|  |
|--|
|  |
|  |

**SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-Q**

|                                                                     | QUARTERLY REPORT PURSUANT TO        SECTION 13 OR 15(d) OF THE      SECURITIES EXCHANGE    ACT OF 1934 |
|---------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
|                                                                |                                                                                                                            |
| For the quarterly period ended: MARCH    31, 2004                   |
|                                                                |                                                                                                                            |
|                                                                     | TRANSITION REPORT PURSUANT TO SECTION 13        OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934                                 |
|                                                                |                                                                                                                            |
| For    the transition period from __________ to ______________      |
|                                                                |
| Commission File      No. 0-20190                                    |
|                                                                |                                                                                                                            |
| **AUTHENTIDATE HOLDING CORP.**                                      |
|                                                                     |
| Exact name of small business issuer as specified    in its charter) |

|                                                                |                                                 |
|---------------------------------------------------------------------|------------------------------------------------------|
| Delaware                                                            | 14-1673067                                           |
|                                                                     |                                                      |
| (State or other jurisdiction      of incorporation or organization) |  (I.R.S.Employer  Identification      No.) |
|                                                           |                                                      |
| 2165 Technology Dr.,      Schenectady, NY,                          | 12308                                                |
|                                                                     |                                                      |
| (Address      of principal executive offices)                       |  (Zip      Code)                                |
|                                                                |                                                 |

Registrant’s telephone number,including area code :       (518) 346-7799         

Former name, former address and former fiscal year, if changed since last report.

Yes    No 

Yes    No 

32,859,914 shares of      Common Stock, par value $.001 per share, were outstanding at May 6, 2004.

|  |
|--|
|  |
|  |

----

**AUTHENTIDATE HOLDING CORP.****FORM 10-Q****INDEX**

|                                                                                                        | **Page No.**   |
|-------------------------------------------------------------------------------------------------------------|----------------|
|                                                                                                             |           |  |
| **Part I Financial Information**                                                                            |           |   |
|                                                                                                        |           |   |
| Item 1 – Financial    Statements:                                                                      |           |   |
|                                                                                                        |           |   |
| Consolidated Balance Sheets - March 31, 2004 and June 30, 2003                                              | 3              |   |
|                                                                                                        |           |   |
| Consolidated Statements of Operations    - Three and nine months ended March 31, 2004 and March 31,  2003   | 5              |   |
|                                                                                                        |           |   |
| Consolidated Statements of Cash    Flows - Nine months ended March 31, 2004 and March 31,  2003             | 6              |   |
|                                                                                                             |           |   |
| Notes to Consolidated Financial Statements                                                                  | 7              |   |
|                                                                                                        |           |   |
| Item 2 – Management’s    Discussion and Analysis of Financial Condition and Results of Operations | 13             |   |
|                                                                                                        |           |   |
| Item 3 – Quantitative    and Qualitative Disclosures About Market Risk                                 | 19             |   |
|                                                                                                        |           |   |
| Item 4 – Controls    and Procedures                                                                    | 20             |   |
|                                                                                                        |           |   |
|                                                                                                        |           |   |
| **Part II Other Information**                                                                               |           |   |
|                                                                                                        |           |   |
| Item 1 – Legal    Proceedings                                                                          | 20             |   |
|                                                                                                        |           |   |
| Item 2 – Changes    in Securities                                                                      | 20             |   |
|                                                                                                        |           |   |
| Item 3 – Defaults    Upon Senior Securities                                                            |   20 |   |
|                                                                                                        |           |   |
| Item 4 – Submission    of Matters to a Vote of Security Holders                                        |  21       |   |
|                                                                                                        |           |   |
| Item 5 – Other    Information                                                                          | 21             |   |
|                                                                                                        |           |   |
| Item 6 – Exhibits    and Reports on Form 8-K                                                           | 22             |   |
|                                                                                                        |           |   |
| Safe Harbor Statement                                                                                       |  23       |   |
|                                                                                                        |           |   |
| Signatures                                                                                                  | 23             |   |
|                                                                                                        |           |   |
| Certifications                                                                                              | 24             |   |
|                                                                                                        |           |   |

Page 2 

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**PART I FINANCIAL INFORMATION****AUTHENTIDATE HOLDING CORP. AND** **SUBSIDIARIES****CONSOLIDATED BALANCE****SHEETS**(unaudited  except for the June 30, 2003 balance sheet) 

| **ASSETS**                                                                                                                                 | **March 31,    2004** |            |        | **June 30,  2003** |       |
|--------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|------------|--------|--------------------|------------|
|                                                                                                                                       |                       |       |        |                    |       |
| Current Assets:                                                                                                                            |                  |       |   |               |       |   |
| Cash and    cash equivalents                                                                                                               | $                     | 75,369,779 |   | $                  | 3,460,446  |   |
| Accounts          receivable, net of allowancefor doubtful accounts          of $390,647 at March31, 2004 and $460,740 at June    30, 2003 |                  | 5,779,030  |   |               | 3,642,221  |   |
| Due from    related parties                                                                                                                |                  | 454        |   |               | 2,279      |   |
| Inventories:                                                                                                                               |                  |       |   |               |       |   |
| Finished    goods                                                                                                                          |                  | 82,449     |   |               | 129,986    |   |
| Purchased    components & raw material                                                                                                 |                  | 66,244     |   |               | 63,115     |   |
| Prepaid expenses    and other current assets                                                                                               |                  | 49,583     |   |               | 69,248     |   |
|                                                                                                                                       |                       |            |   |                    |            |   |
| Total current    assets                                                                                                                    |                  | 81,347,539 |   |               | 7,367,295  |   |
|                                                                                                                                       |                  |       |   |               |       |   |
|                                                                                                                                       |                  |       |   |               |       |   |
| Property and equipment, net                                                                                                                |                  | 3,411,817  |   |               | 3,764,846  |   |
|                                                                                                                                       |                  |       |   |               |       |   |
| Other assets:                                                                                                                              |                  |       |   |               |       |   |
| Software    development costs, net                                                                                                         |                  | 299,820    |   |               | 355,082    |   |
| Goodwill                                                                                                                                   |                  | 12,795,501 |   |               | 12,795,501 |   |
| Patent costs,    net                                                                                                                       |                  | 304,015    |   |               | 277,406    |   |
| Other intangible    assets, net                                                                                                            |                  | 461,941    |   |               | 189,479    |   |
| Deferred    financing fees                                                                                                                 |                  |       |   |               | 268,935    |   |
| Other assets                                                                                                                               |                  | 235,940    |   |               | 27,296     |   |
|                                                                                                                                       |                       |            |   |                    |            |   |
| Total assets                                                                                                                               | $                     | 98,856,573 |   | $                  | 25,045,840 |   |
|                                                                                                                                       |                       |       |        |                    |       |

See accompanying notes to the consolidated financial statements.    

Page 3 

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**AUTHENTIDATE HOLDING CORP. AND SUBSIDIARIES****CONSOLIDATED          BALANCE SHEETS** (unaudited except for the June          30, 2003 balance sheet) 

|                                                                                                |   |                |   |       |                     |   |
|-----------------------------------------------------------------------------------------------------|--------|---------------------|--------|------------|--------------------------|--------|
| **LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                       |   | **March 31,  2004** |        |            | **June 30,        2003** |   |
|                                                                                                |        |                     |   |            |                          |   |
| Current liabilities:                                                                                |   |                |   |       |                     |   |
|    Accounts payable                                                                  | $      | 1,105,204           |   | $          | 1,436,943                |   |
|    Accrued expenses and other liabilities                                            |   | 2,016,696           |   |       | 2,125,111                |   |
|    Deferred revenue                                                                  |   | 2,200,941           |   |       | 647,599                  |   |
|    Line of credit                                                                    |   | 1,584,448           |   |       | 877,863                  |   |
|    Current portion of long-term debt                                                 |   | 253,239             |   |       | 218,811                  |   |
|    Current portion of obligations under            capital leases                    |   | 82,022              |   |       | 112,520                  |   |
|    Income taxes payable                                                              |   | 6,724               |   |       | 24,843                   |   |
|                                                                                                |        |                     |   |            |                          |   |
|       Total current liabilities                                       |   | 7,249,274           |   |       | 5,443,690                |   |
| Convertible debentures                                                                              |   |                |   |       | 3,316,815                |   |
| Long-term debt, net of current portion                                                              |   | 78,000              |   |       | 1,331,129                |   |
| Deferred grant                                                                                      |   |                |   |       | 1,000,000                |   |
| Obligations under capital leases, net of current portion                                            |   | 49,382              |   |       | 85,556                   |   |
|                                                                                                |        |                     |   |            |                     |
|       Total liabilities                                               |   | 7,376,656           |   | 11,177,190 |                     |
|                                                                                                |        |                     |   |            |                          |   |
| Commitments and contingencies                                                                       |   |                |   |       |                     |   |
|                                                                                                |   |                |   |       |                     |   |
|                                                                                                |   |                |   |       |                     |   |
| Shareholders’ equity:                                                                          |   |                |   |       |                     |   |
|    Preferred stock - $.10 par value,            5,000,000 shares authorized:         |   |                |   |       |                     |   |
|       Series B - 28,000            shares issued and outstanding      |   | 2,800               |   |       | 2,800                    |   |
|       Series C - no shares            were outstanding at             |   |                |   |       | 360                      |   |
|          December            31, 2003 and 3,600 issued |   |                |   |       |                     |   |
|          and            outstanding at June 30, 2003   |   |                |   |       |                     |   |
|    Common stock - $.001 par value; 40,000,000                                        |   |                |   |       |                     |   |
|       shares authorized;            shares issued and outstanding:    |   |                |   |       |                     |   |
|       32,720,995 at March            31, 2004 and                     |   |                |   |       |                     |   |
|       20,388,174 at June            30, 2003                          |   | 32,721              |   |       | 20,388                   |   |
|    Additional paid-in capital                                                        |   | 156,719,685         |   |       | 66,916,663               |   |
|    Accumulated deficit                                                               |   | (65,248,888         | )      |       | (53,062,512              | )      |
|                                                                                                |        |                     |   |            |                          |   |
|                                                                                                |   | 91,506,318          |   |       | 13,877,699               |   |
|    Currency translation adjustment                                                   |   | (26,401             | )      |       | (9,049                   | )      |
|                                                                                                |        |                     |   |            |                          |   |
|       Total shareholders’            equity                      |   | 91,479,917          |   |       | 13,868,650               |   |
|                                                                                                |        |                     |   |            |                          |   |
| Total liabilities and shareholders’ equity                                                     | $      | 98,856,573          |   | $          | 25,045,840               |   |
|                                                                                                |        |                     |   |            |                          |   |

See accompanying notes to the consolidated financial statements. 

