CURRENT RATING: 6
(Upgraded from 4 on 05-03-04)
INITIAL 12-18 MONTH PRICE TARGET: $9.50
Price Target upgraded 10-31-03 from $9.50 to $21.00
Price Target upgraded 02-18-04 from $21 to $28
Price Target downgraded 12-21-04 from $28 to $15
To date, the company's revenues have been generated by sales from the DJS and DocStar subsidiaries, while the Authentidate ("AD") division has primarily been developing technologies, which enable users to time stamp electronic Internet documents such as e-mails, electronic payments and other forms. The AD technology allows users to prove or authenticate the date, time and content of an electronic document. Currently, the DJS and DocStar subsidiaries operate at positive cash flow and typically contribute positive earnings; the company has experienced losses due primarily to the development efforts on the AD side, as well as additional corporate overhead. We believe that DocStar and DJS will continue to make contributions of both cash flow and profits to address corporate overhead going forward. However, in our view the opportunity in ADAT is clearly focused on the company's ability to roll out and proliferate its Authentidate technologies. We believe that the AD approach may offer in some instances a better approach than current technologies, while in addition, offering an approach to electronic document authentication that was previously unavailable.
The company has recently announced several key joint ventures and/or relationships that we think are launch points into differing channels that we believe will lead to considerable opportunity for the company. These include a recent deal with the U.S. Postal Service which is using the AD technology for its new Electronic Postmark product. We think the USPS may ultimately sell several billion Electronic Postmarks per year, and ADAT will receive revenue on a piece by piece basis. In addition, the company has recently signed deals in Europe with companys like Deutsche Telecom which we think will use the technology for electronic bill presentment. Lastly, the company has a medical division that has signed agreements with some of the largest medical equipement suppliers in the U.S. to use the technology to file electronic medical forms such as Certificates of Medical Necessity.
In our view, ADAT is uniquely positioned to deploy its technology into a substantial market that only recently became viable as a result of electronic signature legislation passed in several major industrial nations including the U.S.
DISCLAIMER STATEMENT
The information contained in this report has been written by David Lavigne of EdgeWater Research Partners LLC ("Edgewater") and has been derived from sources considered reliable, but cannot be guaranteed by us. Edgewater and Lavigne are not aware of any material conflict of interest known at the time of the publication of this report. Financial projections and estimates herein represent our independent analysis based upon information in conjunction with the Company's publicly available financial statements. Edgewater and Lavigne may maintain positions in the securities referenced, which may change at any time without notice. Edgewater does not receive fees, warrants or any other compensation from issuers in connection with its research. It does however, encourage issuers and it representatives to subscribe to Edgewater's research, and from time to time, issuers and or their representatives may also purchase individual copies of Edgewater's research products. Edgewater and Lavigne may own options, rights or warrants to purchase any of the securities of the Company. This report is for informational purposes only and is not to be construed as specific investment advice or recommendations, nor as an offer to sell or a solicitation of an offer to buy any securities. The securities referenced are speculative in nature and may not be suitable for your specific investment objective. For specific investment advice or recommendations, please consult with your investment representative.
To date, EdgeWater Research Partners LLC has received 6 annual "all services" subscriptions ($395 each) from employees and/or directors of AuthentiDate Holdings Corp. ("ADAT") In addition, ADAT has purchased 130 copies of the "ADAT Initial Coverage" research reports at $30 each. On 06-05-03, ADAT purchased 50 03-31-03 Earnings Updates for $7.00 each. On 09-05-03, ADAT paid a fee of $7000 to attend EdgeWater's Invesment conference for Investment Professionals. On about 01-02-04, employees and/or Directors of ADAT pruchased five annual subscription renewals at $199 each. On 02-04-04, ADAT paid a fee of $9,000 to attend EdgeWater's "Spring 2004 MicroCap Confernece for Investment Professionals". For more information regarding the format and the use of proceeds of this conference, please see the "MicroCap Conferences" section of this site.
