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Basis of Presentation and Liquidity
3 Months Ended
Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation and Liquidity

1. Basis of Presentation and Liquidity

The accompanying unaudited condensed consolidated financial statements have been prepared by the company pursuant to the rules and regulations of the Securities and Exchange Commission and, in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The condensed consolidated financial statements include the accounts of Authentidate Holding Corp. (AHC) and its subsidiaries (collectively, the “company”). All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations for the period ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year. Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed consolidated financial statements should 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, 2015 and the corresponding Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The company has incurred significant recurring losses and negative cash flows from operations and our product development activities have required substantial capital investment to date. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Additionally, on March 6, 2015 we announced that the Department of Veterans Affairs (VA) informed the company that it did not intend to exercise the fourth and final option year under our contract for telehealth products and services. The company’s contract with the VA was originally awarded in April 2011 and consisted of a base year and four one-year option years which were exercisable at the VA’s sole discretion. The current option year under the contract expired on May 15, 2015 and the transition process with the VA was completed by that date. Our VA revenue included both recurring service revenues as well as hardware sales. As a result of the non-renewal of the VA contract we expect to report significantly reduced revenues over the next several quarters and we have taken steps to reduce our operating costs and better align our resources with the growth opportunities we intend to pursue. As a result, we have implemented a number of changes to our business plan with the ultimate goal to increase revenues and generate positive cash flow from operations, including a recalibration of marketing and sales efforts that have already resulted in growth from existing customers and sales to new customers. These changes include cost reductions from reducing our workforce and use of consultants that we made in the third quarter of fiscal 2015 and additional workforce reductions through August 31, 2015. These reductions are expected to reduce operating expenses on an annualized basis. The company has also taken actions to realign our data center operations and has executed an agreement with its landlord to relocate its offices, which are expected to result in additional annualized savings.

Since June 2015, the company has completed debt financing transactions resulting in total proceeds of approximately $1.2 million, however, the company has an immediate need for additional capital and is exploring additional potential transactions to improve our capital position, ensure we are able to meet our working capital requirements and provide funds to pay these debt obligations which are due in the next twelve months. Based on its business plan, the company expects its existing resources, revenues generated from operations, net proceeds from our debt financing transactions, other transactions we are considering and proceeds received from the exercise of outstanding warrants (of which there can be no assurance) or a restructuring of outstanding debt obligations (of which there can be no assurance) to satisfy its working capital requirements for at least the next twelve months. If necessary, management of the company believes that it can raise additional equity or debt financing to satisfy its working capital requirements. However, no assurances can be given that we will be able to support our costs or pay debt obligations through revenues derived from operations or generate sufficient cash flow to satisfy our other obligations. Unless we are able to increase revenues substantially or generate additional capital from other transactions, our current cash resources will only satisfy our working capital needs for a limited period of time and we will need to raise additional funds to meet our obligations in the future. In addition to our recently announced letter of intent for a business combination transaction, we are continuing to explore additional potential transactions to improve our capital position to ensure we are able to meet our financing and working capital requirements. Currently, the company does not have any definitive agreements with any third parties for such transactions and there can be no assurances that the company will be successful in completing the transaction contemplated by the letter of intent or in raising additional capital or securing financing when needed or on terms satisfactory to the company. Any inability to obtain required financing on sufficiently favorable terms could have a material adverse effect on our business, results of operations and financial condition.