10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2017

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number: 000-20190

AUTHENTIDATE HOLDING CORP.

(Exact name of registrant as specified in its charter)

Delaware	14-1673067
(State or other jurisdiction	( I.R.S. Employer
of incorporation or organization)	Identification No.)
2225 Centennial Drive	30504
Gainesville, GA 30504	(zip code)
(Address of principal executive offices)

1-888-661-0225

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 19, 2018, there were 7,249,370 shares of common stock, $0.001 par value per share, outstanding.

		Page
PART I FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets at December 31, 2017 (Unaudited) and June 30, 2017	2
	Condensed Consolidated Statements of Income (unaudited)	3
	Condensed Consolidated Statements of Cash Flows (unaudited)	4
	Notes to Unaudited Condensed Consolidated Financial Statements (unaudited)	5
ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	21
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	30
ITEM 4.	CONTROLS AND PROCEDURES	30
PART II OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	32
ITEM 1A.	RISK FACTORS	32
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	35
ITEM 4.	MINE SAFETY DISCLOSURES	35
ITEM 5.	OTHER INFORMATION	35
ITEM 6.	EXHIBITS	36
SIGNATURES

1

PART I - FINANCIAL INFORMATION 

ITEM 1.    FINANCIAL STATEMENTS

AUTHENTIDATE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	December 31,			June 30,
	2017			2017
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	357,165		$	1,121,763
Restricted cash		-			120,695
Accounts receivable, net		2,467,935			1,020,988
Inventory, net		397,569			347,750
Prepaid expenses and other current assets		38,729			58,711
Total current assets		3,261,398			2,669,907
Property and equipment, net		1,780,123			2,203,543
Other assets
Security deposits		10,211			10,211
Deferred tax asset		7,357,436			11,848,017
Total assets	$	12,409,168		$	16,731,678
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable	$	1,269,454		$	2,177,722
Accrued expenses		2,493,374			2,168,090
Accrued commissions		855,424			427,627
Accrued dividends		816,377			644,979
Deferred rent		170,483			141,833
Related party notes payable		2,545,199			2,545,199
Derivative liabilities		185,176			551,040
Total current liabilities		8,335,487			8,656,490
Deferred rent		90,000			45,000
Total liabilities		8,425,487			8,701,490
Commitments and contingencies
Shareholders' equity
Preferred stock, $.10 par value; 5,000,000 shares authorized, Series D, 605,000 shares and Series E 25,000 shares issued and outstanding at December 31, 2017 , and June 30, 2017, respectively		63,000			63,000
Common stock, $.001 par value; 190,000,000 shares authorized, 7,249,370 shares issued and outstanding on December 31, 2017, and June 30, 2017 , respectively		20,508			8,938
Additional paid-in capital		44,530,041			44,307,479
(Accumulated deficit)		(40,629,868	)		(36,349,229	)
Total shareholders' equity		3,983,681			8,030,188
Total liabilities and shareholders' equity	$	12,409,168		$	16,731,678

The accompanying notes are an integral part of the condensed consolidated financial statements.

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AUTHENTIDATE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	Three Months Ended						Six Months Ended
	December 31,						December 31,
	(Unaudited)						(Unaudited)
	2017			2016			2017			2016
				(Restated)						(Restated)
Net revenues
Fees for services	$	5,278,042		$	4,565,435		$	8,388,424		$	10,256,731
Hosted software services		248,530			311,671			491,550			658,605
Telehealth products and services		4,650			9,707			9,300			21,552
Total net revenues		5,531,222			4,886,813			8,889,274			10,936,888
Operating expenses
Cost of revenues		888,541			951,668			2,017,117			1,958,164
Write down of inventory		-			-			-			237,674
Selling, general and administrative		3,042,771			4,204,114			6,153,936			7,727,165
Share based compensation		21,111			89,526			51,159			148,476
Depreciation and amortization		200,837			394,484			423,421			803,147
Total operating expenses		4,153,261			5,639,792			8,645,633			10,874,626
Operating income (loss)		1,377,961			(752,979	)		243,641			62,262
Other (expense) income
Interest		(37,013	)		(92,175	)		(64,362	)		(370,768	)
Change in fair value of derivative liabilities		292,573			621,820			365,864			135,601
Other		(124,149	)		-			(162,294	)		-
		131,411			529,645			139,208			(235,167	)
Income (loss) before provision for income taxes		1,509,372			(223,334	)		382,849			(172,905	)
Provision for income taxes		(4,493,239	)		(45,404	)		(4,493,239	)		-
Net loss	$	(2,983,867	)	$	(268,738	)	$	(4,110,390	)	$	(172,905	)
Less: preferred dividends	$	(85,699	)	$	(100,624	)	$	(170,249	)	$	(201,248	)
Net loss available to common shareholders	$	(3,069,566	)	$	(369,362	)	$	(4,280,639	)	$	(374,153	)
Loss per share:
Basic loss per common share	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Diluted loss per common share	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Weighted average number of common shares outstanding:
Basic		7,249,370			6,015,053			7,249,370			5,893,655
Diluted		7,249,370			6,015,053			7,249,370			5,893,655

The accompanying notes are an integral part of the condensed consolidated financial statements.

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AUTHENTIDATE HOLDING CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
	Six Months Ended
	December 31,
	(Unaudited)
	2017			2016
Cash flows from operating activities
Net loss	$	(4,110,390	)	$	(172,905	)
Adjustments to reconcile net income (loss) to net cash used by operating activities
Impairment of deferred tax asset		4,490,581
Change in fair value of derivative liabilities		(365,864	)		(135,601	)
Write off of inventory		-			237,674
Depreciation and amortization		423,421			803,147
Deferred taxes		-			-
Share based compensation		51,159			148,476
Changes in assets and liabilities
Restricted cash		120,695			-
Accounts receivable		(1,446,948	)		1,067,894
Inventory		(49,819	)		(303,637	)
Prepaid expenses and other current assets		19,982			49,696
Accounts payable		(650,497	)		(1,130,623	)
Accrued expenses		325,285			(465,416	)
Accrued commissions		427,797			(72,546	)
Deferred rent		-			(4,874	)
Net cash provided (used) by operating activities		(764,598	)		21,285
Cash flows from investing activities
Purchases of property and equipment		-			(22,103	)
Disposal of fixed assets		-			-
Net cash (used in) investing activities		-			(22,103	)
Cash flows from financing activities
Repayments of notes payable		-			(1,057,811	)
Net cash (used in) financing activities		-			(1,057,811	)
Net decrease in cash		(764,598	)		(1,058,629	)
Cash beginning of period		1,121,763			1,414,706
Cash end of period	$	357,165		$	356,077
Supplemental disclosure of cash paid for:
Interest paid	$	99,005		$	227,758
Income taxes paid	$	-		$	-
Non-cash investing and financing activities
Non-cash preferred dividends	$	137,249		$	201,248
Earn-out common dividends paid in stock	$	-		$	5,472,598

The accompanying notes are an integral part of the condensed consolidated financial statements.

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1. Description of Business, Reverse Merger and Liquidity

Business

Authentidate Holding Corp. ("AHC") and its subsidiaries primarily provides an array of clinical testing services to health care professionals through its wholly-owned subsidiary, Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories ("AEON"). AHC also continues to provide its legacy secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Web-based services are delivered as Software as a Service (SaaS) to customers interfacing seamlessly with billing, information and records management systems.

Reverse Merger

On January 27, 2016, AEON merged into a newly formed acquisition subsidiary of AHC pursuant to a definitive Amended and Restated Agreement and Plan of Merger dated January 26, 2016, as amended on May 31, 2016 and December 15, 2016 (collectively the "Merger Agreement") (the "AEON Acquisition"). The merger certificate was filed with the Secretary of State of Georgia on January 27, 2016. AEON survived the merger as a wholly-owned subsidiary of AHC (collectively the "Company"). AEON contracts with health care professionals to provide urine and oral fluid testing to patients. The four primary tests provided by AEON are Medical Toxicology, Pharmacogenomics, Cancer Genetic Testing and Molecular Biology. Following the completion of the reverse merger, the business conducted by AEON became primarily the business conducted by the Company.

Under accounting principles generally accepted in the United States of America ("U.S. GAAP"), the merger is treated as a "reverse merger" under the purchase method of accounting. The condensed consolidated financial statements reflect the historical results of AEON prior to the completion of the reverse merger since it was determined to be the accounting acquirer, and do not include historical results of AHC prior to the completion of the merger.

Going Concern

As of the filing date of this Quarterly Report on Form 10-Q, there is outstanding an aggregate principal amount of $2,545,199 of senior secured convertible notes with a maturity date of March 20, 2018 and a secured note subordinated to the interests of the existing senior lenders in the principal amount of $210,000 with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet. We expect existing resources, revenues generated from operations, and proceeds received from other transactions we are considering (of which there can be no assurance) to satisfy working capital requirements for at least the next twelve months; however, no assurances can be given, that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy our other obligations. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of assets carrying amounts or the amounts and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, the Company needs to raise additional capital and are exploring potential transactions to improve our capital position. Unless we can 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.

The Company's capital requirements have been and will continue to be significant and it is expending significant amounts of capital to develop, promote and market its services. The Company's available cash and cash equivalents as of December 31, 2017 totaled approximately $357,000 and the Company's working capital deficit was approximately $5,074,000. Nevertheless, our available cash and cash equivalents as of the filing date of this Quarterly Report on Form 10-Q is approximately $1,057,000 and our estimated monthly cash requirement is approximately $1,300,000.

The Company does not have a bank line of credit or other fixed source of capital reserves. We are exploring potential transactions to improve our capital position to ensure we can meet our financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities may cause our stockholders to experience substantial dilution in their ownership interests and new investors may have rights superior to the rights of our other stockholders. Raising additional funds through debt financing or preferred stock, if available, may involve covenants that restrict our business activities and options and such additional securities may have powers, designations, preferences or rights senior to our currently outstanding securities. We may also enter into financing transactions which involve the granting of liens on our assets or which grant preferences of payment from our revenue streams, all of which could adversely impact our ability to rely on our revenue from operations to support our ongoing operating costs. Alternatively, we may seek to obtain new financing from existing security holders, which may include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, we do not have any definitive agreements with any third-parties for such transactions and there can be no assurance; however, that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on our business, financial condition and results of operations.