 Page 4 

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**AUTHENTIDATE HOLDING              CORP. AND SUBSIDIARIES****CONSOLIDATED              STATEMENTS OF****OPERATIONS**(Unaudited) 

|                                                                                                  | **For the 3 months ended** |            | **For the 9 months ended** |   |
|--------------------------------------------------------------------------------------------------|----------------------------|------------|----------------------------|--------|
|                                                                                             |                            |       |                            |   |
|                                                                                                  | **March 31,**              |            | **March 31,**              |        | **March 31,** |  | **March 31,** |   |
|                                                                                                  | **2004**                   |            | **2003**                   |        | **2004** |  | **2003** |   |
|                                                                                             |                            |       |                            |   |  |   |  |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|    Net sales                                                                      | $                          | 6,790,398  |                       | $      | 8,105,870 |   | $ | 14,090,689 |   | $ |   | 19,491,021 |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|    Cost of goods sold                                                             |                       | 5,095,363  |                       |   | 6,652,697 |   |   | 9,543,119 |   |   |   | 14,964,532 |   |
|                                                                                             |                            |       |                            |   |  |   |  |   |
|       Gross profit                                                 |                       | 1,695,035  |                       |   | 1,453,173 |   |   | 4,547,570 |   |   |   | 4,526,489 |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|    Selling, general and                                                           |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|          administrative                    expenses |                       | 3,783,166  |                       |   | 3,027,959 |   |   | 9,727,163 |   |   |   | 9,023,914 |   |
|    Product development costs                                                      |                       | 679,027    |                       |   | 731,346 |   |   | 1,759,054 |   |   |   | 1,896,011 |   |
|                                                                                             |                            |       |                            |   |  |   |  |   |
|       Operating                    loss                            | (2,767,158                 | )          | (2,306,132                 | )      |   | (6,938,647 | ) |   |   | (6,393,436 | ) |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|    Other income (expense):                                                        |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|    Interest expense                                                               |                       | (42,134    | )                          |   | (339,912 | ) |   | (6,224,294 | ) |   |   | (587,734 | ) |
|    Interest and other income                                                      |                       | 244,358    |                       |   | 31,178 |   |   | 1,056,395 |   |   |   | 542,821 |   |
|    Equity in net loss of affiliated                    companies                  |                       |       |                       |   | (393,380 | ) |   |   |   |   |   | (514,427 | ) |
|                                                                                             |                            |       |                            |   |  |   |  |   |
|       Loss before                    income taxes                  | (2,564,934                 | )          | (3,008,246                 | )      | (12,106,546 | ) |   |   | (6,952,776 | ) |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|                                                                                             |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|    Income tax (expense)/benefit                                                   |                       | (411       | )                          |   | (1,512 | ) |   | 17,493 |   |   |   | (5,403 | ) |
|                                                                                             |                            |       |                            |   |  |   |  |   |
|    Net loss                                                                       | $                          | (2,565,345 | )                          | $      | (3,009,758 | ) | $ | (12,089,053 | ) | $ |   | (6,958,179 | ) |
|                                                                                             |                            |       |                            |   |  |   |  |   |
|    Per share amounts basic and                                                    |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|       diluted:                                                     |                       |       |                       |   |   |   |   |   |   |   |   |   |   |
|       Net loss                per commonshare                      |                       | ($0.09     | )                          |   | ($0.15 | ) |   | ($0.49 | ) |   |   | ($0.36 | ) |
|                                                                                             |                            |       |                            |   |  |   |  |   |

----

See accompanying notes to the consolidated financial            statements 

 Page 5 

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**AUTHENTIDATE HOLDING CORP. AND SUBSIDIARIES****CONSOLIDATED STATEMENTS OF CASH FLOW**(Unaudited) 

|                                                                                                                         |        | **For the 9 months                      ended** |         |
|------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|--------------|
|                                                                                                                         |   |                                                 |         |
|                                                                                                                         |        | **March 31,**                                   |              | **March 31,** |   |
|                                                                                                                         |        | **2004**                                        |              | **2003** |   |
| Cash flows from operating activities:                                                                                        |   |                                                 |         |  |   |
| Net loss                                                                                                                     |   |                                            | ($12,089,053 | ) |   | ($6,958,179 | ) |
| Adjustments to reconcile net loss to                                                                                         |   |                                            |         |   |   |   |   |
|    net cash provided by/(used                    in) operating activities:                                    |   |                                            |         |   |   |   |   |
|       Depreciation                    and amortization                                         |   |                                            | 895,736      |   |   | 1,398,077 |   |
|       Amortization                    of discount on convertible debentures                    |   |                                            | 5,396,813    |   |   | 278,195 |   |
|       Amortization                    of deferred financing costs                              |   |                                            | 545,773      |   |   |   |   |
|       Provision                    for doubtful accounts                                       |   |                                            | 30,731       |   |   | 42,930 |   |
|       Equity in                    net loss of affiliates                                      |   |                                            |         |   |   | 514,427 |   |
|       Non-cash                    issuance of warrants and options for services                |   |                                            | 622,393      |   |   | 164,483 |   |
|       Non-cash                    interest paid in stock                                       |   |                                            | 117,245      |   |   | 66,394 |   |
|       NYS Grant                    income (note 17)                                            |   |                                            | (732,000     | ) |   |   |   |
|       Other non-cash                    expenses                                               |   |                                            | 12,500       |   |   | 27,823 |   |
|       Changes                    in operating assets and liabilities:                          |   |                                            |         |   |   |   |   |
|          Accounts                    receivable and other receivables           |   | (2,165,716                                      | )            | (931,058 | ) |
|          Inventories                                                            |   | 44,408                                          |         | 51,947 |   |
|          Prepaid                    expenses and other current assets           |   | 19,766                                          |         | (201,147 | ) |
|          Accounts payable and other current                    liabilities      |   | (467,477                                        | )            | (203,907 | ) |
|          Deferred                    revenue                                    |   | 1,553,342                                       |         | 466,194 |   |
|          Income                    taxes                                        |   | (18,119                                         | )            | 5,477 |   |
|                                                                                                                         |   |                                                 |         |  |   |
| Net cash provided by/(used in) operating                    activities                                                       |   |                                            | (6,233,658   | ) | (5,278,344 | ) |
|                                                                                                                         |   |                                                 |         |  |   |
| Cash flows from investing activities:                                                                                        |   |                                            |         |   |   |   |   |
|    Property and equipment expenditures                                                                        |   |                                            | (124,787     | ) |   | (331,328 | ) |
|    Software development costs                                                                                 |   |                                            | (170,122     | ) |   | (225,239 | ) |
|    Other intangible assets                                                                                    |   |                                            | (491,607     | ) |   | (86,940 | ) |
|    Note receivable, repayment                                                                                 |   |                                            |         |   |   | 350,000 |   |
|    Other long term assets                                                                                     |   |                                            | (208,644     | ) |   | (82,403 | ) |
|    Investment in affiliates                                                                                   |   |                                            |         |   |   | (220,000 | ) |
|                                                                                                                         |   |                                                 |         |  |   |
|          Net                cash used in investing activities                   |   |                                            | (995,160     | ) |   | (595,910 | ) |
|                                                                                                                         |   |                                                 |         |  |   |
| Cash flows from financing activities:                                                                                        |   |                                            |         |   |   |   |   |
|    Proceeds - sale of common                    stock, net of expenses ($308,706)                             |   |                                            | 69,561,882   |   |   | 1,955,035 |   |
|    Proceeds issuance of debentures,                    net of expenses ($100,378)                             |   |                                            | 2,369,622    |   |   | 3,566,798 |   |
|    Net borrowings under line                    of credit                                                     |   |                                            | 706,585      |   |   | (15,826 | ) |
|    Principal payments on long-term                    debt                                                    |   |                                            | (1,486,700   | ) |   | (26,533 | ) |
|    Capital leases, net                                                                                        |   |                                            | (66,672      | ) |   | 43,842 |   |
|    Payment of registration costs                                                                              |   |                                            | (57,717      | ) |   | (63,419 | ) |
|    Exercise of warrants and options                                                                           |   |                                            | 8,334,321    |   |   | 199,293 |   |
|    Deferred financing costs                                                                                   |   |                                            | (137,300     | ) |   | (142,000 | ) |
|    Payback of loan by Company                    officer                                                      |   |                                            |         |   |   | 59,033 |   |
|    Preferred stock dividends                                                                                  |   |                                            | (70,000      | ) |   | (35,000 | ) |
|    Other                                                                                                      |   |                                            | 1,482        |   |   |   |   |
|                                                                                                                         |   |                                                 |         |  |   |
|          Net                    cash provided by/(used in) financing activities |   |                                            | 79,155,503   |   |   | 5,541,223 |   |
|                                                                                                                         |   |                                                 |         |  |   |
| Effect of exchange rate changes on cash flow                                                                                 |   |                                            | (17,352      | ) |   | (45,448 | ) |
|                                                                                                                         |   |                                                 |         |  |   |
| Net increase/(decrease) in cash and cash equivalents                                                                         |   |                                            | 71,909,333   |   |   | (378,479 | ) |
| Cash and cash equivalents, beginning of year                                                                                 |   |                                            | 3,460,446    |   |   | 2,269,353 |   |
|                                                                                                                         |   |                                                 |         |  |   |
| Cash and cash equivalents, end of period                                                                                     |   | $                                               | 75,369,779   |   | $ | 1,890,874 |   |
|                                                                                                                         |   |                                                 |         |  |   |

See accompanying notes to the consolidated financial                statements. 

