Acquisition of Image Analysis and Pattern Recognition Software Provider



    Combines Complementary Technologies to Address Health Care and Other

Markets



    BERKELEY HEIGHTS, N.J. and BOULDER, Colo., Aug. 6

/EMWNews/ -- Authentidate Holding Corp. (Nasdaq: ADAT), a

worldwide provider of secure workflow management software and web-based

services, and Parascript, LLC, an image analysis and pattern recognition

software provider, today announced that the companies have signed a

definitive merger agreement. Under the terms of the agreement, Authentidate

will acquire Parascript, for up to $10 million in cash, a five year 10%

note in the principal amount of $20 million, which is subject to

adjustment, 30 million shares of Authentidate common stock, and all of the

shares of Authentidate's German subsidiary, Authentidate International AG.

Contingent consideration based on the financial performance of a newly

formed business unit may also be paid in Authentidate common stock in 2012.



    The transaction has been unanimously approved by the board of directors

of Authentidate and the manager of Parascript. The companies expect the

transaction to be completed in the fourth quarter of calendar year 2008.



    Parascript's image analysis and pattern recognition software interprets

human thinking and behavioral patterns based on cognitive science, pattern

recognition, neural networks and artificial intelligence. For over a

decade, Parascript has continually improved and adapted its image analysis

and pattern recognition software to make it usable in a variety of

applications for the medical imaging, postal, mail automation, business

process outsourcing, banking and financial services industries.



    For the calendar year ended December 31, 2007, Parascript had gross

revenues from continuing operations of approximately $22 million and net

income before taxes of approximately $6.9 million. Net income before taxes

included approximately $2.2 million in net losses from an entity being

closed down by Parascript, the net loss of which is included in income from

continuing operations.



    F. Ross Johnson, Chairman of Authentidate Holding Corp., stated, "We

view this as a strategic merger that brings together technologies from two

forward thinking companies working to revolutionize the operational

infrastructure of the healthcare industry by improving workflows and

enhancing document security. We believe the merger will help both companies

build greater momentum within the industry, growing their businesses and

increasing shareholder equity. As such, the Board believes that this

transaction offers Authentidate's shareholders a tremendous opportunity to

maximize their investment. I am confident I am leaving the company with a

strong management team to guide Authentidate along its new strategic path."



    Authentidate also announced that Mr. Johnson will be retiring from the

board after the closing of the merger.



    Jeff Gilb, President and CEO of Parascript, who will become Chief

Executive Officer of the combined company, said, "The combination of

Parascript and Authentidate presents new growth opportunities that were not

available to Parascript when it was privately held. The recognition

software industry is at the beginning of a significant transformation of

applications and services -- one that is projected to enable higher

performance and greater labor savings for our customers. This brings

extraordinary opportunities for our combined business to accelerate its

growth. The combination creates a new company with a comprehensive

portfolio that will be poised to deliver significant benefits to customers,

employees and stockholders."



    "We have worked to add new services and penetrate new segments of the

multi-billion dollar healthcare industry," stated Ben Benjamin, President

of Authentidate. "The addition of Parascript's innovative intelligent

recognition software to our technology base will allow us to further

develop our product offerings."



    Transaction Terms



    Authentidate's board of directors and the manager of Parascript LLC

have unanimously approved an agreement and plan of merger that will result

in Authentidate and Parascript becoming wholly-owned subsidiaries of a new

Authentidate holding corporation ("New Authentidate") and will continue to

trade under Authentidate's current Nasdaq stock symbol, "ADAT." Current

Authentidate stockholders will receive shares in the New Authentidate

holding corporation to replace their existing Authentidate shares. Any

shares issued to Parascript members in the transaction will be shares of

New Authentidate.



    Authentidate stockholders will exchange their existing shares of

Authentidate common stock, $.001 par value, for an equal number of shares

of common stock in New Authentidate. Under the merger agreement,

Authentidate and Parascript will survive as wholly owned subsidiaries of

New Authentidate and New Authentidate will be renamed "Authentidate Holding

Corp." on the closing of the transaction. All of the outstanding units of

Parascript will be exchanged, less certain amounts required to pay

outstanding debt and obligations, for a total of up to $10 million in cash

all of the shares of Authentidate's subsidiary Authentidate International

AG (the "AG Shares"), 30 million shares of New Authentidate common stock,

and a 10% note in the principal amount of $20 million, which is subject to

adjustment (the "Note"). Principal and interest on the Note are subject to

certain restrictions on payment.



    After the closing, New Authentidate will form a subsidiary to exploit

certain markets for Parascript's image analysis and pattern recognition

technology. The Parascript unit holders will also be entitled to receive

additional shares of New Authentidate common stock equal to ten times the

average annual EBITDA achieved for fiscal years 2010 and 2011, divided by

$3.00.