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Management has concluded that due to the conditions described above, there is substantial doubt about the entity's ability to continue as a going concern. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance will provide sufficient capital to continue operations through fiscal 2018. While our plan is to raise capital from commercial operations and/or product partnering opportunities to address our capital deficiencies and meet our operating cash requirements, there is no assurance that our plans will be successful. If we fail to generate sufficient capital from commercial operations or partnerships, we will need to seek capital from other sources and risk default under the terms of our existing loans. We cannot assure you that financing will be available on favorable terms or at all. Additionally, if additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. Furthermore, despite our optimism regarding the future of the Company, even if the Company is adequately funded, there is no guarantee that any of our services will perform as hoped or that such services can be successfully commercialized.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company's condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company's financial information. These interim results are not necessarily indicative of the results to be expected for the year ending June 30, 2018 or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended June 30, 2017, included in the Company's 2017 Annual Report on Form 10-K filed with the SEC.

The balance sheet as of June 30, 2017 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 The most sensitive accounting estimates affecting the financial statements are revenue recognition, the allowance for doubtful accounts, depreciation of long-lived assets, fair value of intangible assets and goodwill, amortization of intangible assets, income taxes and associated deferrals and valuation allowances, commitments and contingencies and measurement of derivative liabilities.

Accounts Receivable, Net

Accounts receivable represent customer obligations due under normal trade terms, net of allowance for doubtful accounts. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience and other currently available evidence. The allowance for doubtful accounts was approximately $887,000 and $923,000 as of December 31, 2017 and June 30, 2017, respectively.

Fair Value Measurements

The Company follows ASC 820-10, "Fair Value Measurements and Disclosures", of the FASB to measure the fair value of its financial statements and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The three levels of fair value hierarchy defined by ASC 820-10 are described below:

Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

6

Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 Pricing inputs that are generally unobservable input and not corroborated by market data.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lower priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company's warrant liabilities and certain conversion features underlying the convertible debt are categorized as Level 3.

Revenue Recognition

The Company provides laboratory testing services, web-based hosted software services, telehealth products and post contract customer support services.

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC-605 "Revenue Recognition", the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured. Billings for laboratory testing services are reimbursed by third-party payors net of allowances for differences between amounts billed and the cash receipts.

Revenue from laboratory testing services are recognized at the time test results are delivered, net of estimated contractual allowances. Third-party reimbursement revenue is estimated based on cash received over a 12-month period.

Revenue for hosted software services, telehealth products, and customer support services are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the selling price is fixed and collectability is reasonably assured. Multiple-element arrangements are assessed to determine whether they can be separated into more than one unit of accounting. A multiple-element arrangement is separated into more than one unit of accounting if all the following criteria are met: (i) the delivered item has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of the undelivered items in the arrangement; (iii) if the arrangement includes a general right of return relative to the delivered items; (iv) and delivery or performance of the undelivered item is considered probable and substantially in the Company's control. If these criteria are not met, then revenue is deferred until such criteria are met or until the period over which the last undelivered element is delivered, which is typically the life of the contract agreement. If these criteria are met, we allocate total revenue among the elements based on the sales price of each element when sold separately which is referred to as vendor specific objective evidence or VSOE.

Concentrations of Credit Risk

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At December 31, 2017 and June 30, 2017, the Company had approximately $119,000 and $871,000 in excess of FDIC-insured limits. The Company has not experienced any losses in such accounts.

Income Taxes

The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Management considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability for or discloses potential changes that management believes are more likely than not to occur upon examination by tax authorities. Management has not identified any uncertain tax positions that require recognition or disclosure in the accompanying consolidated financial statements.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

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Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers" (Topic 606) ("ASU 2014-09"), which affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. Under ASU 2014-09, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU must be applied for annual periods beginning after December 15, 2017, with early application permitted for annual reporting periods beginning after December 15, 2016. The Company has begun to research this guidance and does not believe that this ASU will have a material impact on the consolidated financial results of the Company, we understand it will require increased qualitative and quantitative disclosure about the nature, amount, timing and uncertainty arising from contracts with customers. The Company is still evaluating the impact of this ASU and expects to adopt this ASU effective July 1, 2018.

In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern". The amendments in this update state that regarding preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued, when applicable). The amendments in this update are effective for the annual reporting period beginning after December 15, 2016 and for annual periods and interim periods thereafter. Early application is permitted. The Company has adopted ASU 2014-15 and has made the necessary disclosures in the "Going Concern" sections of this Quarterly Report on Form 10-Q.

In July 2015, the FASB issued ASU 2015-11, "Inventory (Topic 330): Simplifying the Measurement of Inventory". ASU 2015-11 requires inventory measured using any method other than last-in, first-out ("LIFO") or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU 2015-11 is effective prospectively for fiscal years, and for interim periods within those years, beginning after December 15, 2016. Early application is permitted. The Company has determined that the ASU has no material impact on its consolidated financial statements and related disclosures since it does not sell inventory on a stand-alone basis at net realizable value.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments (Subtopic 825-10): Recognition and Measurements of Financial Assets and Financial Liabilities." ASU 2016-01 provides guidance on the recognition and measurement of financial assets and financial liabilities. This ASU requires that all equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income. However, companies may elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. In addition, the ASU eliminates the requirement to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet. The ASU is effective for the Company in the first quarter of 2018. The Company has determined that the ASU has no material impact on its consolidated financial statements and related disclosures since it does not have equity investments.

In February 2016, the FASB issued ASU No. 2016-02, "Leases", which establish a right-of-use (ROU) model that requires a lessee to record an ROU asset and lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classifications affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. ASU 2016-02 requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the effect of adoption of this ASU on July 1, 2019.

In March 2016, the FASB issued ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting", which makes several modifications to the accounting for employee share-based payment transactions, including the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. This guidance also clarifies the presentation of certain components of share-based awards in the statement of cash flows. This guidance is effective for annual reporting periods beginning after December 15, 2016, and interim periods within those annual periods, and early adoption is permitted. The Company has not had stock compensation exercises since the reverse merger; therefore, the ASU is not applicable until exercises occur. The Company plans to implement this ASU when such exercises occur.

In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The guidance is effective for the Company on July 1, 2018 and early adoption is permitted. The Company is currently evaluating the effect of adoption of this ASU on July 1, 2018.

In November 2016, the FASB issued an ASU 2016-18, "Restricted Cash", which clarifies the presentation and classification of restricted cash in the statement of cash flows. The ASU requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Company in the first quarter of 2018 with early adoption permitted and must be applied retrospectively to all periods presented. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures with the fiscal year beginning July 1, 2018.

8

In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting", which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. The Company is evaluating the impact of this ASU and expects to adopt this ASU effective July 1, 2018.

In July 2017, the FASB issued ASU 2017-11, "Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging (Topic 815); Part I. Accounting for Certain Financial Instruments with Down Round Features and Part II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception", which states that when determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to the Company's own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The Company is evaluating the provisions of this ASU and plans to adopt this ASU effective July 1, 2019.

In December 2017, the Securities and Exchange Commission recently issued Staff Accounting Bulletin No. 118, which is an application of ASC Topic 740, Income Taxes, in the reporting period that includes December 22, 2017, the date on which the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act changes existing United States tax law and includes numerous provisions that will affect business. Staff Accounting Bulletin No. 118 implies that if a reasonable estimate can be made of the Act's effects on the Company's financial statements, the reasonable estimate should be reported in the period ending after December 22, 2017. The Company has implemented Staff Accounting Bulletin No. 118 is this Form 10-Q ended December 31, 2017 by revaluing its deferred tax asset for the lower tax rates.

3. Restatement and Correction of Error

In the fourth quarter of the year ended June 30, 2017, the Company concluded that its results for the quarter ending December 31, 2016 included errors resulting in the understatement of inventory and the understatement of certain accruals. The financial statements for the quarter have been restated and were presented in the Company's consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2017. Management considered the impact to current and past financial statements under the SEC's authoritative guidance on materiality and determined that the error was material, and a restatement of the prior quarter financial statements was the most appropriate recognition of the adjustment so as not to mislead readers of the financial statements. The following sections detail the impact of the error on the previously issued unaudited consolidated financial statements for the prior quarter.

The following adjustments were made to the December 31, 2016 Restated Statements of Income (Unaudited):

AUTHENTIDATE HOLDING CORP

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	As Originally									As Originally
	Reported						As Restated			Reported						As Restated
	Three Months						Three Months			Six Months						Six Months
	Ended						Ended			Ended						Ended
	Dec 31,						Dec 31,			Dec 31,						Dec 31,
	2016			Adj			2016			2016			Adj			2016
Net revenues
Fees for services	$	4,565,435		$	-		$	4,565,435		$	10,256,731		$	-		$	10,256,731
Hosted software services		311,671			-			311,671			658,605			-			658,605
Telehealth services		9,707			-			9,707			21,552			-			21,552
Total net revenues		4,886,813			-			4,886,813			10,936,888			-			10,936,888
Operating expenses
Cost of revenues		1,128,218			(176,550	)		951,668			2,295,214			(337,050	)		1,958,164
Write-down of inventory		-			-			-			237,674			-			237,674
Selling, general and administrative		4,293,640			-			4,293,640			7,875,641			-			7,875,641
Depreciation and amortization		394,484			-			394,484			803,147			-			803,147
Total operating expenses		5,816,342			(176,550	)		5,639,792			11,211,676			(337,050	)		10,874,626
Operating income (loss)		(929,529	)		176,550			(752,979	)		(274,788	)		337,050			62,262
Other (expense) income, net		529,645			-			529,645			(235,167	)		-			(235,167	)
Income (loss) before provision for income taxes		(399,884	)		176,550			(223,334	)		(509,955	)		337,050			(172,905	)
Income tax provision		45,404			-			(45,404	)		-			-			-
Net loss	$	(445,288	)	$	176,550		$	(268,738	)	$	(509,955	)	$	337,050		$	(172,905	)
less: preferred dividends	$	(100,624	)	$	-		$	(100,624	)	$	(201,248	)	$	-		$	(201,248	)
Net loss available to common shareholders	$	(545,912	)	$	176,550		$	(369,362	)	$	(711,203	)	$	337,050		$	(374,153	)
Loss per share:
Basic loss per common share	$	(0.09	)	$	0.03		$	(0.06	)	$	(0.12	)	$	0.06		$	(0.06	)
Diluted loss per common share	$	(0.09	)	$	0.03		$	(0.06	)	$	(0.12	)	$	0.06		$	(0.06	)

9

The following adjustments were made to the December 31, 2016 Restated Statement of Cash Flow (Unaudited):

AUTHENTIDATE HOLDING CORP.