Page 6 

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**AUTHENTIDATE HOLDING CORP.****NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

1.      In the opinion of management the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal, recurring adjustments, necessary for fair presentation. The consolidated financial statements include the accounts of Authentidate Holding Corp. (AHC) and its subsidiaries DJS Marketing Group, Inc. (DJS),  Authentidate, Inc., Authentidate International AG (AG) and Trac Medical Systems, Inc. (Trac Med) and its DocStar Division and are referred to as the Company.  

2.      The results of operations for the three and nine months ended March 31, 2004 are not necessarily indicative of the results to be expected for the full year.

3.      Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these consolidated financial statements be read in conjunction with the annual consolidated financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended June 30, 2003.

4.      The following represents the calculation of the basic and diluted loss per share amounts for the three and nine months ended March 31, 2004 and 2003, respectively.  

|                                   |   |   |                   |        |        | **March  31,**            |        |        |         |   |
|----------------------------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------|--------|
|                                        |        |        |                        |
|                                   |   |   | **Three Months Ended** |        |        |  **Nine    Months Ended** |   |
|                                   |   |        |                        |   |        |                                |   |
|                                   |   |   | **2004**               |        |        | **2003**                       |        |        | **2004**     |        |  | **2003** |   |
|                                   |   |        |                        |   |        |                                |   |        |              |   |  |  |   |
|                                   |   |   |                   |   |   |                           |   |   |         |   |   |   |   |
| Net income/(loss)                      |   |   | ($2,565,345            | )      |   | ($3,009,758                    | )      |   | ($12,089,053 | )      |   | ($6,958,179 | ) |
| Preferred stock dividends              |   |   | (17,500                | )      |   | (55,999                        | )      |   | (97,323      | )      |   | (170,091 | ) |
|                                   |   |        |                        |   |        |                                |   |        |              |   |  |  |   |
|                                   |   |   |                   |   |   |                           |   |   |         |   |   |   |   |
| Loss applicable to common shareholders |   |   | ($2,582,845            | )      |   | ($3,065,757                    | )      |   | ($12,186,376 | )      |   | ($7,128,270 | ) |
| Weighted average shares                |   |   | 30,283,325             |   |   | 20,102,062                     |   |   | 25,051,355   |   |   | 20,006,547 |   |
| Basic and diluted loss per share       |   |   | ($.09                  | )      |   | ($.15                          | )      |   | ($.49        | )      |   | ($.36 | ) |
|                                   |   |   |                   |   |   |                           |   |   |         |   |   |   |   |

|                         |        | **March 31,**                   |      |
|------------------------------|--------|---------------------------------|-----------|
|                         |   | **Three and Nine Months Ended** |      |
|                         |   |                                 |      |
|                         |        | **2004**                        |           | **2003** |   |
|                         |   |                                 |      |  |   |
| Options                      |   |                            | 4,677,648 |   |   | 5,118,301 |   |
| Warrants                     |   |                            | 2,298,582 |   |   | 3,550,696 |   |
| Convertible notes            |   |                            | –    |   |   | 1,480,000 |   |
| Convertible preferred shares |   |                            | 500,000   |   |   | 1,294,634 |   |
|                         |   |                                 |      |  |   |
| Total                        |   |                            | 7,476,230 |   |   | 11,443,631 |   |
|                         |   |                                 |      |  |   |

5.      The Company’s reportable segments are separate divisions and distinct businesses which are managed separately.  Included in the Authentidate Segment column are operations of Authentidate,  Trac Med and AG which are all in the authentication software services business.  DocStar is in the document imaging software business and DJS is in the systems integration business. DocStar sells through a national network of dealers (approximately 100 dealers) and anticipates the addition of several new dealers each quarter to expand into markets not currently served and also anticipates the deletion of a couple of non-performing dealers each quarter.  DJS’s market is primarily in the Albany, New Yorkregion.  Authentidate, Trac Med and AG sell their products and services on a global basis using a direct sales model. The Corporate Division’s expenses are non-operating expenses which include all public company related activities and apply to all of the Company’s operating divisions and therefore should be segregated.   The Company’s segment information follows:

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****

| **Segment Information for        the nine months ended:** |        |        | **DocStar** |        |        | **DJS**            |        |        | **Authentidate Segment** |        |        | **Totals** |   |
|-----------------------------------------------------------|--------|--------|-------------|--------|--------|--------------------|--------|--------|--------------------------|--------|--------|------------|--------|
| **March 31, 2004:**                                       |        |        |             |        |        |                    |        |        |                          |        |        |            |        |
| Net sales from external customers                         |   | $      | 4,311,759   |   | $      | 8,767,234          |   | $      | 1,011,696                |   | $      | 14,090,689 |   |
| Intersegment sales                                        |   |   |        |   |   | 62,699             |   |   | 114                      |   |   | 62,813     |   |
| Segment profit/(loss)                                     |   |   | 387,613     |   |   | 157,416            |   |   | (3,970,212               | )      |   | (3,425,183 | )      |
| Segment assets                                            |   |   | 3,911,906   |   |   | 4,222,877          |   |   | 3,092,256                |   |   | 11,227,039 |   |
|                                                      |   |   |        |   |   |               |   |   |                     |   |   |       |   |
| **March 31, 2003:**                                       |   |   |        |   |   |               |   |   |                     |   |   |       |   |
| Net sales from external customers                         |   | $      | 4,854,526   |   | $      | 13,524,741         |   | $      | 1,111,754                |   | $      | 19,491,021 |   |
| Intersegment sales                                        |   |   | 13,770      |   |   | 45,649             |   |   |                          |   |   | 59,419     |   |
| Segment profit/(loss)                                     |   |   | 459,901     |   |   | 135,639            |   |   | (4,137,462               | )      |   | (3,541,922 | )      |
| Segment assets                                            |   |   | 4,098,749   |   |   | 4,276,346          |   |   | 3,122,847                |   |   | 11,497,942 |   |
|                                                      |   |   |        |   |   |               |   |   |                     |   |   |       |   |
| **Reconciliation:**                                       |   |   |        |   |   | **March 31, 2004** |        |        | **March 31, 2003**       |   |   |       |   |
|                                                           |        |   |        |        |        |                    |        |        |                          |        |        |            |        |
|                                                      |   |   |        |   |   |               |   |   |                     |   |   |       |   |
| Total sales from segments                                 |   |   |        |   | $      | 14,153,502         |   | $      | 19,550,440               |   |   |       |   |
| Elimination of intersegment sales                         |   |   |        |   |   | (62,813            | )      |   | (59,419                  | )      |   |       |   |
|                                                           |        |   |        |        |        |                    |        |        |                          |        |        |            |        |
| Total consolidated net sales                              |   |   |        |   | $      | 14,090,689         |   | $      | 19,491,021               |   |   |       |   |
|                                                           |        |   |        |        |        |                    |        |        |                          |        |        |            |        |
|                                                      |   |   |        |   |   |               |   |   |                     |   |   |       |   |
| Total pre-tax loss of segments                            |   |   |        |   |   | ($ 3,425,183       | )      |   | ($ 3,541,922             | )      |   |       |   |
| Product development expenses                              |   |   |        |   |   | (1,759,054         | )      |   | (1,896,011               | )      |   |       |   |
| Corporate Division expenses                               |   |   |        |   |   | (6,928,982         | )      |   | (1,506,437               | )      |   |       |   |
| Elimination of intersegment profits                       |   |   |        |   |   | 6,673              |   |   | (8,406                   | )      |   |       |   |
|                                                           |        |   |        |        |        |                    |        |        |                          |        |        |            |        |
| Loss before income taxes                                  |   |   |        |   |   | ($12,106,546       | )      |   | ($ 6,952,776             | )      |   |       |   |
|                                                           |        |   |        |        |        |                    |        |        |                          |        |        |            |        |
|                                                      |   |   |        |   |   |               |   |   |                     |   |   |       |   |
| Total assets of segments                                  |   |   |        |   | $      | 11,227,039         |   | $      | 11,497,942               |   |   |       |   |
| Corporate assets                                          |   |   |        |   |   | 87,646,549         |   |   | 14,364,078               |   |   |       |   |
| Elimination of intersegment  assets                       |   |   |        |   |   | (17,015            | )      |   | (23,801                  | )      |   |       |   |
|                                                           |        |   |        |        |        |                    |        |        |                          |        |        |            |        |
| Consolidated assets                                       |   |   |        |   | $      | 98,856,573         |   | $      | 25,838,219               |   |   |       |   |
|                                                           |        |   |        |        |        |                    |        |        |                          |        |        |            |        |

6.      In    February 2004, the Company completed a private sale of its common stock to    certain accredited investors pursuant to Section 4(2) of the Securities Act    of 1933 (“the Securities Act”), as amended and Regulation D,    promulgated thereunder. The Company sold a total of 5,360,370 common shares    at a price    of $13.75 per share and realized gross proceeds of $73,705,000. After payment    of offering expenses and broker commissions the Company realized $69,562,000    in net proceeds. The shares of common stock issued are restricted securities    and have not been registered under the Securities Act, or any state securities    law, and unless so registered, may not be offered or sold in the United Statesabsent a registration or applicable exemption from the registration requirements    of the Securities Act and applicable state securities laws. The Company will    use the funds to strengthen its balance sheet, develop a back-up data center    for Authentidate Inc. as well as for sales and marketing activities and general    corporate purposes.      

