AuthentiDate Holding Corp. Announces Year End Results and Improvement of Fourth Quarter Over the Prior Year.

Business & Technology Editors

SCHENECTADY, N.Y.--(BUSINESS WIRE)--Sept. 30, 2002

Legacy Business' Maintain Profitability;

AuthentiDate's Enabling Technology Initiatives Gain Traction

AuthentiDate Holding Corp. (AHC) (NASDAQ: ADAT) today announced its results for the fiscal year ended June 30, 2002.

Consolidated sales were $16.6 million for the year ended June 30, 2002 compared to $17.9 million for the year ended June 30, 2001. The primary reason for the sales decline was a change in business strategy from direct to indirect sales of hardware by the Company's DJS Marketing Group. More hardware was sold on an indirect basis in fiscal 2002 compared to the previous fiscal year. Sales by DJS decreased from $11.6 million to $9.9 million in fiscal 2002.

Incorporating the indirect sales model, DJS passed on hardware sales to the manufacturers or national distributors and received a fee. This resulted in lower reported sales but the cost of sales was commensurately lower as well, while the reported gross profit was roughly the same in an indirect sales model compared to a direct sales model. Furthermore, DJS eliminated most of the risk of inventory obsolescence or uncollectible receivables.

The second reason for the decline of sales at DJS was the general slowdown in sales experienced by the entire U.S. computer hardware industry in reaction to overall market and recessionary pressures. DJS has been able to remain profitable in this difficult period by operating more efficiently. DJS reported a segment profit of $97,000 for fiscal 2002 compared to a segment profit of $385,000 for the prior fiscal year.

Fiscal 2002 sales in the DocStar Division increased over the prior fiscal year to $6.7 million from $6.2 million and profit improved to $288,000 from a loss of $296,000, respectively.

With the acquisition of the remaining 61% of the outstanding stock of AuthentiDate's German subsidiary, AuthentiDate International AG, effective March 15, 2002, consolidated reported sales for the AuthentiDate businesses were $51,000 for the fiscal year ended June 30, 2002. On a proforma basis reported fiscal 2002 sales for the AuthentiDate activities including AuthentiDate International AG for the full year would have been $324,000. For a comparison of fourth quarter results see the chart below.

Consolidated gross profit increased from $3.7 million for the year ended June 30, 2001 to $4.6 million for the year ended June 30, 2002 as the gross profit margin improved from 21% to 27% from fiscal 2001 to fiscal 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 to 54% in the current fiscal year from 37% in the prior year.

The Company realized a net loss of $10 million ($0.69 per share) for the year ended June 30, 2002, which is attributed to the three AuthentiDate related businesses, including AuthentiDate Inc., AuthentiDate International AG and Trac Medical Solutions, Inc. These three subsidiaries had a combined segment loss of $5.7 million before product development expenses of $2.1 million, while the more mature DJS and DocStar companies were profitable. The only other costs contributing to the loss were corporate public company-related expenses of $2.2 million and losses from the AuthentiDate Sports, Inc. joint venture of $334,000.

John Botti, CEO, stated, "We are certainly disappointed by the loss of $10 million for the year just ended but we are very gratified with the continued profitability of our mature businesses, DJS and DocStar. We also take satisfaction in the progress our AuthentiDate businesses have made in the past year and, particularly, in recent months."

"AuthentiDate, Inc.", Mr. Botti added, "announced the signing of a major contract with the US Postal Service to provide Electronic Postmarks for the USPS in an initiative that includes such leading corporate partners as Microsoft, Unisys and IBM. We believe this contract will lead to significant growth in the years to come. Our German subsidiary, AuthentiDate International AG, recently announced a joint development project with Deutsche Telecom in Germany to process large volumes of electronic documents and have them electronically signed and sent over the Internet. We believe, and independent studies support this view, that customers can save significant dollars that are currently spent in processing and mailing of paper invoices by adopting our electronic invoicing solutions. Trac Medical announced a key milestone in their development in August 2002. Trac Med announced the first electronic Certificate of Medical Necessity ("CMN") to include a comprehensive and verifiable audit trail that complies with the U.S. Government's Medicare program guidelines. This new product, Care Cert(TM), will streamline the way medical suppliers handle CMN's and will create significant paper work savings for these companies."

"Finally", Mr. Botti concluded, "as you will see below, the fourth quarter results show improvement over the fourth quarter of fiscal 2001 in terms of sales and improvement in the net loss. We anticipate further improvement in all of our businesses in the current fiscal year and the growing acceptance of the AuthentiDate technology."

Below is a summary of the operating results for the last two years:

                              Quarter Ended             Year Ended
                                 June 30,                 June 30,
                             ----------------        -----------------
                             2002        2001        2002         2001

(In thousands)
Sales                      $ 5,656     $ 4,959    $ 16,643    $ 17,861
Gross profit                 1,428         789       4,522       3,677
Loss from operations        (2,515)     (3,171)     (9,088)     (9,495)
Net loss                    (2,586)     (3,165)     (9,951)     (9,340)
Net loss per share            (.16)       (.21)       (.69)       (.63)
Cash flow                   (1,868)      3,434      (6,771)      1,075

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 document imaging products. AuthentiDate and AuthentiDate AG provide the authentication of digital data through its proprietary and patent pending technology. AuthentiDate is establishing itself as the authority on "content security", a growing sector of the electronic network security infrastructure market. DJS delivers professional services centered on systems integration projects, staff augmentation, out-tasking and outsourcing services, and resells computer related products. Trac Medical uses the AuthentiDate service to improve speed, accuracy and security in processing medical forms.

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.