CONSOLIDATED STATEMENT OF CASH FLOW

	As Originally
	Reported						As Restated
	Six Months						Six Months
	Ended						Ended
	Dec 31,						Dec 31,
	2016			Adj			2016
Cash Flows from Operating Activities
Net Loss	$	(509,955	)	$	337,050		$	(172,905	)
Adjustments to reconcile net loss to cash provided by operating activities
Write off of inventory		237,674			-			237,674
Loss on debt extinguishment		-			-			-
Change in fair value of derivative liabilities		(135,601	)		-			(135,601	)
Deferred taxes		-			-			-
Depreciation and amortization		803,147			-			803,147
Share based compensation		148,476			-			148,476
Deferred rent		(4,874	)		-			(4,874	)
Changes in assets and liabilities
Accounts receivable		1,067,854			-			1,067,854
Inventory		33,413			(337,050	)		(303,637	)
Prepaid expenses and other current assets		49,696			-			49,696
Accounts payable		(1,130,583	)		-			(1,130,583	)
Accrued expenses		(465,416	)		-			(465,416	)
Accrued commissions		(72,546	)		-			(72,546	)
Deferred rent		-			-			-
Net cash provided by operating activities		21,285			-			21,285
Cash flows from investing activities
Purchases of property and equipment		(22,103	)		-			(22,103	)
Net cash used in investing activities		(22,103	)		-			(22,103	)
Cash flows from financing activities
Proceeds from note payable - related party		-			-			-
Repayment of notes payable		(1,057,811	)		-			(1,057,811	)
Net cash used in financing activities		(1,057,811	)		-			(1,057,811	)
Net decrease in cash and cash equivalents		(1,058,629	)		-			(1,058,629	)
Cash and cash equivalents beginning of year		1,414,706			-			1,414,706
Cash and cash equivalents end of year	$	356,077		$	-		$	356,077

10

4. Inventory

Inventory consists of the following:

	December 31,		June 30,
	2017		2017
Laboratory testing supplies	$	397,569	$	347,750
Total inventory	$	397,569	$	347,750

Purchased components of approximately $31,000 and finished goods of $207,000 were written down in the six months ended December 31, 2016 to net realizable value. No inventory was written down in the six months ended December 31, 2017.

5. Income Taxes

The Company's effective tax rate for the three and six months ended December 31, 2017 was 179.5% and 326.4%, respectively. The unusually high tax rate for the periods was due to a deferred income tax charge of approximately $4,493,000, as explained below. For the three and six months ended December 31, 2017, the Company calculated income tax expense based upon an annual effective tax rate forecast adjusted for discrete items that specifically relate to the interim period. Changes in tax laws or rates on deferred tax assets and liabilities are recognized as discrete items in the interim period that includes the enactment date. The differences between the effective tax rate and the U.S. federal statutory tax rate of 35% principally resulted from state and local taxes, graduated federal tax rate reductions, changes in the valuation allowance, non-deductible expenses, and discrete items for the interim period.

On December 22, 2017, the U.S. President signed the Tax Cuts and Jobs Act of 2017 (the "Act"). Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 740, Income Taxes ("ASC 740") requires that the effects of changes in tax laws or tax rates be recognized in the financial statements in the period in which such changes were enacted. During the three months ended December 31, 2017, the Company incurred a deferred income tax charge of approximately $4.5 million due to the write-down of deferred tax assets related to the reduction of the corporate income tax rate per the Act.

At December 31, 2017, the Company had a net deferred tax asset of approximately $7,357,000. Management has considered the realizability of the deferred tax assets and has concluded that a valuation allowance of approximately $31,291,000 should be recorded, related to net operating loss carryforwards that are not anticipated to be realized. Management determined that a valuation allowance was required with respect to the remaining net deferred tax assets. Realization of these assets is primarily dependent on achieving the forecast of future taxable income, as well as prudent and feasible tax planning strategies.

6. Related Party Notes Payable

	December 31, 2017				June 30, 2017
	Note		Interest rate		Note		Interest rate
	Payable		per annum		Payable		per annum
Secured				Secured
	$	1,056,875	5% interest paid annually		$	1,056,875	5% interest paid annually
		641,294	5% interest paid annually			641,294	5% interest paid annually
		255,417	5% interest paid annually			255,417	5% interest paid annually
		591,613	5% interest paid annually			591,613	5% interest paid annually
Total	$	2,545,199		Total	$	2,545,199

Secured

At June 30, 2016, the Company had outstanding a convertible note payable in the aggregate principal amount of $950,000. The note was convertible into shares of common stock at an initial conversion price of $2.25 per share, subject to adjustment. This note had a maturity date of December 17, 2016. Based on the initial conversion price, the note was convertible into up to 422,222 shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that is less than the conversion price then in effect, such conversion price would be decreased to equal 85% of such lower price. This note accrued interest at 9% per annum with interest payable upon maturity or on any earlier redemption date. As described in greater detail below under the caption "Exchange Transaction", on March 20, 2017, this note was exchanged for a new promissory note in the aggregate principal amount of $1,056,875. The new note matures twelve months following such extension date and interest accrues on the principal amount of the new note at the rate of 5% per annum. The new note is secured by a lien on all the Company's assets and is convertible at the initial conversion price of $2.03 per share.

11

At June 30, 2016, the Company had outstanding a promissory note in the aggregate principal amount of $320,000. The note was due and payable on April 15, 2016 and interest accrued on the note at the rate of 10% per annum. The note was secured by a first priority lien on certain of the Company's assets, as described in a security agreement entered between the Company and the purchaser. The note was convertible into shares of common stock of the Company at an initial conversion price of $4.86 per share. The note was issued to an affiliate of J. David Luce, a former member of the board of directors. On September 1, 2016, the Company entered into an amendment agreement which extended the maturity date to December 1, 2016 at an interest rate of 5% per annum. In consideration for such agreement, the Company agreed that the note would be further modified so that it would be convertible into shares of common stock of the Company at a conversion price of $3.00 per share, which was equal to the most recent closing bid price of the Company's common stock immediately prior to the execution of the amendment agreement. Based on the modified conversion price, the principal amount of the note was convertible into 106,667 shares of common stock. As described in greater detail below under the caption "Exchange Transaction," on March 20, 2017, this note was combined with the $200,000 unsecured note held by the same entity and was exchanged for a new promissory note in the aggregate principal amount of $641,294. The new note matures twelve months following such extension date and interest accrues on the principal amount of the new note at the rate of 5% per annum. The new note is secured by a lien on all of the Company's assets and is convertible at the initial conversion price of $2.03 per share.

Unsecured

At June 30, 2016, the Company had outstanding a promissory note in the aggregate principal amount of $200,000, held by an entity affiliated with J. David Luce, a former member of the board of directors. The notes accrued interest at the rate of 20% per annum, payable in arrears, and was due upon the earlier of (i)  August 26, 2016, or (ii) the closing of a sale of equity or debt securities of the Company, or series of closings, as part of the same transaction, of equity or debt securities within a period of 90 days in the gross amount of at least $5,000,000 in cash proceeds. On September 1, 2016, the note was amended to extend the maturity date to December 1, 2016 and to allow the investor to elect to further extend the note for an additional 90 days. In consideration for such agreements, the Company agreed that the promissory note would be further modified so that it would be convertible into shares of common stock of the Company at an initial conversion price of $3.00 per share, which was equal to the most recent consolidated closing bid price of the Company's common stock immediately prior to the execution of the amendment agreement. Based on the conversion price, the principal amount of the note was convertible into up to 173,333 shares of common stock. In March 2017, this note was combined with the $320,000 secured note held by the same entity and exchanged for a new promissory note in the aggregate principal amount of $641,294. The new note matures twelve months following such extension date and interest accrues on the principal amount of the new note at the rate of 5% per annum. The new note is secured by a lien on all of the Company's assets and is convertible at the initial conversion price of $2.03 per share. Additional terms and conditions of the new note are described in greater below under the caption "Exchange Transaction".

At June 30, 2016, the Company had a promissory note in the aggregate principal amount of $450,000 to Optimum Ventures, LLC, a related party of Peachstate Health Management, LLC, through common ownership. The note was unsecured and was not convertible into equity securities of the Company. The note accrued interest at the rate of 20% per annum, payable in arrears, and was due upon the earlier of (i)  October 28, 2016, or (ii) within 30 days of the closing of a sale of equity or debt securities of the Company, or series of closings, as part of the same transaction, of equity or debt securities within a period of 90 days, in the gross amount of at least $5,000,000 in cash proceeds. As described in greater detail below under the caption "Exchange Transaction", on March 20, 2017, this note was exchanged for a new promissory note in the aggregate principal amount of $591,613. The new note matures twelve months following such extension date and interest accrues on the principal amount of the new note at the rate of 5% per annum. The new note is secured by a lien on all of the Company's assets and is convertible at the initial conversion price of $2.03 per share.

Effective as of January 31, 2017, the Company accepted a short-term loan in the aggregate principal amount of $250,000 from Hanif A. Roshan, the Company's Chief Executive Officer and Chairman of the Board. To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of $250,000. The Note was an unsecured obligation of the Company and was not convertible into equity securities of the Company. The Note was due and payable on the 30-day anniversary of the issue date and interest accrued on the Note at the rate of 12% per annum. The Note was exchanged for a new secured convertible note in the exchange transaction described below under the caption "Exchange Transaction".