7.      In July and August 2002 the Company sold 660,077 shares of its common stock at $3.03 per share in a private transaction.  The Company received gross proceeds of approximately $2.0 million.  The Company issued 132,015 common stock purchase warrants to the buyers which have an exercise price of $3.26 per share and have a five year life.  The proceeds have been used to fund business development, sales and marketing of the Authentidate businesses along with general working capital of the Company. 

8.      In October 2002, the Company sold convertible debentures with a face value of $3,700,000  to institutional investors and warrants to purchase 444,000 shares of common stock.  The debentures are convertible into shares of the Company’s common stock at an initial conversion price of $2.50 per share.  The debentures are due three years from the date of issuance and accrue interest at the rate of 7% per annum, payable quarterly in arrears.  At the option of the Company, the interest may be paid in either cash or additional shares of common stock.  The warrants are exercisable for a period of four years from the date of issuance and are initially exercisable at $2.50 per share.  The conversion priceof the debentures and the exercise price of the warrants are subject to adjustment in the event the Company issues common stock or securities convertible into common stock at a price per share of common stock less than the conversion price or exercise price on the basis of a weighted average formula.

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In addition,    the conversion price of the debentures and the exercise price of the warrants    are subject to adjustment at any time  as the result of any subdivision, stock split, combination of shares or recapitalization.  The Company had an option, but not a requirement, to sell another $2,470,000  of convertible debentures to the same investors provided the Company’s  common stock maintains a trading price at or above $3.00 per share for the  15 trading days preceding an election to sell additional debentures. In September  2003, the Company exercised this option and issued $2,470,000 convertible debentures  with an initial conversion price of $3.00 per share. The Company also issued  247,000 common stock purchase warrants in connection with these debentures.  The warrants have an initial exercise price of $3.00 per share.

The debentures are due three        years from the date of issuance and accrue interest at the rate of 7%        per annum, payable quarterly in arrears. At the option of the Company,        the interest may be paid in either cash or additional shares of common        stock. The warrants are exercisable for a period of five years from the        date of issuance. The conversion price of the debentures and the exercise        price of the warrants are subject to adjustment in the event the Company        issues common stock or securities convertible into common stock at a        price per share of common stock less than the conversion price or exercise        price on the basis of a weighted average formula. In addition, the conversion        price of the debentures and the exercise price of the warrants are subject        to adjustment at any time as the result of any subdivision, stock split,        combination of shares or recapitalization.

In May and June 2003 the Company        issued similar convertible debentures in the amount of $2,725,300 to        institutional investors and warrants to purchase 419,279 shares of common        stock. These debentures have an initial conversion price of $2.60 per        share. The debentures are due three years from the date of issuance and        accrue interest at the rate of 7% per annum, payable quarterly in arrears.        At the option of the Company, the interest may be paid in either cash        or additional shares of common stock. The warrants are exercisable for        five years from the date of issuance and 50% of the warrants are initially        exercisable at $2.60 per share and the remaining 50% of the warrants        are initially exercisable at $2.86 per share. The conversion price of        the debentures and the exercise price of the warrants are subject to        adjustment in the event the Company issues common stock or securities        convertible into common stock at a price per share of common stock less        than the conversion price or exercise price on the basis of a weighted        average formula. In addition, the conversion price of the debentures        and the exercise price of the warrants are subject to adjustment at any        time as the result of any subdivision, stock split, combination of shares        or recapitalization.

On        September 22, 2003, we completed the sale of 166,667 common shares for        $500,000 to an additional accredited investor. In addition, we also issued        warrants to purchase an aggregate of 50,000 shares of common stock to        the investor in this transaction. The per share purchase price of the        common stock and the per share exercise price of the warrants is $3.00.        The investor also agreed to a twelve-month “lock-up” provision        restricting the resale of the securities. We also issued warrants to        purchase an aggregate of 10,000 shares of our common stock to a consultant        for services rendered in connection with this transaction which are exercisable        at $3.00 per share. The consultant also received a cash fee equal to        6% of the gross proceeds we received. The Company recorded a debt discount        related to the beneficial conversion feature of the debentures and the        value of the warrants. The Company recorded a total of approximately        $5.9 Million in debt discount for all three convertible debenture sales        described above. This debt discount was to be amortized and charged to        interest expense over the respective 36 month terms. In the event the        investors converted the debentures prior to the end of respective 36        month terms then generally accepted accounting principles require the        Company to expense the unamortized balance of the debt discount. 

Each of the foregoing transactions        was a private transaction exempt from the registration requirements of        the Securities Act of 1933, as amended, by reason of Section 4(2) thereof        and/or Regulation D, promulgated thereunder.

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9.       In October 2003, the Company forced the conversion of the October 2002 debentures in the amount of $3,700,000 and the May/June 2003 debentures in the amount of $2,725,300.  The Company  issued 2,528,192 common shares to complete the conversion.  In December 2003, the Company forced the conversion of the third and last set of convertible debentures in the amount of $2,470,000 and issued 823,333 common shares to complete the conversion.  During the quarter ended December 31, 2003 the Company expensed the entire balance of unamortized debt discount and charged approximately $5.1 Million to interest expense.  This brings the total write-off of debt discount for the six months ended December 31, 2003 toapproximately $5.4 Million, all of which is a non cash interest charge.

     In addition, the Company expensed all unamortized deferred financing costs related to these three debenture issues during the six months ended December 31, 2003, in the amount of $546,000 as interest expense.   The Company will save approximately $623,000 in interest payments annually as a result of these conversions.

10.      As described in our report on Form 10-K for the fiscal year ended June 30, 2003, we are involved in the following pending and threatened legal proceedings. We are the defendant in a third party complaint filed by Shore Venture Group, LLC in the Federal District Court for the Eastern District of Pennsylvania.  The third party complaint was filed on May 7, 2001.  Shore Venture is the defendant to an action commenced by Berwyn Capital.  The third party complaint alleges a claim of breach of contract and seeks indemnification.  There was a trial in October 2002 and we continueto await the judge’s decision.  Management believes that the claim will not have a material adverse impact on our financial condition, results of operations or cash flow.     

We are engaged in no other litigation        the effect of which would be anticipated to have a material adverse impact        on our financial condition, results of operations or cash flows.
11.    Total comprehensive income/(loss) consist of:
 **March    31,**      **Three Months Ended****Nine  Months Ended**       **2004****2003****2004****2003**                        Net loss           ($2,565,345)        ($3,009,758)        ($12,089,053)    ($6,958,179)Currency translation adjustment  (2,935) (14,977)        (17,352) (45,448)          Total comprehensive loss   ($2,568,280) ($3,024,735)  ($12,106,405)  ($7,003,627)          
12.      Effective July 1, 2001, the Company adopted FAS 141 and FAS 142.  FAS 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting.  It also specifies the types of acquired intangible assets that are required to be recognized and reported separate from goodwill.  FAS 142 requires that goodwill and certain intangibles no longer be amortized, but instead tested for impairment at least annually.  The changes in the carrying amount of goodwill for the nine months ended March 31, 2004, are as follows:
 **DJS****Authentidate****AG****Trac Med** **Total**       Balance June 30, 2003 $1,178,765 $   3,987,571 $ 7,291,165 $ 338,000 $ 12,795,501 Changes in carrying amount of goodwill   —    —    —    —    —        Balance March 31, 2004 $ 1,178,765 $ 3,987,571 $ 7,291,165  $ 338,000 $ 12,795,501                         The Company retains    a third party valuation firm to perform an annual valuation of goodwill as    of June 30 each year. There have been no developments during the nine months    ended March 31, 2004, which would require an interim valuation of goodwill.
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Intangible asset amortization    expense for the nine months ended March 31, 2004 was $192,536. Below is a    chart of intangible assets:        **June 30, 2003** **March 31, 2004**    ** **** ****Gross Carrying      Amount**** ****Accumulated      Amortization**** ****Gross Carrying      Amount**** ****Accumulated      Amortization**** **     Patents$321,085 $43,679 $365,782 $61,767 Other Intangible Assets:            Trademarks 138,578  22,583  133,086  28,633 Completed technologies 59,400  37,125  59,400  59,400 Accreditation 121,800  76,125  121,800  121,800 Licenses 15,101  9,567  476,482  118,994      Total$655,964 $189,079 $1,156,550 $390,594                   No significant residual    value is estimated for these intangible assets. Patent, trademark and other    intangible asset amortization expense is expected to be approximately the    same amount in 2005, 2006, 2007 and 2008, as expected in 2004.
13.      Included in net sales and cost of goods sold are service sales of $958,000 and $336,000 for the nine and three months ended March 31, 2004, respectively and cost of service sales of $385,000 and $126,000 for the nine and three months ended March 31, 2004, respectively. This compares to servicesales of $1,163,000 and $370,000 for the nine and three months ended March 31, 2003, respectively and cost of service sales of $461,000 and $153,000 for the nine and three months ended March 31, 2003, respectively.

