHS
ENDING ENDING ENDING ENDING
12/31/96 12/31/97 03/31/97 03/31/98
Revenue 9,244 26,430 5,384 4,475
Operating Expenses 10,774 22,938 4,602 5,620
Operating Income -1,530 3,492 782 -1,145
Non-Operating Income 279 305 77 1,936
Non-Operating Expenses -293 -228 -67 -25
Income Before Taxes -1,544 3,569 792 766
Income Taxes -1,222 154 186 329
Income After Taxes -322 3,415 606 437
Adjustments to Income 0 0 0 0
Inc. for Primary EPS -322 3,415 606 437
EPS Excl. Xord Items -0.045 0.419 0.078 0.049
Disc Opns + Xord Items 0 0 0 0
EPS Incl. Xord Items -0.045 0.419 0.078 0.049
Avg Primary Shs Out. 7,129.54 8,148.15 7,734.39 8,936.26
Common Dividends/Shr 0.000 0.000 0.000 0.000
F.D. EPS Excl. Xord -0.045 0.385 0.067 0.045
F.D. EPS Incl. Xord -0.045 0.385 0.067 0.045
SELECTED BALANCE SHEET ITEMS
(Thousands of U.S. Dollars)
YEAR ENDING QUARTER ENDING
12/31/96 12/31/97 03/31/97 03/31/98
Cash & ST Investments 1,119 2,161 1,892 3,098
Receivables 2,678 4,568 3,415 4,068
Other Current Assets 6,129 7,701 5,138 9,911
Total Current Assets 9,926 14,430 10,445 17,077
LT Investments 0 0 0 0
Fixed Assets 868 1,022 874 713
Other LT Assets 0 2,336 0 2,566
Total Assets 10,794 17,788 11,319 20,356
Accounts Payable 822 967 516 2,138
ST Debt & Curr LTD 5 1,193 5 0
Other Current Liab. 263 484 224 662
Total Current Liab. 1,090 2,644 745 2,800
LT Debt & Cap Leases 2,158 0 2,202 430
Other LT Liabilities 39 39 34 0
Total Liabilities 3,287 2,683 2,981 3,230
Preferred Stock 0 0 0 0
Common & Paid In Capital 10,051 14,235 10,274 15,821
Retained Earnings -2,543 871 -1,937 1,308
Other Equity 0 0 0 0
Total Equity 7,508 15,106 8,337 17,129
Shares Outstanding 7,584 8,707 7,884 9,053
SELECTED STATEMENT OF CASH FLOWS ITEMS
INDIRECT METHOD (Thousands of U.S. Dollars)
ANNUAL YEAR TO DATE
12 MONTHS 12 MONTHS 3 MONTHS 3 MONTHS
ENDING ENDING ENDING ENDING
12/31/96 12/31/97 03/31/97 03/31/98
Net Income -322 3,414 606 436
Depreciation & Amort. 353 322 101 506
Non Cash Items -1,059 -393 177 -1,536
Other Operating CF -4,643 -4,144 -274 -1,162
Total Operating CF -5,671 -801 610 -1,756
Capital Expenditures -394 -408 -63 -207
Other Investing CF -98 100 0 1,644
Total Investing CF -492 -308 -63 1,437
Dividends Paid 0 0 0 0
Sale (Purch.) of Stock 279 2,251 224 188
Net Borrowings 3,405 -5 0 429
Other Financing CF 0 0 0 0
Total Financing CF 3,684 2,246 224 617
Exchange Rate Effect 0 0 0 0
Net Change In Cash -2,480 1,138 773 297
COMPANY CONTACT, ADDRESS & PHONE #: Investor Relations
Andrea Electronics Corp. 11-40 45th Road
Long Island City, NY 11101PHONE: (800) 442-7787 |