Exchange Transaction

On March 20, 2017, the Company entered into a note exchange agreement with the holders of an aggregate principal amount of $2,170,000 of outstanding promissory notes (the "Original Notes"), which were due and payable, pursuant to which the Company agreed to issue the holders of such notes, in consideration of the cancellation of the Original Notes, new promissory notes in the aggregate principal amount of $2,545,199, which is equal to the sum of the aggregate principal amount of the Original Notes plus the accrued but unpaid interest on the Original Notes (the "New Notes"). The New Notes are convertible into shares of the Company's common stock at an initial conversion price of $2.03 per share. Based on the initial conversion prices, the New Notes will be convertible into up to 1,253,792 shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that is less than the conversion price then in effect, such conversion price will be decreased to equal 85% of such lower price. The foregoing adjustments to the conversion price will not apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. The conversion price is also subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. These conversion options resulted in a derivative liability valued at $328,422. All the New Notes have a maturity date of one year from the closing date. The New Notes were issued in consideration of the exchange of (i) an aggregate principal amount of $950,000 of Original Notes convertible at a price of $2.25 per share, (ii) an aggregate principal amount of $520,000 of Original Notes convertible at a price of $3.00 per share, and (iii) an aggregate principal amount of $700,000 of unconvertible Original Notes.

12

During the year ended June 30, 2017, in connection with the exchange of the Original Notes for the New Notes, the Company also agreed with the holder of all outstanding shares of Series B Convertible Preferred Stock (the "Series B Preferred Stock") to exchange all of its outstanding shares of Series B Preferred Stock for shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (the "Series E Preferred Stock"). Accordingly, on March 20, 2017, the Company also entered into a separate exchange agreement with the holder of the shares of Series B Preferred Stock, to exchange such shares for a total of 25,000 shares of Series E Preferred Stock. Each share of Series E Preferred Stock will have a stated value of $30.00 per share. Pursuant to this exchange agreement, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock. The shares of Series E Preferred Stock are initially convertible by the holder into an aggregate of 187,500 shares of common stock at the initial conversion rate of $4.00 per share. The conversion price of the new preferred stock is subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events. The right of holders of Series E Preferred Stock to convert these securities into common stock is subject to a 4.99% beneficial ownership limitation, which beneficial ownership limitation may be increased by a holder to a greater percentage not more than 9.99% after providing notice to the Company.

The New Notes bear interest at the rate of 5% per annum with interest payable upon maturity, the conversion of the New Notes or on any earlier redemption date. Beginning one month after the Company's common stock is listed for trading on a national securities exchange, and Company will have the right to redeem all or any portion of the outstanding principal balance of the New Notes, plus all accrued but unpaid interest at a price equal to 110% of such amount. The holders of the New Notes shall have the right to convert any or the entire amount to be redeemed into common stock prior to redemption. Subject to certain exceptions, the New Notes contain customary covenants against incurring additional indebtedness and granting additional liens and contain customary event default. Upon the occurrence of an event of default under the New Notes, the holders may require the Company to repay all or a portion of the note in cash, at a price equal to 110% of the principal, plus accrued and unpaid interest.

Loss on Extinguishment of Debt

In accordance with ASC 470-50, "Debt - Modifications and Extinguishments", the Company's note exchange agreement was tested to determine whether a debt modification or debt extinguishment had occurred. Based on management's review, debt extinguishment accounting applied. A loss on extinguishment of $258,037 resulted from the exchange, and was recorded in fiscal year 2017. The loss consists of the resulting derivative liability of $328,422 from embedded conversion options in the New Notes and the additional value of $50,000 of the Series E Preferred Stock compared to the Series B Preferred Stock, offset by the waiving of the unpaid Preferred Series B dividends of $120,385. No expense was yet incurred in fiscal year 2018.

7. Equity

Preferred Stock

As of December 31, 2017, there were 25,000 shares of Series E Convertible Preferred Stock outstanding. The shares of Series E Preferred Stock are initially convertible into an aggregate of 187,500 shares of common stock at the initial conversion rate of $4.00 per share. The conversion price of the Series E Preferred Stock will be subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events and does not provide for general price-based anti-dilution adjustments. Each share of Series E Preferred Stock has a stated value of $30.00 per share and has the following rights and preferences: (i) each holder of the Series E Preferred Stock has the right, at any time, to convert the shares of Series E Preferred Stock into shares of common stock, (ii) the Series E Preferred Stock is redeemable at the Company's option commencing one year after the original issuance date, provided that the Company's common stock is listed on a national securities exchange at such time, and (iii) the Series E Preferred Stock will pay dividends at the rate of 5% per annum in cash. The shares of Series E Preferred Stock were issued in a transaction with the holder of the Company's previously outstanding shares of Series B Preferred Stock to exchange the shares of Series B Preferred Stock for the shares of Series E Preferred Stock. Pursuant to the exchange agreement for the preferred stock, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock. At December 31, 2017, the Company has accrued dividends of approximately $29,000 on the Series E Preferred Stock which remain unpaid.

13

As of December 31, 2017, there are 605,000 shares of Series D Convertible Preferred Stock outstanding. The Series D Preferred Stock can be converted by the holders into an aggregate of 619,154 shares of common stock at an initial conversion rate of $9.77139 per share. The holders of such shares have the right to convert the preferred shares at any time, although the shares received upon conversion may not be offered or sold except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Company has the right to repurchase the outstanding Series D Preferred Stock at a redemption price equal to $10.00 per share, plus accrued and unpaid dividends, and to require holders to convert their Series D Preferred Stock beginning in June 2016. Dividends on the Series D Preferred Stock accrue at a rate of 5% per annum and are payable semi-annually in cash or stock at the Company's option. At December 31, 2017, the Company has accrued dividends in the amount of approximately $787,000 on the Series D Preferred Stock, which remain unpaid. 

The Company's preferred stock takes precedence over Common Stock but ranks below debt in the event of liquidation. In addition, the Series D Convertible Preferred Stock ranks above the Series E Convertible Preferred Stock.

Earnings per Share

FASB ASC Topic 260, Earnings per Share, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of ordinary shares outstanding during the period, while diluted earnings per share is calculated to include any dilutive effects to ordinary shares. For the three and six months ended December 31, 2017, our ordinary share equivalents consisted of stock options, restricted stock units, convertible debt, preferred stock and warrants.

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2017			2016			2017			2016
Basic earnings (loss) per share
Net loss	$	(2,983,867	)	$	(268,738	)	$	(4,110,390	)	$	(172,905	)
Preferred stock dividends		(85,699	)		(100,624	)		(170,249	)		(201,248	)
Net loss available to common shareholders after preferred stock dividends	$	(3,069,566	)	$	(369,362	)	$	(4,280,639	)	$	(374,153	)
Weighted average shares used in the computation of basic earning per share		7,249,370			6,015,053			7,249,370			5,893,655
Loss per share - basic	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Dilutive earnings (loss) per share
Loss available to common shareholders	$	(3,069,566	)	$	(369,362	)	$	(4,280,639	)	$	(374,153	)
Weighted average shares used in the computation of diluted earnings per share		7,249,370			6,015,053			7,249,370			5,893,655
Dilutive effect of options, warrants, convertible debt and convertible preferred stock		-			-			-			-
Shares used in the computation of diluted earnings (loss) per share		7,249,370			6,015,053			7,249,370			5,893,655
Loss per share - diluted	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Anti-Dilutive Options Excluded		1,253,793			5,354,203			1,253,793			5,354,203

14

Common Stock Warrants

A schedule of common stock warrant activity for the six months ended December 31, 2017 is as follows:

Warrant Activity	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		4,150,535		$	4.67		3.87	$	42,582
Issued		-
Expired		(25,000	)	$	12.06		-
Outstanding December 31, 2017		4,125,535		$	4.62		2.89	$	-
Exercisable, December 31, 2017		4,069,979		$	4.18		2.79	$	-

 8. Share-Based Compensation

Stock option activity under the Company's stock option plans for employees and non-executive directors for the six months ended December 31, 2017 is as follows:

Employee Option Activity	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		226,902			9.04		6.34	$	-
Granted		50,000			2.00		9.70		-
Expired/Forfeited		(11,556	)		23.40		23.40
Outstanding December 31, 2017		265,346			7.08		7.04	$	-
Exercisable December 31, 2017		143,917			11.50		4.94	$	-

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Non-Executive Option Activity	Options			Price		Life (Years)		Value
Outstanding June 30, 2017		602,311			3.57		6.11	$	-
Granted		45,555			1.59		9.74		-
Expired/forfeited		(35,901	)		4.01		-		-
Outstanding and exercisable December 31, 2017		611,965			3.40		7.35	$	-

No options were granted to the Company's non-employee directors as of December 31, 2017 as each director that would have received such options as of such date under the Company's Non-Employee Director Compensation Policy waived the receipt of such compensation for the quarter ended December 31, 2017.

15

Restricted stock unit activity under the Company's restricted stock unit plans for employees and non-executive directors for the six months ended December 31, 2017 is as follows:

	Number of RSUs		Weighted Average Grant Date Fair Value
Outstanding June 30, 2017		411,429	$	1.75
Granted		120,000		0.74
Expired/Forfeited		-
Outstanding December 31, 2017		531,429	$	1.54

9. Fair Value Measurements and Other Financial Instruments

The carrying amounts of the Company's financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses, and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

In connection with the issuance of a convertible promissory note as discussed in Note 6, the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the convertible note agreement that potentially could result in a settlement in the event of a fundamental transaction, requiring the Company to classify the conversion feature as a derivative liability.

The Company's Level 3 financial liabilities consist of the derivative conversion features of underlying convertible debt and warrants issued in 2011 to 2015. The Company valued the conversion features using the Black Scholes model prior to the three months ended September 30, 2016 and the Monte Carlo model for all periods thereafter. These models incorporate transaction details such as the Company's stock price, contractual terms maturity, risk free rates and volatility as of the date of issuance and each balance sheet date. The decrease in the value of the conversion feature of the convertible debt and warrants issued was primarily due to the decrease in the stock price during 2017 compared with prior years.

The Company utilized the following assumptions in valuing the derivative conversion features:

Exercise Price	$2.03	-	$2.07
Risk free interest rate	1.38%	-	2.21%
Expected volatility	100%	-	160%
Remaining Term (years)	0.22	-	5.57

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

The fair value of AHC financial instruments, using the fair value hierarchy under U.S. GAAP detailed in "Fair Value Measurements" in Note 2, "Summary of Significant Accounting Policies and Recently Issued Accounting Standards," of the Notes to the Condensed Consolidated Financial Statements are included in the tables below.

