Authentidate Holding Corp. Announces Fourth Quarter and Year End Results

SCHENECTADY, N.Y.
Sep 07, 2005

Authentidate Holding Corp. (Nasdaq: ADAT) announced today that the Company reported revenue of $4,769,332 and $17,553,438 respectively for the quarter and full-year periods ending June 30, 2005.
The Company stated that revenue for its Security Software Solutions Segment increased from $372,760 for the quarter ended June 30, 2004 to $1,165,368 for the quarter ended June 30, 2005, a 213% increase. Annual revenue for the Security Software Solutions segment increased 172% from $1,384,456 to $3,772,061. The increase in revenues during the fourth quarter and for the full year in this segment resulted from continued sales growth from both US and international operations.

The Document Management Solutions Segment reported revenue of $1,936,021 for the fourth quarter with full year revenue of $6,795,716. Annual revenues for the Document Management Solutions Segment grew by 8%, from $6,274,218 in 2004, largely attributable to growth from indirect channel sales. Revenue for the fourth quarter stayed roughly flat, compared to the same quarter in the previous year.

The Systems Integration Segment reported revenue of $1,667,943 for the fourth quarter with full year revenue of $6,985,661. Revenues in the Systems Integration Segment decreased on a quarterly basis by $1,148,220, and on a full year basis by $4,597,736, as management continued to de-emphasize low margin hardware sales in favor of higher margin service revenues. The decrease in sales of $4,597,736 had only a marginal impact on segment profit of approximately $123,000 before a non-recurring item of $162,000 related to a facility closing.
Total revenue across all segments for the fiscal year ending June 30, 2005 was $17,553,438 compared to $19,242,071 for fiscal year ended June 30, 2004. This decline in revenue is directly attributable to lower revenues within the Systems Integration Segment as discussed above.

The net loss for the quarter ended June 30, 2005 was $8,397,786 or $0.25 per share, compared to $3,580,140 or $0.11 per share for the same quarter in the prior year. The increase in net loss was attributed to a $4.8 million write-off of goodwill and other long lived assets, compared to $1.2 million in the prior year. Including the effect of this goodwill impairment charge, the reported net loss for the year ended June 30, 2005 was $19,184,046 ($0.57 per share) compared to $15,669,193 ($0.59 per share) for the prior year.

Net loss from operations in 2005 increased to $20,835,588 from $10,759,060, including the effects of an increase in impairment charges for goodwill and other intangibles of approximately $3.6 million, $2 million of non-recurring severance and warrant expenses, and increases in personnel costs and professional fees.
The Company's cash and marketable securities position at the end of the year remained strong at close to $63 million. The Company reported that deferred revenue increased 33% during the year from $1,881,277 to $2,505,677 primarily due to growth in the Security Software Solutions segment.

"During the past year we have demonstrated significant top line growth in our Security Software Solutions segment while strengthening our operating capabilities" stated Suren Pai, Authentidate's CEO. "While we are pleased with these results we are committed to continuing to produce positive results for our shareholders through improved financial performance."