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Authentidate Holding Corp. Reports Operating Results (10-Q)

February 11, 2010 | About:
10qk

10qk

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Authentidate Holding Corp. (ADAT) filed Quarterly Report for the period ended 2009-12-31.

Authentidate Holding Corp. has a market cap of $38.1 million; its shares were traded at around $1.01 with and P/S ratio of 5.6. Authentidate Holding Corp. had an annual average earning growth of 0.4% over the past 10 years.

Highlight of Business Operations:

Selling general and administrative (SG&A) expenses decreased to $2,480,000 for the quarter ended December 31, 2009, compared to $2,946,000 for the prior year period. The decrease reflects our cost management activities and lower share based compensation expense for the period offset by the timing of audit and related expenses from period to period. The prior year period includes a state payroll tax credit of approximately $326,000 offset by the write off of deferred deal expenses of approximately $900,000 related to the termination of our deal with Parascript. SG&A expenses for the six months ended December 31, 2009 decreased to $5,058,000 compared to $5,773,000 for the prior year reflecting the same trends as the quarter.

Product development expenses were $470,000 for the quarter ended December 31, 2009, compared to $386,000 for the prior year period. Product development spending fluctuates period to period based on the amounts capitalized. Total spending for the quarter, including capitalized amounts, was $512,000 compared to $547,000 for the prior year reflecting our cost management activities. Product development expenses for the six months ended December 31, 2009 were $977,000 compared to $809,000 for the prior year. Total spending for the period was $1,056,000 compared to $1,150,000 for the prior year reflecting the same trends as the quarter.

Other income (expense) includes interest and other income for the periods and the amortization of non-cash deferred financing costs for the quarter and six month periods ended December 31, 2009. Interest and other income decreased to $85,000 for the quarter ended December 31, 2009, compared to $136,000 for the prior year period. For the six months ended December 31, 2009 interest and other income was $179,000 compared to $338,000 for the prior year. The decrease in interest and other income is due primarily to lower interest rates and lower cash and investment balances during the current period, as we continue to invest in our business. As discussed more fully in Note 18 of Notes to the Condensed Consolidated Financial Statements, during the quarter ended December 31, 2009 we recorded a non-cash expense of $533,000 to amortize the deferred financing costs related to the Standby Commitment we entered into in September 2009 which expired in connection with our capital raise in December 2009.

Net loss for the quarter ended December 31, 2009 was $2,819,000, or $0.08 per share, compared to $2,554,000, or $0.07 per share, for the prior year period. For the six months ended December 31, 2009 net loss was $4,932,000, or $0.14 per share, compared to $5,000,000, or $0.15 per share, for the prior year. The net loss for the periods reflects the revenue fluctuations, cost management activities and other matters discussed above.

At December 31, 2009, cash, cash equivalents and marketable securities amounted to approximately $4,156,000 and total assets at that date were $23,471,000. Since June 30, 2009 cash, cash equivalents and marketable securities have decreased by $2,408,000 as we utilized cash principally to fund operating losses, product development activities, joint venture investments, changes in working capital and capital expenditures during the six month period ended December 31, 2009. Cash used for the period includes investments in joint venture inventory and operations of approximately $1 million and $222,000, respectively, and the prepayment of certain insurance premiums and maintenance contracts. We expect to continue to use cash to fund operating losses, product development activities, joint venture investments and capital expenditures for the foreseeable future.

Net cash provided by financing activities for the six months ended December 31, 2009 was approximately $2,863,000 which was primarily due to our closing on a sale of 3,400,000 shares of our common stock and warrants to purchase 3,400,000 shares of our common stock to certain institutional and/or accredited investors in a registered direct offering in December 2009. The purchase price for each share and warrant was $1.00. The warrants are exercisable within 90 days of the closing date through March 10, 2010, at an exercise price of $1.00 per share. Gross proceeds of the offering were $3.4 million and we received approximately $2.9 million in net proceeds, after deducting the placement agents fees and estimated offering expenses. In connection with this transaction, we entered into a Placement Agency Agreement with Rodman & Renshaw, LLC and paid them a fee equal to 7.0% of the aggregate gross proceeds raised in connection with the offering and issued them a warrant to purchase 170,000 shares of common stock at a per share exercise price of $1.25, which warrants will be exercisable for a period of five years from the effective date of the registration statement. The shares of common stock, the warrants and the shares of common stock issuable upon exercise of the warrants were offered and sold pursuant to a base prospectus which is included in the companys shelf registration statement on Form S-3 and the related prospectus supplement filed with the Securities and Exchange Commission on December 9, 2009. In addition, in October 2009, we received approximately $5,000 in connection with the exercise of employee stock options.

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