The Company uses Level 3 of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative liabilities at every reporting period and recognizes gains and losses in the statement of operations that are attributable to the change in the fair value of the derivative liabilities.

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The following tables provide a summary of the changes in fair value, including net transfers in and/or out, of all financial assets/ (liabilities) measured at the fair value on a recurring basis using significant unobservable inputs during the six months ended December 31, 2017.

				Convertible
	Warrants			Notes			Total
Balance - June 30, 2017	$	435,036		$	116,004		$	551,040
Change in fair value of derivative liabilities		(254,553	)		(111,311	)		(365,864	)
Balance - December 31, 2017	$	180,483		$	4,693		$	185,176

	Fair
	Value		Level 1		Level 2		Level 3
June 30, 2017 derivative liabilities	$	551,040	$	-	$	-	$	551,040
December 31, 2017 derivative liabilities	$	185,176	$	-	$	-	$	185,176

Derivative Instruments

For the three and six months ended December 31, 2017 and 2016, the Company recorded non-cash income of approximately $293,000 and $366,000, compared to income of $622,000 and $136,000 for the prior year periods in other (expense) income for the changes in fair value of the derivative liabilities.

10. Commitments and Contingencies

A complaint was filed by a former independent contractor in the State of Louisiana who was involved in the sales and marketing of the Company's products and services. The caption of the case is Medlogic, LLC and Malena F. Badon v. Peachstate Health Management, LLC., Pyarali Roy, and Universal Billing Systems, LLC. Plaintiff alleges certain commissions had not been paid in full. The Company believes the contractor was overpaid and has asserted a counter claim for reimbursement of such overpayments. The Company intends to vigorously defend the claim and pursue the counter claim. The parties have completed initial discovery and the matter remains pending. The Company believes the resolution of this matter will not have a material effect on its financial statements.

Regarding the termination of the Company's employment relationship with certain executives, including the former Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") of AHC, the Company has been reviewing its severance obligations to them and the vesting of other post-termination provisions. The Company believes that it has accrued all related severance costs as of December 31, 2017 related to the past terminations. 

The former CEO of AHC commenced arbitration proceedings against AHC before the American Arbitration Association ("AAA"). A demand for arbitration was filed with the AAA on or about June 22, 2016 by O'Connell Benjamin, requesting payment of severance compensation of $341,620 and other benefits, including the vesting of certain stock option awards, pursuant to an employment agreement. The parties opted to pursue mediation in their attempt to resolve the matter, and a mediation session was held on October 30, 2017, but no resolution was reached. The Company believes that it has valid defenses to Mr. Benjamin's claims and intends to defend this matter accordingly as the arbitration process ensues.

The Company is a defendant in an action captioned Cogmedix, Inc. v. Authentidate Holding Corp. in the Superior Court of Worcester County, Commonwealth of Massachusetts, Case No. 1685CV01318B. Suit was filed on September 6, 2016 alleging the principal amount of $227,061, and accumulating interest and attorney fees remain outstanding on a purchase order dated December 6, 2013. Management believes that this matter will not have a material adverse effect on financial position, results of operations, or cash flows. Nevertheless, this matter is the subject of further negotiations.

On August 24, 2017, the Company commenced suit against Mr. Richard G. Hersperger, a former company director and officer, to recover 38,321 shares of common stock and to obtain declaratory relief terminating all further obligations to Mr. Hersperger. The case was filed in the Superior Court of Hall Country, State of Georgia under the caption Authentidate Holding Corp. and Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Richard G. Hersperger, Case No. 2017-CV-1686-B. The complaint also sought damages based on common law fraud and breach of fiduciary duty. Mr. Hersperger threatened to commence litigation against us and certain of our directors. In December 2017, the Company entered into a settlement agreement and release with Mr. Hersperger to resolve the dispute. Pursuant to the settlement agreement and release, and in consideration of the general release of claims provided by the former CEO and his agreement to dispose of the shares previously issued to him to a designated third party, the Company agreed to pay an amount of $15,000 to the former CEO and dismiss the above-referenced proceeding it had commenced against him. The Company also agreed to provide a general release to the former CEO.

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On May 3, 2017, the Company received notice from the Office for Civil Rights ("OCR") of the U.S. Department of Health and Human Services ("HHS") informing the Company that the OCR is conducting a review of the Company's compliance with applicable Federal Standards for Privacy of Individually Identifiable Health Information and/or Security Standards for the Protection of Electronic Protected Health Information. The OCR is the division of HHS charged with enforcing the Health Insurance Portability and Accountability Act of 1996, as amended ("HIPAA"), and the privacy, security and data breach rules which implement HIPAA ("HIPAA Rules"). The OCR compliance review covers both the Company's telehealth business and its clinical laboratory operations. The OCR reviewed the Company's premises and conducted interviews on May 23, 2017 and the Company continues to work on a resolution with the OCR. The OCR may, among other things, require a corrective action, issue penalties, or reach a monetary settlement. The Company does not expect a material adverse determination on its consolidated financial position, results of operations and cash flows.

The Company is the plaintiff in a case captioned Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Radius Foundation, Inc. and William Bramlett, Ph.D., filed on June 13, 2017 in the State Court of Hall County, State of Georgia. On October 10, 2017, Plaintiff filed a motion for default judgment requesting an order of judgment in the principal amount of $116,650. The Court has since requested additional information from the Company relating to details of the parties' business relationship which the Company is in the process of providing in order to secure an Order for Default Judgment.

The Company is the plaintiff in a case captioned Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Trimana, LLC d/b/a Via Medical Center filed on April 29, 2016 in the State Court of Hall County, State of Georgia. Service of the Summons and Complaint was perfected upon the Defendant on October 11, 2017, and an Answer was due to be filed by the Defendant on or before November 10, 2017. No Answer was filed by the defendant, however, and the Company will be seeking a default judgement in the amount of $104,442 along with interest and attorney fees.

The Company, along with its chief executive officer and certain unnamed persons, are defendants in a case captioned Carlotta Miraflor v. Peachstate Health Management, LLC d/b/a Aeon Global Health, et al., filed on October 4, 2016 in the United States District Court for the Central District of California. Service of the Summons and Complaint was made on January 3, 2018 and the Company has not yet filed its answer to the complaint. The plaintiff was an independent contractor which provided marketing services to the Company pursuant to a services agreement. The complaint alleges harassment, retaliation, wrongful termination, assault, and other claims. The lawsuit was preceded by a Dismissal and Notice of Rights by the U.S. Equal Employment Opportunity Commission in July 2017 on the basis that the plaintiff has been identified as an independent contractor, notwithstanding that the plaintiff alleged that the Company was the employer of the plaintiff. The lawsuit now seeks an injunction enjoining the Company from classifying its sales and marketing personnel as independent contractors and unspecified compensatory damages of at least $75,000 for plaintiff's alleged loss of earnings, emotional distress, punitive damages, and attorneys' fees and costs. The Company disputes that it was an employer of the plaintiff, believes that it has strong defenses to plaintiff's allegations and intends to vigorously defend the litigation. Management is unable to determine at this time whether this claim will have a material adverse impact on the Company's financial condition, results of operations or cash flow.

The Company is also subject to claims and litigation arising in the ordinary course of business. Management considers that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would not have a material adverse effect on the consolidated financial position, results of operations or cash flows.

The Company has entered into various agreements by which it 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 the Company under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by the Company and to dispute resolution procedures specified in the particular contract. Further, obligations under these arrangements may be limited in terms of time and/or amount and, the Company may have recourse against third parties for certain payments made by the Company. It is not possible to predict the maximum potential amount of future payments under these indemnification agreements due to their conditional nature 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 December 31, 2017, the Company is not aware of any obligations under such indemnification agreements that would require material payments.

11. Related Party Transactions

Except as disclosed herein, the Company has not entered into any material transactions or series of similar transactions with any director, executive officer or any security holder owning 5% or more of common stock since July 1, 2016.

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AEON leases its facilities from Centennial Properties of Georgia, LLC under a lease agreement commencing April 2014, as amended January 20, 2016. The lease provides for a term of 12 years expiring March 2026. The lease payments range from $46,500 to a maximum of $60,000. In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a first priority lien and security interest in substantially all its assets. The landlord under the lease is Centennial Properties of Georgia, LLC a Georgia limited liability company. Centennial is owned by Sonny Roshan, Shawn Desai, Pyarali Roy and Sohail Ali, all of whom were AEON members and received common stock in Authentidate as a result of the Acquisition. Mr. Roshan serves as the Chairman and CEO of Authentidate. Mr. Desai is the Chief Technology Officer of AEON. Mr. Roy is the Chief Strategy Officer of AEON. Related party rent expense for the three and six months ending December 31, 2017 and 2016 was $144,000 and $288,000, and $140,000 and $279,000, respectively.

The Company holds certain related party notes payable with shareholders and affiliates of board members of the Company, as detailed in Note 6. Interest expense relating to these notes amounted to approximately $32,000 and $64,000, and $92,000 and $203,000 for the three and six months ended December 31, 2017 and 2016, respectively.

Effective as of January 31, 2017, the Company accepted a short-term loan in the aggregate principal amount of $250,000 from Hanif A. Roshan, the Company's Chief Executive Officer and Chairman of the Board. To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of $250,000. The Note was an unsecured obligation of the Company, and was not convertible into equity securities of the Company. The Note was due and payable on the 30-day anniversary of the issue date and interest accrued on the Note at the rate of 12% annum. The Note was exchanged for a new secured convertible note in the exchange transaction described above in Note 6 under the caption "Exchange Transaction".

AHC entered into a lease agreement with Hanif A. ("Sonny") Roshan (the "landlord") for a residential premises at 5455 Golf View Drive, Braselton, Georgia 30517 for a term of one year beginning on January 1, 2017 and ending on December 31, 2017 for a fixed rent in monthly installments of $7,500 due and payable by the first day of each month. The lease is renewable with a 3% increase in rent for each renewal. The tenant is responsible for utilities and insurance with the landlord responsible for maintenance and taxes on the premises. Rent expense was $22,500 and $45,000 for the three and six months ended December 31, 2017.