14.      On October 30, 2002, the Company filed a Certificate of Amendment of the Certificate of Designations, Preferences and Rights and Number of Shares of Series B Preferred Stock with the Secretary of State of the State of Delaware.  The Amendment provides that the conversion rate applicable to the outstanding shares of Series B Preferred Stock will be fixed at $1.40.  Previously, the conversion rate was equal to the lower of $1.875 and the average of the closing bid and asked prices of our common stock for the immediately preceding ten consecutive trading days ending one day prior to the notice of conversion; provided, however, that the conversion rate would not be below $0.875.  Accordingly, the outstanding 28,000 shares of Series B Preferred Stock are presently convertible into an aggregate of 500,000 shares of the Company’s common stock.  Prior to the amendment, the outstanding shares of Series B Preferred Stock were convertible into a maximum of 800,000 shares of the Company’s common stock.  In consideration of obtaining the consent of the holder of the outstanding Series B Preferred Stock, the Company agreed to defer its ability to redeem those shares for a period of two years.

15.      In April 2003, the non executive Directors approved a plan to purchase all of the outstanding Series A Preferred Stock from the Company’s Chairman and Chief Executive Officer in exchange for loans owed to the Company by the Chairman and for cash.  The Company’s Series A Preferred Stock provides the holder with the ability to elect a majority of the Company’s Board of Directors.  The Company and its Chief Executive Officer agreed on a total purchase price for this transaction of $850,000 which represents a discount as compared to the appraised value of the shares of Series A Preferred Stock of $1.1 million which was determined by an independent nationally recognized appraisal and valuation firm.  TheCompany’s Board ordered this valuation prior to  agreeing upon the purchase price for the shares of Series A Preferred Stock.  Of the purchase price paid,  approximately $455,000 was credited against certain loans owed to the Company.  Of the balance due to the Chief Executive Officer $70,000 was paid at closing and the balance is being paid in monthly installments of $15,000.  

16.      The Company does not expense options granted under the Company’s option plans.  The Company applies FAS No.123 to determine the compensation cost on a pro-forma basis for footnote disclosure.  The pro-forma amounts in the table below were determined using the Black Scholes option-pricing model which values options based on the stock price at the grant date, the expected life of the option, the estimated volatility, expected dividend payments and the risk-free interest rate over the expected life of the options.

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                 **March****31,**         **Three Months Ended**  **Nine****Months          Ended**        **2004**  **2003**  **2004** **2003**         Net Loss:             As reported ($2,565,345)  ($3,009,758) ($12,089,053) ($6,958,179)Deduct: total stock based employee                compensation expense determined                under fair value method (1,047,545)  (873,506) (2,382,431) (2,336,809)                      Proforma ($3,612,890)  ($3,883,264) ($14,471,484) ($9,294,988)Basic and diluted net loss per common share:                As reported ($.09)  ($.15) ($.49) ($.36)   Proforma ($.12)  ($.20) ($.58) ($.47)
17.       In June 1999, the Company completed construction of a new office and production facility in Schenectady, New York for approximately $2,300,000 which was financed with a $1,000,000 grant from the Empire State Development Corporation (ESDC) (an agency of New York state) and a mortgage loan from a local financial institution.  The grant stipulates that the Company is obligated to achieve certain annual employment levels between January 1, 2002 and January 1, 2004 or some or all of the grant will have to be repaid. Although we have not achieved the agreed upon employment levels to date, we reached an agreement with the ESDC to restructure the grant terms relating to this covenant.  We agreed to repay$268,000 of the grant amount at the rate of $10,000 per month, interest free, in consideration of the ESDC’s agreement to permanently reduce our employment level requirement to 99.  At March 31, 2004 the amount due ESDC was $198,000 and is included in debt on the balance sheet.  As a result of this arrangement, we recorded $732,000 as other income in the Corporate Division.

18.      Belowis a summary of changes in Shareholders’ Equity for the nine months ended March 31, 2004:
 **Preferred****Stock** **Common****Stock**  **Paid in****Capital** **Accumulated****Deficit** **Translation****Adjustment** **Total Shareholders'****Equity**         Balance                      June 30, 2003$3,160 $20,388  $66,916,663 ($53,062,512)($9,049)$13,868,650 Exercise of options                      and warrants    2,669   8,331,652        8,334,321 Convert debt to common                      stock    3,352   8,891,949        8,895,301 Convert preferred stock                      to common stock (360) 743   (383)       — Private stock sale    5,527   69,865,061       69,870,588 Debenture interest                      paid in shares    40            40 Offering expenses        (544,803)       (544,803)Warrants and options                      issued for services        622,393        622,393 Registration costs        (57,717)       (57,717)Deferred Financing Costs                      and Debt Discount related                      to sale of Convertible                      Debentures in September 2003      2,565,167        2,565,167 Debenture interest paid                      In common stock        117,205        117,205 Currency translation adj.              (17,352) (17,352)Preferred stock dividends           (97,323)    (97,323)Restricted share as compensation  2   12,498        12,500 Net loss          (12,089,053)    (12,089,053)        Balance Mar. 31, 2004$2,800 $32,721  $156,719,685 ($65,248,888)($26,401)$91,479,917             
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19.      We have entered into various agreements by which we may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification provisions are included in contracts arising in the normal course of business under which we customarily agree to hold the indemnified party harmless against losses arising from a breach of representations related to such matters as intellectual property rights. Payments by us under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by us and to dispute resolution procedures specified in the particular contract.  Further, our obligations under thesearrangements may be limited in terms of time and/or amount and, in some instances, we may have recourse against third parties for certain payments made by us. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement.  Historically, the Company has not made any payments under these agreements that have been material individually or in the aggregate. As of March 31, 2004, we were not aware of any obligations under such indemnification agreements that would require materialpayments.
 **Management’s    Discussion and Analysis of****Item 2.** **Financial Condition and Results    of Operations****Overview**   
We areinvolved in the development    of security software technology, document imaging software products and services    and systems integration  services and products. Our products include DocStar document imaging software  products and services, the Authentidate authentication and security software  products and services and system integration services and products through  our DJS subsidiary. We also offer, through our Trac Medical Solutions subsidiary,  the CareCertTM Internet-based medical forms processing service. Authentidate  products are sold by Authentidate, Inc., Trac Medical Solutions, Inc., and  Authentidate International, AG and this group of companies is referred to as  the Authentidate Group. Revenues generated during the nine months ended March  31, 2004 were primarily derived from our DocStar and DJS segments. Our Authentidate  Group generated $1,012,000 in revenues during the nine months ended March 31,  2004.

DJS is an authorized sales          and support provider for software products such as Microsoft Solutions          and Lotus Notes. DJS sells computer hardware and provides software          and professional services to businesses to meet their data management          needs.

Authentidate engages in the          business of providing end users with a software-based security service          designed to accept and store a digital code through the Internet which          enables users to prove the authenticity of the date, time and the content          of any electronic document. The Authentidate product was released for          sale in May, 2001. We contemplate that product integration development          work will be necessary for each application or customer. We currently          own approximately 98% of Authentidate, Inc.

On July 31, 2002, we entered          into a strategic alliance agreement with the United States Postal Service          to serve as the preferred provider of the USPS Electronic Postmark® (EPM)          service. Under the terms of the agreement, our subsidiary, AuthentiDate,          Inc., provides the management, technology and support for the United          States Postal Service’s EPM system. The USPS Electronic Postmark® provides          evidence that the content of a document or file existed at a specific          date and time and is intended to protect the integrity of the document          or file by ensuring that it cannot be altered without detection. The          EPM uses our patent pending technology offering highly sophisticated          encryption methodology ensuring document authenticity and is intended          to be able to be added to any application regardless of the computing          platform or operating system. In order to facilitate this product launch,          we entered into development and promotional agreements with Microsoft          Corporation and an affiliate of Microsoft in order to create the necessary          software interfaces to Microsoft Office®. We announced a general          release of this product on October 21, 2003. Authentidate generates          sales both from the sale of EPM’s and the sale of professional          services.

In March 2002, we acquired          all the outstanding capital stock of Authentidate International, AG.          We previously owned 39% of Authentidate International. Authentidate          International sells the Authentidate product in the European marketplace          and is currently focusing on the German market. Authentidate International          enters into revenue generating agreements with end-users and resellers          through which it expects to realize revenue from a combination of license          fees, maintenance fess, transactions fees and professionalservices.

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We    also organized Trac Medical Solutions during the fiscal year ended June 30,    2001 in order to develop a business model to apply the Authentidate technology    to the medical supply business relating to the automation and processing    of Certificates of Medical Necessity. Trac Med generates sales through license    fees, maintenance fees, the sale of transactions and professional services.    During the fiscal year ended June 30, 2002, Trac Medical began entering into    revenue-generating agreements with customers using its CareCertTM service.    In February 2004, Trac Medical entered into an agreement with Homecare Association    LLC, pursuant to which Trac Medical markets its CareCert service directly    to the membership community of the American Association for Homecare. 
**Critical Accounting Policies and Estimates**
Our discussion and analysis of our financial condition  and results of operations are based on our consolidated financial statements,  which have been prepared in accordance with accounting principles generally  accepted in the United States of America. The preparation of these financial  statements requires us to make estimates and judgments that affect reported  amounts of assets, liabilities, revenues and expenses, and related disclosures  of contingent assets and liabilities. On an ongoing basis, we evaluate our  estimates, including those related to new product launches, bad debts, inventory  obsolescence, goodwill, intangible assets, software capitalization and deferred  tax assets and contingencies and litigation. We base our estimates on historical  experience and on various other assumptions that are believed to be reasonable  under the circumstances, the results of which form the basis for making judgments  about the carrying values of assets and liabilities that are not readily apparent  from other sources. Actual results could differ from these estimates under  different assumptions.  
We believe the following critical        accounting policies require significant judgments and estimates used        in the preparation of our consolidated financial statements. We maintain        allowances for doubtful accounts for estimated losses resulting from        the inability of our customers to make required payments. If the financial        condition of our customers were to deteriorate, resulting in an impairment        of their ability to make payments, additional allowances may be required. 

