Acquisition of Image Analysis and Pattern Recognition Software Provider

Combines Complementary Technologies to Address Health Care and Other Markets

BERKELEY HEIGHTS, N.J. and BOULDER, Colo., Aug. 6 /PRNewswire-FirstCall/ -- Authentidate Holding Corp. (Nasdaq: ADAT), a worldwide provider of secure workflow management software and web-based services, and Parascript, LLC, an image analysis and pattern recognition software provider, today announced that the companies have signed a definitive merger agreement. Under the terms of the agreement, Authentidate will acquire Parascript, for up to $10 million in cash, a five year 10% note in the principal amount of $20 million, which is subject to adjustment, 30 million shares of Authentidate common stock, and all of the shares of Authentidate's German subsidiary, Authentidate International AG. Contingent consideration based on the financial performance of a newly formed business unit may also be paid in Authentidate common stock in 2012.

The transaction has been unanimously approved by the board of directors of Authentidate and the manager of Parascript. The companies expect the transaction to be completed in the fourth quarter of calendar year 2008.

Parascript's image analysis and pattern recognition software interprets human thinking and behavioral patterns based on cognitive science, pattern recognition, neural networks and artificial intelligence. For over a decade, Parascript has continually improved and adapted its image analysis and pattern recognition software to make it usable in a variety of applications for the medical imaging, postal, mail automation, business process outsourcing, banking and financial services industries.

For the calendar year ended December 31, 2007, Parascript had gross revenues from continuing operations of approximately $22 million and net income before taxes of approximately $6.9 million. Net income before taxes included approximately $2.2 million in net losses from an entity being closed down by Parascript, the net loss of which is included in income from continuing operations.

F. Ross Johnson, Chairman of Authentidate Holding Corp., stated, 'We view this as a strategic merger that brings together technologies from two forward thinking companies working to revolutionize the operational infrastructure of the healthcare industry by improving workflows and enhancing document security. We believe the merger will help both companies build greater momentum within the industry, growing their businesses and increasing shareholder equity. As such, the Board believes that this transaction offers Authentidate's shareholders a tremendous opportunity to maximize their investment. I am confident I am leaving the company with a strong management team to guide Authentidate along its new strategic path.'

Authentidate also announced that Mr. Johnson will be retiring from the board after the closing of the merger.

Jeff Gilb, President and CEO of Parascript, who will become Chief Executive Officer of the combined company, said, 'The combination of Parascript and Authentidate presents new growth opportunities that were not available to Parascript when it was privately held. The recognition software industry is at the beginning of a significant transformation of applications and services -- one that is projected to enable higher performance and greater labor savings for our customers. This brings extraordinary opportunities for our combined business to accelerate its growth. The combination creates a new company with a comprehensive portfolio that will be poised to deliver significant benefits to customers, employees and stockholders.'

'We have worked to add new services and penetrate new segments of the multi-billion dollar healthcare industry,' stated Ben Benjamin, President of Authentidate.