 12. Segment Information

The Company is operated as two segments: laboratory testing services (AEON), and web-based software (AHC). Laboratory testing services includes the testing of an individual's blood, urine or saliva for the presence of drugs or chemicals and the patient's DNA profile. Web-based software provides secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Management currently runs each segment separately and measures profitability and operational performance based on the financial statements, which are independently maintained.

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Selected financial information related to the Company's segments is presented below:

	Authentidate			AEON			Total
Three Months ended December 31, 2017
Net revenues	$	253,180		$	5,278,042		$	5,531,222
Cost of revenues		64,978			823,564			888,541
Operating expenses		335,067			3,818,194			4,153,261
Operating loss		(81,887	)		1,459,848			1,377,961
Six Months ended December 31, 2017
Net revenues	$	500,850		$	8,388,424		$	8,889,274
Cost of revenues		120,106			1,897,012			2,017,117
Operating expenses		1,208,452			7,437,181			8,645,633
Operating loss		(707,602	)		951,243			243,641
Three Months Ended December 31, 2016
Net revenues	$	321,378		$	4,565,435		$	4,886,813
Cost of revenues		55,325			896,343			951,668
Operating expenses		1,320,216			4,319,576			5,639,792
Operating loss		(160,596	)		(592,383	)		(752,979	)
Six Months ended December 31, 2016
Net revenues	$	680,157		$	10,256,731		$	10,936,888
Cost of revenues		356,783			1,839,055			2,195,838
Operating expenses		2,764,971			8,109,655			10,874,626
Operating income (loss)		(143,361	)		205,623			62,262
December 31, 2017
Total assets	$	7,474,180		$	4,934,988.74		$	12,409,168
June 30, 2017
Total assets	$	11,772,874		$	4,958,804		$	16,731,678

13. Subsequent Events

On January 4, 2018, the Company entered into a Consulting Agreement with Dr. Armando Moncada, M.D. ("Moncada") pursuant to which the Company engaged Moncada to act as it Chief Medical Officer - Pathology and to provide certain consulting services in connection with the operating of the Company's pathology laboratory, as specified in the Consulting Agreement, which expires December 31, 2020; however, it may be terminated sooner by either party upon 30 day's prior written notice. In the event that the Consulting Agreement is terminated by the Company without cause, or by the Consultant due to a breach by the Company, the Consultant will be entitled to receive all fees earned through the date of termination, plus the Company shall pay the Consultant the applicable consulting fee for one additional month. Pursuant to the Consulting Agreement, the Company agreed to pay the Consultant the following consulting fees: (i) an amount of $40,000 upon the execution of the agreement, (ii) the sum of $25,000 per month, commencing February 1, 2018, and (iii) an additional sum of $40,000 on or about January 15, 2019 and January 15, 2020. Further, the Company agreed to grant the Consultant 280,000 restricted stock units ("RSUs") pursuant to its 2011 Omnibus Equity Incentive Plan (the "Plan"), which RSUs will vest in the event that the Consultant remains engaged by the Company to the end of the term of the Consulting Agreement and upon the achievement of certain performance criteria, subject to the approval of the Company's shareholders of an amendment to the Plan to increase the number of shares of common stock available for awards to be issued thereunder. In addition, pursuant to the Consulting Agreement, Moncada agreed to transfer and assign to the Company, in his personal capacity as well as in his capacity as a controlling member and/or officer of PCG Molecular, LLC and Pathology Consultants of Georgia, Inc., all rights to the intellectual property of such entities, whether trademarks, patents, patent applications, service marks. The completion of the transaction to acquire the foregoing intellectual property rights is subject to the negotiation and execution of a definitive assignment agreement and other customary closing conditions. Accordingly, there can be no assurance that a definitive agreement will be reached by the parties.

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On January 23, 2018, the Company accepted a short-term loan in the aggregate principal amount of $500,000 from Hanif A. Roshan, the Company's Chief Executive Officer and Chairman of the Board. To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of $500,000. The Note is an unsecured obligation of the Company and is not convertible into equity securities of the Company. The Note is due and payable on April 23, 2018 and interest will accrue on the Note at the rate of 5% per annum. In addition, the Note also provides the holder with the right to exchange the principal amount of the Note (and unpaid interest thereon) into securities of the Company that it may issue in the next financing, as defined in the Note. The Note contains terms and events of default customary for similar transactions. The Company is using the net proceeds from the transaction for general business and working capital purposes.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Certain statements in this Quarterly Report on Form 10-Q are "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this Quarterly Report, words such as "may," "should," "seek," "believe," "expect," "anticipate," "estimate," "project," "intend," "strategy" and similar expressions are intended to identify forward looking statements regarding events, conditions and financial trends that may affect the Company's future plans, operations, business strategies, operating results and financial position. Forward looking statements are subject to a number of known and unknown risks and uncertainties that may cause actual results, trends, performance or achievements of the Company, or industry trends and results, to differ materially from the future results, trends, performance or achievements expressed or implied by such forward looking statements. These risks and uncertainties include:

• Changes in U.S., state, local and third-party payer regulations or policies or other future reforms in the healthcare system (or in the interpretation of current regulations), new insurance or payment systems, including state, regional or private insurance cooperatives (e.g., Health Insurance Exchanges), affecting governmental and third-party coverage or reimbursement for clinical laboratory testing;

• Significant fines, penalties, costs and/or damage to the Company's reputation arising from the failure to comply with U.S. and international privacy and security laws and regulations, including the Health Insurance Portability and Accountability Act of 1996, Health Information Technology for Economic and Clinical Health Act, U.S. state laws and regulations, and laws and regulations of the European Union and other countries;

• Loss or suspension of a license or imposition of a fine or penalties under, or future changes in, or interpretations of, the law or regulations of the Clinical Laboratory Improvement Act of 1967, and the Clinical Laboratory Improvement Amendments of 1988;

• Penalties or loss of license arising from the failure to comply with the U.S. Occupational Safety and Health Administration requirements and the U.S. Needlestick Safety and Prevention Act, or similar laws and regulations of U.S., state, local or international agencies;

• Fines, unanticipated compliance expenditures, suspension of manufacturing, enforcement actions, injunctions, or criminal prosecution arising from failure to maintain compliance with current good manufacturing practice (cGMP) regulations and other applicable requirements of various regulatory agencies;

• Changes in testing guidelines or recommendations by government agencies, medical specialty societies and other authoritative bodies affecting the utilization of laboratory tests;

• Increased competition, including price competition, competitive bidding and/or changes or reductions to fee schedules and competition from companies that do not comply with existing laws or regulations or otherwise disregard compliance standards in the industry;

• Failure to obtain and retain new customers or a reduction in tests ordered, specimens submitted or services requested by existing customers;

• Customers choosing to insource services that are or could be purchased from the Company;

• Damage or disruption to the Company's facilities;

• Failure to identify, successfully close and effectively integrate and/or manage newly acquired businesses; and

• Adverse results in litigation matters.

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These and certain other factors are discussed in this Quarterly Report and from time-to-time in other Company reports filed with the Securities and Exchange Commission (the "SEC"). The Company expressly disclaims any obligation to update or revise any forward-looking statements, whether because of new information, future events or otherwise, except as required by law.

The AEON Acquisition 

On January 27, 2016, AEON was merged into a newly formed acquisition subsidiary of AHC (the "Aeon Acquisition") pursuant to a definitive Amended and Restated Agreement and Plan of Merger dated January 26, 2016, as amended on May 31, 2016 and December 15, 2016 (collectively the "Merger Agreement"). The merger certificate was filed with the Secretary of State of Georgia on January 27, 2016, and AEON survived the merger as a wholly-owned subsidiary of AHC. The acquisition of AEON requires us to pay certain Earn'out Payments (as defined and described below) to the former members of AEON upon achievement of certain financial milestones. The Earn-out Payments must be paid in shares of our common stock. In accordance with the Merger Agreement, the members of AEON prior to the effective time of the AEON Acquisition became holders of shares of common stock, issuable in tranches as described below. The closing of the AEON acquisition occurred on January 27, 2016 and the Company filed a Current Report on Form 8-K on February 1, 2016 regarding the AEON Acquisition in accordance with the SEC regulations.

Pursuant to the terms of the Merger Agreement, among other things:

• Following the AEON Acquisition, AEON is operated as a separate entity.

• The former members of AEON prior to the effective time of the AEON Acquisition became holders of shares of common stock issuable in tranches as follows (the payments referred to in (b), (c), (d) and (e) below are hereinafter be referred to as the "Earn-out Payments"):

(a)    At the closing of the AEON Acquisition, the membership interests of AEON were converted into the right to receive such number of validly issued, fully paid and non-assessable shares of our common stock as is equal to 19.9% of the issued and outstanding shares of our common stock (rounded to the nearest whole share) as of the close of business on the business day immediately prior to the closing date of the AEON Acquisition (958,030 shares of our common stock).

(b)    In December 2016, we issued to the former AEON members 240,711 shares of common stock, representing 5% of the issued and outstanding shares of our common stock as of the close of business on the business day immediately prior to the closing date of the AEON Acquisition, following the approval of our shareholders of the Earn-out Payments.

(c)    In December 2016, we issued to the former AEON members 1,155,415 shares of common stock, representing 24% of the issued and outstanding shares of our common stock as of close of business on the business day immediately prior to the closing date of the AEON Acquisition, due to the determination that AEON achieved at least $16,000,000 in EBITDA for the calendar year ending December 31, 2015.

(d)    In the event AEON achieves at least $65,900,000 in EBITDA, in the aggregate, for the three calendar years ending December 31, 2016, 2017 and 2018, then, on October 1, 2019, subject to the completion of the audited financial statements of AEON for the calendar year ending December 31, 2018, we will issue to the former AEON members such number of additional shares of our common stock as is equal to 36.1% of the issued and outstanding shares of our common stock (rounded to the nearest whole share) as of the close of business on the business day immediately prior to the closing date of the AEON Acquisition; provided; however, we will issue to the former AEON members such number of additional shares of our common stock so that the total number of shares of our common stock issuable to the former AEON members shall equal 85% of the issued and outstanding shares of our common stock on a post-issuance basis (rounded to the nearest whole share) on a Fully Diluted Basis (as defined below).