 We write down our inventory        for estimated obsolescence or nonmarketable inventory equal to the difference        between the cost of the inventory and the estimated market value based        upon assumptions about future demand and market conditions. If actual        market conditions are less favorable than those projected by management,        additional inventory write downs may be required.

We have capitalized goodwill        related to our acquisitions of Authentidate International AG and Trac        Medical Solutions, Inc., for which the recoverability of such capitalized        goodwill is highly dependent on the future success of the marketing and        sales of such product. If the product is not well received by the market        place and our future forecasted revenue and profitability from such product        launch is less than anticipated, the carrying value of goodwill may be        impaired and require an impairment charge in the future. 

We record a full valuation against        our deferred tax assets when we believe it is more likely than not that        such deferred tax assets will not be realized. 
**Results of Operations****The Three and Nine Months Ended March 31, 2004 Compared to the Three and Nine Months Ended March 31, 2003.**

We realized a consolidated net      loss of $2,565,000 ($.09 per share) and $12,089,000 ($.49 per share) for      the three and nine months ended March 31, 2004, respectively, compared      to a consolidated net loss of $3,010,000 ($.15 per share ) and $6,958,000      ($.36 per share) for the three and nine months ended March 31, 2003, respectively.

The consolidated net loss for the      nine months ended March 31, 2004 was negatively affected by the conversion      of convertible debentures to common stock which is further described in      footnote 9. We expensed $5.6 Million of deferred financing costs and debt      discount during the quarter ending December 31, 2003. We expensed a total      of $5.9 Million of deferred financing costs and debt discount during the      current fiscal year. Virtually all of this expense was recorded prior to      the third quarter ended March 31, 2004. The entire write-off of $5.9 Million      is a non-cash expense.
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The Authentidate Segment realized a segment loss  of $1,459,000 and $3,970,000 for the three and nine months ended March 31,  2004, respectively, on total sales of $416,000 and $1,012,000 for the three  and nine months ended March 31, 2004, respectively. Much of the sales of this  segment are recorded as deferred revenue. In this situation, we will receive  prepaid transaction and license fees from customers which are deferred and  amortized into sales over the life of the respective sales agreements, as required  under generally accepted accounting principles. Deferred revenue increased  by $709,000 from December 31, 2003 to March 31, 2004 for the Authentidate Segment.  Deferred revenues increased by $1,484,000 from June 30, 2003 to March 31, 2004  for the Authentidate Segment. The deferred revenue on the balance sheet will  generally be recognized as sales on a quarterly basis going forward over the  life of the respective sales contracts.

The DocStar Segment realized        a segment profit of $96,000 and $388,000 for the three and nine months        ended March 31, 2004, respectively, compared to ($31,000) and $460,000        for the same periods last year. The DJS Segment realized a segment profit        of $136,000 and $157,000 for the three months and nine months ended March        31, 2004, respectively, compared $97,000 and $136,000 for the same periods        last year.

Consolidated sales were $6,790,000        and $14,091,000 for the three months and nine months ended March 31,        2004, respectively. This compares to consolidated sales of $8,106,000        and $19,491,000 for the three and nine months ended March 31, 2003, respectively.        This decrease versus the prior year is primarily a result of a decline        in low margin direct hardware sales by DJS. Although, DJS sales declined        by $4.8 Million during the nine months ended March 31, 2004 compared        to the prior year, segment income increase by $22,000 because the sales        decline was on low margin computer hardware and also because DJS reduced        overhead costs substantially to compensate for the reduction in computer        hardware sales. Sales in the Authentidate Segment decreased by $100,000        during the nine months ended March 31, 2004 compared to the prior year,        however deferred sales increased by $1,331,000 from March 31, 2003 to        March 31, 2004 in the Authentidate Segment. DocStar sales declined by        approximately $543,000 during the nine months ended March 31, 2004 compared        to the prior year, a decline of 11%.

Consolidated gross profit for        the three and nine months ended March 31, 2004 was $1,695,000 and $4,548,000,        respectively, compared to $1,453,000 and $4,526,000 for the three and        nine months ended March 31, 2003. The consolidated gross profit margin        was 25.0% and 32.3% for the three and nine months ended March 31, 2004        compared to 17.9% and 23.2% for the same periods last year. Gross profit        margin is defined as gross profit as a percentage of net sales. The increase        in margins for both the three and nine month periods is due to a reduction        in low margin hardware sales by DJS this year compared to last year and        an increase in gross margins in DocStar which realized a gross margin        increase from 63.6% at March 31, 2003 to 71.8% at March 31, 2004. DJS        realized a small gross margin increase from 11.6% at March 31, 2003 to        14.4% at March 31, 2004.

Selling, general and administrative        expenses (S,G&A) consist of all other Company expenses except product        development costs and interest. S,G&A expenses amounted to $3,783,000        and $9,727,000 for the three and nine months ended March 31, 2004, respectively,        compared to $3,028,000 and $9,024,000 for the same periods last year.        This increase for the nine month period is due to the Authentidate Segment        which spent $591,000 more this year compared to last year mainly due        to increased spending on sales and marketing.

As a percentage of net sales,        S,G&A costs were 55.7% and 69.0% for the three months and nine months        ended March 31, 2004, respectively, compared to 37.4% and 46.3% for the        same periods last year.

Interest expense was $42,000        and $6,224,000 for the three and nine months ended March 31, 2004, respectively,        compared to $340,000 and $588,000 last year. The increase is primarily        due to the writeoff of unamortized debt discount and unamortized deferred        financing costs ($5.9 Million) due to the conversion of convertible debentures        to common stock        during        the        six months ended December 31, 2003 as non-cash interest expense.

Product development expenses,        excluding capitalized costs, primarily relate to software development        for the Authentidate Segment. These costs were substantially the same        compared to the prior year. The Company has a policy of capitalizing        qualified software development costs after technical feasibility has        been established and amortizing those costs over three years as cost        of goods sold The amortization expense of software development costs        amounted to $56,000 and $191,000 during the three and nine months ended        March 31, 2004.

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Following is certain    Segment Information:           **Segment Information for the nine months ended:**           **DocStar****DJS****Authentidate Segment****Totals** **March 31, 2004:**    Net sales from external customers$4,311,759 $8,767,234 $1,011,696  $14,090,689 Intersegment sales    62,699  114  62,813 Segment profit/(loss) 387,613  157,416 (3,970,212) (3,425,183)Segment assets 3,911,906 4,222,877 3,092,256  11,227,039              **March 31, 2003:**            Net sales from external customers$4,854,526 $13,524,741 $1,111,754 $19,491,021 Intersegment sales 13,770  45,649     59,419 Segment profit/(loss) 459,901  135,639 (4,137,462) (3,541,922)Segment assets 4,098,749 4,276,346 3,122,847  11,497,942                           **Reconciliation:**   **March 31, 2004**** ****March 31, 2003**                          Total sales from segments   $14,153,502 $19,550,440    Elimination of intersegment sales    (62,813)  (59,419)            Total consolidated net sales   $14,090,689 $19,491,021                          Total pre-tax loss of segments   ($3,425,183) ($3,541,922)   Product development expenses    (1,759,054) (1,896,011)   Corporate Division expenses   (6,928,982) (1,506,437)   Elimination of intersegment profits    6,673  (8,406)            Loss before income taxes   ($12,106,546) ($6,952,776)                         Total assets of segments   $11,227,039 $11,497,942    Corporate assets    87,646,549  14,364,078    Elimination of intersegment    assets    (17,015) (23,801)            Consolidated assets   $98,856,573 $25,838,219             
**Liquidity and Capital Resources****Overview**

The Company’s primary sources of funds to  date have been the issuance of equity and the incurrence of third party debt.  The principal balance of long-term debt at March 31, 2004 totaled $331,000  and related to two insignificant notes payable. During the quarter ended March  31, 2004, we paid off our mortgage in full in the amount of approximately $1.3  million in order to reduce interest expenses. This mortgage carried a rate  of interest of 8.25% per annum which we considered high. We don’t have  any current plans to seek to refinance the building given our current cash  balances.

 As discussed in further detail        below, in February 2004, we sold a total of 5,360,370 common shares in        private placements pursuant to Section 4(2) of the Securities Act and        Rule 506, promulgated thereunder. We realized gross proceeds of $73,705,000        from these transactions and received net proceeds of $69,562,000 after        payment of offering expenses and broker commissions.

The Company’s DJS subsidiary        has a $2.5 Million revolving line of credit with a financial institution        collateralized by all assets of DJS and guaranteed by the Company. The        agreement restricts DJS from making cash advances to the parent Company,        AHC, without obtaining a waiver from the financial institution. The interest        rate is prime plus 1.75% with a minimum rate of 7%, however no interest        is incurred if DJS pays each draw off within 30 days. DJS may borrow        on this line based on a formula of qualified accounts receivable and        inventory. The outstanding balance on this line of credit is $1.6 Million        at March 31, 2004.

Property, plant and equipment        expenditures totaled $125,000 and capitalized software development expenditures        totaled $170,000 for the nine months ended March 31, 2004, respectively.        There are no significant purchase commitments outstanding.