    Upon the closing, the size of the board of directors of New

Authentidate will be increased from six to nine members comprised of four

nominees of Parascript and four nominees of Authentidate and the CEO of New

Authentidate. Aron Katz will become non-executive Chairman of the Board of

New Authentidate effective at the closing of the merger; Jeffrey Gilb,

currently the Chief Executive Officer of Parascript will become Chief

Executive Officer of New Authentidate; and O'Connell Benjamin will become

President of New Authentidate after the merger.



    Duff & Phelps advised the Special Committee of the Board of Directors

of Authentidate and provided a fairness opinion to the Special Committee.

Becker & Poliakoff, LLP acted as legal counsel to Authentidate. Davis

Graham & Stubbs, LLP acted as legal counsel to Parascript.

    About Authentidate Holding Corp.



    Authentidate Holding Corp. is a worldwide provider of secure workflow

management software and web-based services. The company's automated and

trusted workflow solutions enable enterprises and office professionals to

employ rules-based electronic forms, intelligent routing and transaction

management, electronic signing, content authentication, identity

credentialing and verification and web and fax based communication

capabilities. Customer benefits from the company's offerings include

increased revenues, reduced costs, improved productivity and service

levels, automated audit trails, enhanced compliance with regulatory

requirements and the reduction of paper- based processes. The company has

offices in the United States and Germany. In the United States we offer our

patent pending content authentication technology in the form of the United

States Postal Service(R) Electronic Postmark(R) (EPM).



    About Parascript



    The Parascript image analysis suite extracts meaningful information

from images. Employing patented digital image analysis and pattern

recognition technologies, the Parascript image analysis suite automates

costly data entry and improves decision quality in medical imaging, postal

and payment automation, fraud detection and forms processing operations.

Parascript software processes over 100 billion imaged documents per year.

Fortune 500 companies, postal operators, major government and financial

institutions rely on Parascript products. Organizations include the U.S.

Postal Service, Bowe Bell & Howell, CheckFree -- now part of Fiserv, Elsag,

Lockheed Martin, NCR, Siemens and Unisys.



    Additional Information About this Transaction



    In connection with the proposed transaction, Authentidate will file

with the Securities and Exchange Commission (the "SEC"), a Registration

Statement on Form S-4, containing a joint proxy statement of Authentidate

and Parascript, and a prospectus of Authentidate covering the New

Authentidate common stock to be issued to Parascript unit holders upon

closing of the transaction. Authentidate and Parascript will mail the Joint

Proxy Statement/Prospectus to their respective security holders. The joint

proxy statement/prospectus contains important information on the

transaction and Authentidate and Parascript urge investors and security

holders to read the joint proxy statement/prospectus when it becomes

available.



    Investors and security holders will be able to obtain free copies of

the Registration Statement and the Joint Proxy Statement/Prospectus and

other documents filed with the SEC by and through the web site maintained

by the SEC at http://www.sec.gov. In addition, investors and security holders will

be able to obtain free copies of the Registration Statement and the Joint

Proxy Statement/Prospectus when they become available from Authentidate by

using the contact information for Authentidate Investor Relations set forth

below.



    Not a Proxy Statement



    This press release is not a proxy statement or a solicitation of

proxies from the holders of common stock of Authentidate or the unit

holders of Parascript and does not constitute an offer of any securities of

Authentidate for sale. Any solicitation of proxies will be made only by the

joint proxy statement/prospectus of Authentidate and Parascript that will

be mailed to all security holders promptly after it is declared effective

by the SEC. The joint proxy statement/prospectus will contain important

information on the transaction. Investors and security holders of

Authentidate and Parascript are urged to read the joint proxy

statement/prospectus and the relevant materials when they become available.






    For more information, please contact:



    Investor Contacts:



    Authentidate:



                                          Media Contacts:

    Todd Fromer / Garth Russell           Erika Kay

    KCSA Worldwide                        KCSA Worldwide

    212-896-1215 / 212-896-1250           212-896-1208

    [email protected] / [email protected]  [email protected]



    You may obtain copies of all documents filed with the SEC regarding

this transaction, free of charge, at the SEC's website (http://www.sec.gov). You

may also obtain these documents, free of charge, from Authentidate's

website (http://www.authentidate.com) under the tab "About Us - Investor Relations

and then under the item "SEC Filings".



    Proxy Solicitation



    Authentidate and Parascript and their respective directors, executive

officers and certain other members of management and employees may be

soliciting proxies from Authentidate stockholders in favor of the merger.

Information regarding the persons who may, under the rules of the SEC, be

considered participants in the solicitation of the Authentidate

stockholders in connection with the proposed merger will be set forth in

the proxy statement/prospectus when it is filed with the SEC. You can find

information about Authentidate's executive officers and directors in its

definitive proxy statement filed with the SEC on March 28, 2008. You can

obtain free copies of these documents from the SEC free of charge at the

SEC's web site at http://www.sec.gov and from Authentidate using the contact

information above.



    Forward-Looking Statements



    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, related decisions by the USPS, the impact of

competition, the management of growth, the success of the merger and the

combined business and the other risks and uncertainties that may be

detailed from time to time in the Company's reports filed with the SEC. 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.