AuthentiDate Holding Corp. Third Quarter Results Show Improvement in Gross Profits; Focus on Authentication Services Creating Widespread Interest

Business Wire, May 15, 2002

Business Editors

SCHENECTADY, N.Y.--(BUSINESS WIRE)--May 15, 2002

AuthentiDate Holding Corp. (AHC) (NASDAQ: ADAT) today announced its results for the third fiscal quarter ended March 31, 2002.

Consolidated sales were $3.6 million for the quarter ended March 31, 2002 compared to $4.4 million for the quarter ended March 31, 2001. Gross profit increased from $1.0 million for the quarter ended March 31, 2001 to $1.2 million for the quarter ended March 31, 2002. The improvement in gross profit is attributed to the DocStar Division, which realized an increase in sales and an increase in gross profit margins compared to the prior year. DocStar realized a segment profit of $150,061 for the nine months ended March 31, 2002 compared to a segment loss of $237,239 for the same period last year. The Company realized a net loss of $2.5 million ($0.18 per share) for the quarter ended March 31, 2002 which is attributed to the AuthentiDate subsidiary which is still in the early stages of developing its business model and has not had significant sales. This net loss for the quarter compares to a net loss of $3.0 million ($0.20 per share) for the quarter ended March 31, 2001.

The Company had a net loss of $7.4 million ($0.51 per share) on $11.0 million in sales for the nine months ended March 31, 2002 compared to a net loss of $6.2 million ($0.42 per share) on $12.9 million in sales for the nine months ended March 31, 2001. Sales declined as a result of a softness in the computer hardware market and a product mix shift in the DJS Marketing Group subsidiary. DJS sells more hardware on an indirect basis than it did in 2001. This results in lower sales but a higher gross margin. DJS's integration service revenue which carries a higher gross margin than hardware revenue increased and gross profit margins increased as a result. DJS still remains profitable for the quarter and nine months ended March 31, 2002 even with the economic pressures on the national computer hardware industry.

John Botti, CEO, stated, "We are extremely excited about our progress in establishing the AuthentiDate process as the de facto standard for verification and time stamping of electronically created documents and continue to see excitement in the marketplace."

The Company's cash flow from operating activities was a negative $4.8 million versus a net loss of $7.4 million for the nine months ended March 31, 2002. The reason for the difference between the net loss and operating cash flow are non-cash expenses totaling $2.7 million, the largest item being depreciation and amortization expense. For the quarter ended March 31, 2002 the Company had a negative cash flow from operations of $1.0 million. The Company has a current ratio of 2.1 to 1 and total debt to equity of 28.9%. DJS closed on a revolving line of credit of $2 million in May 2002 which is secured by all DJS assets and guaranteed by the Company with a financial institution. The interest rate on this line is prime plus 1.75% with a minimum rate of 7%. DJS has not borrowed a significant amount against this credit facility to date. Below is a comparison of the Company's results to the prior year.

                         Quarter Ended          Nine Months Ended
                            March 31,                March 31,
                        2002        2001         2002         2001
                        ----        ----         ----         ----

Sales                $3,592,159  $4,383,397  $10,986,948  $12,901,399
Gross profit          1,237,852   1,046,232    3,921,406    3,521,601
Loss from operations (2,085,507) (3,001,510)  (6,573,052)  (6,324,342)
Net loss             (2,533,384) (2,976,080)  (7,365,309)  (6,174,992)
Net loss per share        ($.18)      ($.20)       ($.51)       ($.42)

About AuthentiDate Holding Corp.

AuthentiDate Holding Corp. (AHC) is the holding company of five business units; DocStar, AuthentiDate International AG, AuthentiDate, Inc., DJS Marketing Group/Computer Professionals International and Trac Medical Solutions, Inc. DocStar sells a complete line of proprietary document imaging products. AuthentiDate and AuthentiDate AG provide the authentication of digital data through its proprietary and patent pending technology. AuthentiDate intends to establish itself as the authority on "content security" as it is a growing sector of the electronic network security infrastructure market. DJS delivers professional services centered around technology systems integration projects, staff augmentation, out-tasking, outsourcing services and resells computer related products. Trac Medical uses the AuthentiDate service in the medical supply business.

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Act of 1934. When used in this release, the words "believe," "anticipate," "think," "intend," "plan," "will be," "expect," and similar expressions identify such forward-looking statements. Such statements regarding future events and/or the future financial performance of The Company are subject to certain risks and uncertainties, which could cause actual events or the actual future results of the Company to differ materially from any forward-looking statement. Such risks and uncertainties include, among other things, the availability of any needed financing, the Company's ability to implement its business plan for various applications of its technologies, the impact of competition, the management of growth, and the other risks and uncertainties that may be detailed from time to time in the Company's reports filed with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.