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In June 1999, we completed    construction of a new office and production facility in Schenectady, New    York for approximately $2,300,000 which was financed with a $1,000,000 grant    from the Empire State Development Corporation (ESDC) (an agency of New York    state) and a mortgage loan from a local financial institution. The grant    stipulates that we’re obligated to achieve certain annual employment    levels between January 1, 2002 and January 1, 2004 or some or all of the    grant will have to be repaid. Although we have not achieved the agreed upon    employment levels to date, in 2003, we entered into an agreement with the    ESDC to restructure the grant terms relating to this covenant. We agreed    to repay $268,000 of the grant amount at the rate of $10,000 per month, interest    free, in consideration of the ESDC’s agreement to permanently reduce    our employment level requirement to 99. As a result of this arrangement,    we recorded $732,000 as other income in the Corporate Division. 
**Cash Flows**
Our    cash balance at March 31, 2004 was $75,370,000 and total assets were $98,857,000.    The cash balance at June 30, 2003 was $3,460,000.  We used $6,234,000 of cash in operating activities during the nine months ended  March 31, 2004. This compares to cash used in operating activities of $5,278,000  for the same period last year. Total cash flow provided by all activities was  $71,909,000 for the nine months ended March 31, 2004 compared to net cash    used of $378,000 for the nine months ended March 31, 2003. This increase    in cash  during the nine months ended March 31, 2004 is mainly due to the sale of common  stock which generated net proceeds of $69,562,000, the sale of convertible  debentures of $2,370,000 and the exercise of common stock options and warrants  of $8,334,000. The decrease in cash during the nine months ended March 31,  2003 is mainly due the Company’s operating activities ($5,278,000) offset  by the sale of convertible debentures of $3,567,000.
To date we have been largely dependent      on our ability to sell additional shares of our common stock or other securities      to obtain financing to fund our operating deficits. Under our current operating      plan to introduce the new Authentidate technology, our ability to improve      operating cash flow has been highly dependent on the market acceptance      of our products. Our completion of the financing for net proceeds of $69,562,000      referred to above during the quarter ending March 31, 2004 will satisfy      our working capital and capital expenditure requirements for the foreseeable      future. 

Our future capital requirements      may vary materially from those now planned. The amount of capital thatwe will need in the future will depend on many factors, including: •our relationships with suppliers and customers; •the market acceptance of our products; •the levels of promotion and advertising that will be required to launch our new products and achieve and maintain a competitive position in the marketplace; •price discounts on our products to our customers; •our pursuit of strategic transactions; •our business, product, capital expenditure and research and development plans and product and technology roadmaps; •the levels of inventory and accounts receivable that we maintain; •capital improvements to new and existing facilities; •technological advances; and •our competitors’ response to our products. 
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**Financing Activities**

In order to address our working capital needs, on  September 12, 2003, we completed the sale of $2,470,000 of our securities to  certain accredited investors pursuant to Section 4(2) of the Securities Act  of 1933, as amended, and Regulation D, promulgated thereunder. We received  net proceeds of approximately $2,400,000, after paying all fees and expenses.  We have been applying these proceeds to working capital and general corporate  purposes. In the transaction, we sold $2,470,000 of convertible debentures  to the investors and warrants to purchase an aggregate of 247,000 shares of  common stock. The debentures are convertible into shares of our common stock  at an initial conversion price of $3.00 per share and the warrants are exercisable  into shares of common stock at an initial price of $3.00 per share.

The other terms and conditions        of the debentures and warrants are the same as set forth in the debentures        and warrants issued in the first tranche of this transaction in October        2002. As previously reported, the convertible debentures issued in this        transaction were converted into shares of common stock during the fiscal        quarter ended December 31, 2003.

We also issued warrants to purchase        an aggregate of 49,400 shares of common stock to certain consultants        for services rendered in connection with this transaction which are exercisable        at $3.00 per share. The consultants also received a cash fee equal to        6% of the gross proceeds we received.

Further, on September 22, 2003,        we completed the sale of 166,667 shares of common stock to an additional        accredited investor pursuant to Section 4(2) of the Securities Act of        1933, as amended, and Regulation D, promulgated thereunder for $500,000.        We have been applying these proceeds to working capital and general corporate        purposes. In addition, we also issued warrants to purchase an aggregate        of 50,000 shares of common stock to the investor in this transaction.        The per share purchase price of the common stock and the per share exercise        price of the warrants is $3.00. The investor also agreed to a twelve-month “lock-up” provision        restricting the resale of the securities. We also issued warrants to        purchase an aggregate of 10,000 shares of our common stock to a consultant        for services rendered in connection with this transaction which are exercisable        at $3.00 per share. The consultants also received a cash fee equal to        6% of the gross proceeds we received.

The securities sold in each of        the foregoing transactions are restricted securities under the terms        of Regulation D and may not be transferred or resold for a period of        one year, except pursuant to registration under the Securities Act or        an exemption thereunder. We filed a registration statement with the Securities        and Exchange Commission to register the shares of common stock issued        and issuable to the investors in both transactions, which was declared        effective by the Commission during the period covered by this report.

In February 2004, we completed        a private offerings of our common stock to certain accredited investors        pursuant to Section 4(2) of the Securities Act of 1933 (“the Securities        Act”), as amended and Regulation D, promulgated thereunder. We                sold a total of 5,360,370 common shares at a price of $13.75 per share        and realized gross proceeds of $73,705,000. After payment of offering        expenses and broker commissions we realized $69,562,000 in net proceeds.        The shares of common stock issued are restricted securities and have        not been registered under the Securities Act, or any state securities        law, and unless so registered, may not be offered or sold in the United        States absent a registration or applicable exemption from the registration        requirements of the Securities Act and applicable state securities laws.        We will use the funds to strengthen our balance sheet, develop a back-up        data center for Authentidate Inc. as well as for sales and marketing        activities and general corporate purposes.

The securities sold in each of        the foregoing transactions are restricted securities under the terms        of Regulation D and may not be transferred or resold for a period of        one year, except pursuant to registration under the Securities Act or        an exemption thereunder. Pursuant to registration rights agreements entered        into with the investors in these financings, we filed a registration        statement with the Securities and Exchange Commission to register the        shares of common stock issued and/or issuable to the investors in the        above-referenced transactions.

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**Contractual Commitments**      **     **
Following is a summary    of the contractual commitments associated with our debt and lease obligations,    as well as our purchase commitments as of March 31, 2004:            **Long-term debt** **Operating leases** **Capital leases** **Purchase Commitments**       For fiscal year             ending June 30,             2004 $75,000 $166,799 $30,702    2005  208,239  602,646  87,358 $250,000 (1)2006  48,000  496,561  26,210    2007     150,584  4,105    2008             Thereafter             
(1) Pursuant to the agreement entered    into by our Trac Medical Solutions subsidiary with an affiliate of the American    Association for Homecare, Trac Medical is obligated to develop an enterprise    version of its CareCert forms processing service. Trac Medical retained bConnected    Software, Inc. to provide development services related to this venture. Although    the parties agreed upon revenue sharing arrangements with respect to certain    of the revenues to be derived from usage of the enterprise version of CareCert,    Trac Medical will be initially obligated to finance the development of the    enterprise software version. Additionally, Trac Medical will be required    to pay license and maintenance fees to bConnected in connection with Trac    Medical’slicense of proprietary software from bConnected.  These fees, however, are contingent obligations dependent upon Trac Medical’sability to derive revenue from end users of the enterprise software deliverable.

**Off-Balance Sheet Arrangements**
We have entered into    various agreements by which we may be obligated to indemnify the other party    with respect to certain matters. Generally, these indemnification provisions    are included in contracts arising in the normal course of business under    which we customarily agree to hold the indemnified party harmless against    losses arising from a breach of representations related to such matters as    intellectual property rights. Payments by us under such indemnification clauses    are generally conditioned on the other party    making a claim. Such claims are generally subject to challenge by us and    to dispute resolution procedures specified in the particular contract. Further,    our obligations under these arrangements may be limited in terms of time    and/or amount and, in some instances, we may have recourse against third    parties for certain payments made by us. It is not possible to predict the    maximum potential amount of future payments under these indemnification agreements    due to the conditional nature of our obligations and the unique facts of    each particular agreement. Historically, the Company has not made any payments    under these agreements that have been material individually or in the aggregate.    As of March 31, 2004, we were not aware of any obligations under such indemnification    agreements that would require material payments.
**Present Accounting Standards Not Yet Adopted and Newly Adopted Standards**

None  

**Item 3.**      **Quantitative and Qualitative Disclosures About Market Risk**
We have approximately    $74 million invested in money market accounts as of March 31, 2004. We do    not believe that any of our financial instruments have significant risk associated    with market sensitivity. We are not exposed to significant financial market    risks from changes in foreign currency exchange rates and are only minimally    impacted by changes in interest rates. However, in the future, we may enter    into transactions denominated in non-U.S. currencies or increase the level    of our borrowings, which could increase our exposure to these market risks.    We have not used, and currently do not contemplate using, any derivative    financial instruments.
**Interest Rate Risk**
At any time, fluctuations in interest rates could  affect interest earnings on our cash and cash equivalents. We believe that  the effect, if any, of reasonably possible near term changes in interest rates  on our financial position, results of operations, and cash flows would not  be material. Currently, we do not hedge these interest rate exposures. The  primary objective of our investment activities is to preserve capital. We have  not used derivative financial instruments in our investment portfolio.
At March 31, 2004, our cash and        cash equivalents totaled $75,370,000, most of which was invested in money        market accounts, the remainder of our cash was in non-interest bearing        checking accounts used to pay operating expenses.
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**Item 4.      Controls and Procedures.**