(e)    In the event AEON achieves at least $100,000,000 in EBITDA, in the aggregate, for the four calendar years ending December 31, 2019, we will issue to the former AEON members such number of shares of our common stock which equals an additional 5% of the issued and outstanding shares of our common stock on a post-issuance basis (rounded to the nearest whole share), on a Fully Diluted Basis, in addition to our common stock issued to the former AEON members under (b), (c) and (d) above (resulting in the AEON members potentially owning 90% of the issued and outstanding shares of our common stock on a post issuance basis on a Fully Diluted Basis if all the additional tranches are earned).

 The Merger Agreement provides that the above-referenced EBITDA targets are subject to adjustment on an annual basis, for each percentage increase or decrease above a ten percent threshold, of the CMS reimbursement rate levels for the services that AEON provides to its customers. The CMS rates changed in 2016 and 2017 and the Company anticipates that the original EBITDA thresholds will be materially reduced.  The Company has recently engaged a valuation consultant to evaluate the impact of the CMS rate changes on the target EBITDA threshold values, which analysis has not yet been completed.

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Basis of Presentation

On January 27, 2016, AEON completed the transactions contemplated by the Merger Agreement with AHC under which AEON merged with a wholly-owned subsidiary of AHC and will be operated as a separate entity. The merger was accounted for as a reverse acquisition with AEON treated for accounting purposes as the acquirer. As such, the financial statements of AEON are treated as the historical financial statements of the Company. For the periods prior to the closing of the reverse acquisition the disclosure below relates to the historical business and operations of AEON. The balance sheet as of June 30, 2017 has been derived from audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements.

Overview of AEON Business

Prior to the closing of the AEON Acquisition, AEON was a privately-held Georgia limited liability company. Subsequent to the Acquisition, the AEON business constitutes the majority of the combined Company's business.

AEON's primary business focus is on the "Personalized Medicine" approach to laboratory testing. This includes the testing of an individual's blood, urine or saliva for the presence of drugs or chemicals and the patient's DNA profile.

AEON is an innovator in genomic testing with a number of established genetic tests in use today in the areas of pharmacogenomics and cancer genetic testing and a pipeline of additional tests in development which it plans to bring to market over the coming eighteen months. AEON is investing to expand its genetic testing capabilities to address the rapidly increasing demand for personalized medical analysis that involves using an individual's genetic profile to guide decisions regarding the prevention, diagnosis, and treatment of disease. AEON strives to offer unique testing specifically designed for its increased focus on personalized medicine, with superior service levels. In this effort, AEON provides advanced testing in DNA pharmacogenomics, cancer genetics and molecular microbiology. Genomic testing is more complex than conventional toxicology testing, requires unique knowledge and significantly more sophisticated equipment and bioinformatics. As a result, genomic testing commands higher prices while enjoying significantly less competition.

Toxicology is a major component of AEON's product mix and will continue to be an important element of AEON's business strategy. AEON's toxicology testing provides information about the medication and other substances in the patient's system from either urine or oral fluid samples. This information helps guide a clinician's treatment of a patient. This testing ensures the safe use of prescriptions and is designed to help doctors provide the highest level of care. AEON offers a comprehensive set of toxicology tests and produce results under quality assurance standards consistent with those required by various regulatory bodies. In addition, AEON intends to expand its anatomic pathology testing business.

AEON supports its national client base from its Gainesville, Georgia headquarters. AEON is focused on technology innovation and efficiency, utilizing state of the art testing equipment and its proprietary methodologies to provide some of the fastest and most reliable test results in the nation. AEON focuses on a service model that emphasizes the importance of the test result for both the client and the patient. By focusing on fast, accurate turnaround of test results and the ability to integrate directly with the electronic medical records of clients, AEON believes it can provide clients a unique service that larger clinical laboratories cannot match. Because of the emphasis on its service model, AEON believes it is ideally positioned to be a preferred lab provider for personalized medicine. The majority of AEON's current testing volume is in toxicology; however, AEON has recently placed focus and emphasis on growing its DNA pharmacogenomics and cancer genetic testing in response to growing market demand for personalized medical testing.

Overview of AHC Business

AHC provides secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to (i) increase revenues, (ii) improve productivity, (iii) reduce costs, (iv) organize care for patients and (v) enhance related administrative and clinical workflows and compliance with regulatory requirements. AHC's web-based services are delivered as Software as a Service (SaaS) to its customers interfacing seamlessly with billing and document management systems. These solutions incorporate multiple features and security technologies such as business-rules based electronic forms, intelligent routing, transaction management, electronic signatures, identity credentialing, content authentication, automated audit trails and remote patient management capabilities. Both web and fax-based communications are integrated into automated, secure and trusted workflow solutions.

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Outlook and Trends

Healthcare Industry Trends

Current industry estimates relied on by management indicate that over $3.0 trillion is spent annually on healthcare in the United States. Management believes that demand for laboratory testing services is expected to continue to grow due to a number of factors including the movement towards preventative care, the aging population, higher illicit drug use and the increasing trend towards personalized and value-based medicine.As such, the healthcare system in the United States will continue to evolve and significant change is taking place in the system. There are a number of key trends that are having, and that we expect will continue to have, a significant impact on the diagnostic information services business in the United States and on our business. These trends present both opportunities and risks. However, because of the nature of the services we provide, we believe that the industry will continue to grow over the long term and that we are well positioned to benefit from the long-term growth expected in the industry.

Consistent with the last few years, we expect downward reimbursement pressure for our Aeon business will continue to be experienced in fiscal 2018. As a result of the size of the overall healthcare spend, market participants, including governments, continue to focus on controlling costs, including potentially by changing reimbursement for healthcare services (including but not limited to a shift from fee for service to capitation), changing medical coverage policies (e.g., healthcare benefits design), requiring pre-authorization of laboratory testing, requiring co-pays, introducing laboratory spend management utilities and payment and patient care innovations. As health plans and government programs require greater levels of patient cost-sharing, our patient collections could be negatively impacted and adversely impact our bad debt expense. In addition, there could be a shift to capitation arrangements where we agree to a predetermined monthly reimbursement rate for each member enrolled in a restricted plan, generally regardless of the number or cost of services provided by us.

Fees for the laboratory services we provide are reimbursed by Medicare, Medicaid and commercial payors and are established in the Clinical Laboratory Fee Schedule (CLFS). Historically, these fee schedules are subject to annual adjustments. During the quarter ended December 31, 2017, 45% of the Company's revenue was reimbursed from Medicare under the CLFS with the balance of the Company's revenue derived from commercial insurance providers and Medicaid. For the quarter ended December 31, 2017, toxicology testing represented approximately 85% of all of laboratory testing services that the Company provided.

Over the past several years, the Company has experienced governmental reimbursement reductions as a direct result of the Patient Protection and Affordable Care Act (ACA) and other laws. The Protecting Access to Medicare Act (PAMA), which became law on April 1, 2014, is expected to result in a future net reduction in reimbursement revenue under the CLFS. These laws include provisions designed to control healthcare expenses reimbursed by government programs through a combination of reductions to fee schedules, incentives to physicians to participate in alternative payment models such as risk-sharing, and new methods to establish and adjust fees.

Beginning in calendar 2016, commercial and government payors focused on reducing payments to clinical laboratories by imposing more stringent payment guidelines in their adjudication processes. Additionally, effective January 2016, the Centers for Medicare and Medicaid Services (CMS) substantially reduced the unit reimbursement rate for many of the tests typically performed by the Company, along with the number of tests that CMS would reimburse. Because Medicare and Medicaid accounts for close to 50% of our annual revenue, these factors have had a substantial negative impact on our revenue.  During calendar 2017, CMS reimbursement rates for the tests we performed increased by an average of 18% to $253.87.

Although revenues for the quarter ended December 31, 2017 increased over the prior year period, we experienced an overall decrease in revenues for the six months ended December 31, 2017, as compared to the same period last year, largely caused by the impact of the severe weather experienced in the southeastern United States and the timing of new business from customers due to the imposition of more stringent payment guidelines described above.

Further payment reductions to Medicare, Medicaid and other government programs could have a direct adverse effect on the Company's net earnings and cash flows. The Company cannot predict whether changes will be implemented that will result in further payment reductions. In addition to changes in reimbursement rates, the Company is also impacted by changes in coverage policies for laboratory tests. For example, CLFS coding and billing changes related to toxicology and other procedures were implemented in 2016. The Company experienced delays in the pricing and implementation of the new toxicology codes. Further coding and billing changes related to toxicology testing and other procedure types were implemented in 2017, and we experienced delays in the pricing and implementation of these new codes, which may continue. While the impact on price and margin is currently unclear, the Company anticipates that some of that impact will be mitigated by timely negotiation with payers impacted by these changes.

The President of the United States has announced that he favors repealing the Affordable Care Act ("ACA"), and leaders of the Republican controlled federal legislature also have taken substantial efforts in an attempt to repeal and replace the ACA during 2017. While no efforts to repeal and/or replace the ACA have been successful as of yet, further Congressional efforts to repeal, amend, replace, or reform the ACA are possible. If such legislation were to become law, it could have a significant impact on the U.S. healthcare system. Uncertainty regarding the ACA prior to any such repeal, amendment, replacement or reform could create uncertainty generally in the healthcare market. Also, the trend of consolidating, converging and diversifying among customers and payers has continued. Consolidation is increasing price transparency and bargaining power, and encouraging internalization of clinical testing.

Despite the market changes regarding reimbursement discussed above, the Company believes that the volume of clinical laboratory testing is positively influenced by several factors, including an expansion of Medicaid, managed care, and private insurance exchanges. Additional factors that may lead to future volume growth include an increase in the number and types of tests that are readily available (due to advances in technology and increased cost efficiencies) for the diagnosis of disease, and the general aging of the U.S. population.