*Evaluation of Disclosure Controls and Procedures*
Our management, under    the supervision and with the participation of our chief executive officer    and chief financial officer, conducted an evaluation of our “disclosure    controls and procedures” (as defined in Securities Exchange Act of    1934 (the “Exchange Act”) Rules 13a-14(c)) as of the end of the    period covered by this Quarterly Report on Form 10-Q. Based on their evaluation,    the chief executive officer and chief financial officer have concluded that    our disclosure controls and procedures are effective to ensure that all material    information required to be filed in this Quarterly Report on Form 10-Q has    been made known to them in a timely fashion. 
*Changes in Internal Controls Over Financial Reporting*
There have been no changes    (including corrective actions with regard to significant deficiencies or    material weaknesses) in our internal controls over financial reporting    or in other factors during our last fiscal quarter that could have materially    affected, or are reasonably likely to materially affect, our internal controls    over financial reporting.
**Part II Other Information**

**Item 1.      Legal Proceedings:**
As described in our report on Form 10-K for the  fiscal year ended June 30, 2003, we are involved in the following pending and  threatened legal proceedings.
We are the defendant in a third        party complaint filed by Shore Venture Group, LLC in the Federal District        Court for the Eastern District of Pennsylvania. The third party complaint        was filed on May 7, 2001. Shore Venture is the defendant to an action        commenced by Berwyn Capital. The third party complaint alleges a claim        of breach of contract and seeks indemnification. There was a trial in        October 2002 and we continue        to await the judge’s decision. Management believes that the claim        will not have a material adverse impact on our financial condition, results        of operations or cash flow.     

We have also been advised of        a claim by Shore Venture Group concerning additional shares of Common        Stock of our subsidiary, Authentidate, Inc. This claim is not before        the court in the third-party litigation previously discussed. We are        conducting settlement negotiations with Shore Venture and believe that        a settlement will not have a material adverse impact on our financial        condition, results of operations or cash flow. No formal action has been        commenced in connection with this claim and the settlement negotiations        are being held at this juncture in an effort to avoid resorting to litigation        on this issue. Although the we will continue to attempt to settle this        claim without resorting to litigation, our management believes that litigation        is possible.

We are engaged in no other litigation        the effect of which would be anticipated to have a material adverse impact        on our financial condition, results of operations or cash flows.
**Item 2.      Changes in Securities**
On February 4, 2004,    we completed a private placement of $71,824,995 of shares of our common stock    to certain institutional and accredited investors pursuant to Section 4(2)    of the Securities Act of 1933, as amended (the “Securities Act”)    and Regulation D, promulgated thereunder. We issued an aggregate of 5,223,636    shares of its common stock in this transaction and received approximately    $69 million in net proceeds from this transaction. We intend to use the net    proceeds from this transaction to strengthen our balance sheet, for sales    and operational purposes, and for other general corporate purposes. Roth    Capital Partners, LLC, SG Cowen Securities Corporation and William Blair & Company    acted as placement agents in the transaction. In addition, we also completed    on February 4, 2004, a separate private placement of 136,734 shares of our    common stock for an aggregate purchase price of $1,880,092 to certain    other accredited investors pursuant to Section 4(2) of the Securities Act    and Regulation D, promulgated thereunder. We received approximately $1.8    million in net proceeds from this transaction. We intend to use the net proceeds    from this transaction for general corporate purposes. The sale and issuance    of common stock in the transaction described in above was deemed to be exempt    from registration under the Securities Act by virtue of Regulation D promulgated    under such Act. The recipients in each case represented their intention to    acquire the securities for investment only and not with a view to the distribution    thereof.
**Item 3.**      **Defaults      Upon Senior Securities:**

None

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**Item 4.**      **Submission of Matters to a Vote of Securities Holders:**
We held our Annual Meeting of shareholders on March  5, 2004. As of the record date of December 23, 2003, there were 26,002,380  shares outstanding and eligible to vote at the Annual Meeting. At the Annual  Meeting, shareholders approved the following actions:
1.      Shareholders        were requested to vote on the election of the following six directors,        each of whom were elected by the shareholders:**Name of Nominee**  **Votes Cast In Favor**  **Votes Withheld**  **% In Favor**    John T. Botti  23,035,662  178,351  99.2%J. Edward Sheridan  22,996,296  217,717  99.1%Charles J. Johnston   23,030,987  183,026  99.2%J. David Luce  23,029,697  184,316  99.2%F. Ross Johnson  22,979,926  234,087  98.9%Harry J. Silverman  23,010,282  203,731  99.1%           2.       Adoption of Amendment  to 2000 Employees’ Stock Option Plan
 Shareholders were requested        to approve an amendment to our 2000 Employees’ Stock Option Plan        to provide for the grant of options to purchase up to 5,000,000 additional        shares of our common stock.**Votes Cast in Favor** **Votes Against** **Votes Abstaining** **Non-Votes** 6,038,246 1,432,906 111,109 15,631,752         3.      Amendment    of Amended Certificate of Incorporation to increase our Authorized Capital 
 Shareholders were requested        to approve an amendment to our Amended Certificate of Incorporation to        increase the number of authorized shares of our common stock to 75,000,000        shares.**Votes Cast in Favor** **Votes Against** **Votes Abstaining**   22,261,574 858,748 93,690           4.       Adoption    of Amendment to 2001 Non-Executive Director Stock Option Plan 
 Shareholders were requested        to approve an amendment to our 2001 Non-Executive Director Stock Option        Plan.**Votes Cast in Favor** **Votes Against** **Votes Abstaining** **Non-Votes** 6,198,824 1,256,365 127,071 15,631,752 
**Item 5.**      **Other Information:**

     During the quarter ended March 31, 2004, our subsidiary, Trac Medical Solutions, Inc. entered into related agreements with an affiliate of the American Association for Homecare and bConnected Software, Inc. regarding the development and marketing of an enhanced version of Trac Medical’s CareCertTM electronic healthcare forms processing solution.  The agreements, effective as of the 12th  day of February 2004, provide that (a) the American Association for Homecare license to Trac Medical its logos and trademarks in connection with Trac Medical’s marketing efforts; (b) Trac Medical will develop and commercialize an  enterprise edition of its CareCert solution; and (c) bConnected will developthe enterprise version of CareCert for Trac Medical.  The parties agreed upon revenue sharing arrangements with respect to certain of the revenues to be derived from usage of the enterprise version of CareCert.

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**Item 6.      Exhibits and Reports      on Form 8-K:**

(a) Exhibits

The exhibits designated with an asterisk (*) are filed herewith.  All other exhibits have been previously filed with the Commission and, pursuant 17 C.F.R. § 230.411, are incorporated by reference to the document referenced in brackets following the description of such exhibits. Certain portions of exhibits marked with the symbol (#) have been omitted and are subject to our request for confidential treatment by the Securities and Exchange Commission. Such portions have been omitted and filed separately with the Commission.
*3.2.1Amended Bylaws of the Registrant *10.1#Agreement among Trac Medical Solutions, Inc., Homecare Association, LLC and bConnected Software, Inc. dated February 12, 2004. *10.2#Product Development and License Agreement between Trac Medical Solutions, Inc. and bConnected Software, Inc. dated February 12, 2004.  10.3Form of Securities Purchase Agreement dated as of January 28, 2004 (Filed as Exhibit 10.1 to Current Report on Form 8-K dated February 5, 2004).  10.4Form of Registration Rights Agreement (Filed as Exhibit 10.2 to Current Report on Form 8-K dated February 5, 2004). *31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *32.1Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 
(b) Reports on Form 8-K 

During the quarter ended March 31, 2004 we filed the following reports on Form 8-K:  
**Date of Report****Item(s)** **Description** January 29, 20045, 7 Announcement of execution of definitive Securities Purchase Agreement and including related press release.February 5, 20045, 7 Announcement of closing of financing and including related press release and exhibits.February 13, 20047, 12 Announcement of quarterly financial information and including related press release.February 19, 20045, 7 Announcement of transaction among Trac Medical Solutions, Inc., Homecare Association LLC and bConnected Software, Inc. and including related press release.
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**SAFE HARBOR STATEMENT**

Certain statements in      this Form 10-Q, including information set forth under Item 2 Management’s      Discussion and Analysis of Financial Condition and Results of Operations      constitute “forward-looking statements” within the meaning of      the Private Securities Litigation Reform Act of 1995 (the Act). We desire      to avail ourself of certain “safe harbor” provisions of the Act      and is therefore including this special note to enable us to do so. Forward-looking      statements in this Form 10-Q or hereafter included in other publicly available      documents filed with the Securities and Exchange Commission, reports to our      stockholders and other publicly available statement we have issued or released      involve known and unknown risks, uncertainties and other factors which could      cause our actual results, performance (financial or operating) or achievements      to differ from the future results, performance (financial or operating) or      achievements expressed or implied by such forward-looking statements. Such      future results are based upon management’s best estimates based upon      current conditions and the most recent results of operations. These risks      include, but are not limited to risks associated with the market acceptance      of the DocStar, Authentidate and related product lines, competition, pricing,      technological changes, technological implementation of the Authentidate      business plan and other risks as discussed in our filings with the Securities      and      Exchange Commission, in particular our Annual Report on Form 10-K/A for      the year ended June 30, 2003 and Registration Statements we have filed      pursuant      to the Securities Act, all of which risk factors could adversely affect      our business and the accuracy of the forward-looking statements contained      herein.

 

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 **AUTHENTIDATE HOLDING CORP**.  May 10, 2004/s/ John T. Botti        DATEJOHN T. BOTTI PRESIDENT & CHIEF EXECUTIVE OFFICER   /s/ Dennis H. Bunt     DENNIS H. BUNT CHIEF FINANCIAL OFFICER  
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