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Federal Tax Policy Trends

On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act tax legislation. While the Company continues to assess the impact of the tax reform legislation on its business and consolidated financial statements, the legislation reduces the U.S. corporate tax rate from the current rate of 35% to 21%, imposes limitations on the deductibility of interest, and allows for the expensing of capital expenditures. As detailed in Note 5 to the notes to the consolidated financial statements contained in this Quarterly Report on Form 10-Q, the value of the Company's deferred tax assets was reduced as of December 31, 2017and management will need to remeasure the Company's deferred tax asset in subsequent periods to incorporate the effect of the new tax rates. The new tax legislation may have a material impact on our future tax liability and the realizability of our net operating losses. We continue to examine the impact this tax legislation may have on our business.

 Critical Accounting Policies

The Company's Critical Accounting Policies are listed in Note 2 of the Notes to Condensed Consolidated Financial Statements.

Going Concern. In connection with preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. Substantial doubt about an entity's ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that an entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued).

Restatement of Previously Issued Financial Statements

While preparing its financial statements for the fiscal year ended June 30, 2017, the Company reviewed its accounting for certain assets held as inventory and determined that its accounting treatment of such items during its fiscal 2017 was not appropriate. After reevaluating its financial statements for each of the quarterly periods of September 30, 2016, December 31, 2016 and March 31, 2017 to assess the impact of this topic, management determined that the changes to the financial statements for the interim quarterly periods occurring during fiscal 2017 were material. Consequently, the Company restated its financial statements reported on Forms 10-Q for the periods ended September 30, 2016, December 31, 2016 and March 31, 2017 in its Annual Report on Form 10-K for the fiscal year ended June 30, 2017. See Note 3 to the Condensed Consolidated Financial Statements. The restatements primarily reflect adjustments to (i) correct for understating the carrying value of inventory in the Condensed Consolidated Balance Sheets for each of the quarterly periods; and (ii) correct for understating net income and overstating cost of cost of revenues in the Condensed Consolidated Statements of income for of the quarterly periods occurring during fiscal 2017.

Recent Accounting Pronouncements. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information of certain accounting standards that have been adopted during fiscal 2017 and the first and second quarters of fiscal 2018 and certain accounting standards that we have not yet been required to implement but may be applicable to our future operations.

Results of Operations

Three and six months ended December 31, 2017 compared to three and six months ended December 31, 2016

Revenues were approximately $5,531,000 for the three months ended December 31, 2017 compared to approximately $4,887,000 for the three months ended December 31, 2016. Revenue for the six months ended December 31, 2017 was $8,889,000 compared to $10,937,000 for the six months ended December 31, 2016. The increase in revenue for the three months ended December 31, 2017 was primarily due to one customer which increased its volume of business with the Company, which amounted to 27% of the current quarter revenue. The Company did not have material revenue from this customer in the prior periods. The decrease in revenue for the six months ended December 31, 2017 was primarily due to a weak first quarter caused by the impact of the severe weather experienced in the southeastern United States during that period and the timing of new business from customers, which benefitted our operations during the quarter ended December 31, 2017.

Cost of revenues for the three months ended December 31, 2017 was approximately $889,000 (16.1% of total net revenues) compared to approximately $952,000 (19.5% of total net revenues) for the three months ended December 31, 2016. Cost of revenues for the six months ended December 31, 2017 was $2,017,000 (22.7% of net revenues) compared to $1,958,000 (17.9% of total net revenues) for the six months ended December 31, 2016. The timing of the supply purchases was the primary cause of fluctuations in cost of sales during the year.

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Write-down of inventory comprised of purchased components of approximately $31,000 and finished goods of $207,000 were written down in the six months ended December 31, 2016 to net realizable value. There were no write-downs in the six months ended December 31, 2017.

Gross margin as a percent of revenue for the three months ended December 31, 2017 was 83.9% as compared to 80.5% for the three months ended December 31, 2016. Gross margin as a percent of revenue for the six months ended December 31, 2017 was 77.3% versus 79.9% for six months ended December 31, 2016. The higher gross margin percentage for the three months ended December 31, 2017 was primarily due to higher margin revenue in the current quarter. The lower gross margin percentage for the six months ended December 31, 2017 was primarily caused by the decrease in revenue in the current six-month period.

 Selling, general and administrative (SG&A) expenses were $3,043,000 (55.0% of total net revenues) for the three months ended December 31, 2017 as compared to $4,204,000 (86.0% of total net revenues) for the three months ended December 31, 2016. SG&A expenses were $6,154,000 (69.2% for the six months ended December 31, 2017 versus $7,727,000 (70.7% of total net revenues) for the six months ended December 31, 2016. The decrease in selling, general and administrative expenses during the current three and six months was due to the implementation of cost containment measures primarily in payroll and commissions. In addition, commissions decreased as a result of lower revenue in the six months ended December 31, 2017.

Share based compensation was approximately $21,000 in the three months ended December 31, 2017 and $90,000 for the three months ended December 31, 2016. Share based compensation was approximately $51,000 in the six months ended December 31, 2017 compared to $148,000 for the six months ended December 31, 2016. The decrease in shared compensation for the current year is primarily due to decreases in the Company's stock price during the current year. The decreased stock price lowered the value of stock compensation issued in the current year.

Depreciation and amortization expense was approximately $201,000 and $394,000 for the three months ended December 31, 2017 and 2016, respectively. Depreciation and amortization for the six months ended December 31, 2017 was $423,000 compared to $803,000 for the six months ended December 31, 2016. The decrease in the current year is primarily due to the Authentidate fixed assets being written off at June 30, 2017 and AEON fixed assets becoming fully depreciated.

Other income (expense) amounted to income of $131,000 and $530,000 for the three months ended December 31, 2017 and 2016, respectively. Other income (expense) was income of $139,000 for the six months ended December 31, 2017 versus an expense of $235,000 for the six months ended December 31, 2016. The current year variance is primarily due to the change in the gain from the valuation of derivative liabilities. This valuation was affected primarily by the lower stock price.

The Company decreased its deferred tax asset of approximately $11,848,000 at June 30, 2017 to $7,357,000 at December 31, 2017. Approximately $4,491,000 of the deferred tax asset was written off in the three months ended December 31, 2017 due to the reduction of the corporate tax rate to 21% from 35% in the new Tax Cuts and Jobs Act enacted in December 2017.

Net loss available to common shareholders for the three months ended December 31, 2017 was approximately $3,070,000 or $0.42 per basic and diluted share as compared to a net loss available to common shareholders of approximately $369,000 or$0.06 per basic and diluted share for the prior year due to the reasons mentioned above. Net loss available to common shareholders for the six months ended December 31, 2017 was approximately $4,281,000 or $0.59 per basic and diluted share versus a net loss available to common shareholders of approximately $374,000 or a loss of $0.06 per basic and diluted share for the six months ended December 31, 2016.

Liquidity and Capital Resources

Overview

Our operations and product development activities have required substantial capital investment to date. As discussed in more detail below, our recurring operating losses and capital needs, among other factors, 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.

Cash Flows

At December 31, 2017, unrestricted cash and cash equivalents amounted to approximately $357,000 and total assets at that date were approximately $12,409,000 compared to cash and cash equivalents at June 30, 2017 of approximately $1,122,000 and total assets of approximately $16,732,000. Our current estimated monthly cash requirement is approximately $1,300,000. Currently, our available cash and cash equivalents as of the filing date of this Quarterly Report on Form 10-Q is approximately $1,057,000. Net cash used by operating activities for the six months ended December 31, 2017 was approximately $765,000.

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Going Concern

As of the filing date of this Quarterly Report on Form 10-Q, there is outstanding an aggregate principal amount of $2,545,199 of senior secured convertible notes with a maturity date of March 20, 2018 and a secured note subordinated to the interests of the existing senior lenders in the principal amount of $210,000 with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet. We expect existing resources, revenues generated from operations, and proceeds received from other transactions we are considering (of which there can be no assurance) to satisfy working capital requirements for at least the next twelve months; however, no assurances can be given, that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy our other obligations. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of assets carrying amounts or the amounts and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, the Company needs to raise additional capital and are exploring potential transactions to improve our capital position. Unless we can 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.

The Company does not have a bank line of credit or other fixed source of capital reserves. We are exploring potential transactions to improve our capital position to ensure we can meet our financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities may cause our stockholders to experience substantial dilution in their ownership interests and new investors may have rights superior to the rights of our other stockholders. Raising additional funds through debt financing or preferred stock, if available, may involve covenants that restrict our business activities and options and such additional securities may have powers, designations, preferences or rights senior to our currently outstanding securities. We may also enter into financing transactions which involve the granting of liens on our assets or which grant preferences of payment from our revenue streams, all of which could adversely impact our ability to rely on our revenue from operations to support our ongoing operating costs. Alternatively, we may seek to obtain new financing from existing security holders, which may include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, we do not have any definitive agreements with any third-parties for such transactions and there can be no assurance; however, that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on our business, financial condition and results of operations.

Management has concluded that due to the conditions described above, there is substantial doubt about the entity's ability to continue as a going concern. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance will provide sufficient capital to continue operations through fiscal 2018. While our plan is to raise capital from commercial operations and/or product partnering opportunities to address our capital deficiencies and meet our operating cash requirements, there is no assurance that our plans will be successful. If we fail to generate sufficient capital from commercial operations or partnerships, we will need to seek capital from other sources and risk default under the terms of our existing loans. We cannot assure you that financing will be available on favorable terms or at all. Additionally, if additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. Furthermore, despite our optimism regarding the future of the Company, even if the Company is adequately funded, there is no guarantee that any of our services will perform as hoped or that such services can be successfully commercialized.

Contractual Commitments

	Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
Leases
Operating	$	6,311,000	$	720,000	$	1,501,000	$	1,484,000	$	2,606,000
Capital		8,000		8,000		-		-		-
Total lease obligations		6,319,000		728,000		1,501,000		1,484,000		2,606,000
Total debt obligations		2,609,000		2,609,000		-		-		-
Severance		210,000		210,000		-		-		-
Total obligations	$	9,138,000	$	3,547,000	$	1,501,000	$	1,484,000	$	2,606,000

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AEON's leases its facilities under a lease agreement dated March 1, 2014, as amended January 20, 2016. The lease, as amended, provided for a term of 12 years expiring March 2026.

Monthly
Rent	Start	End
($)
48,000	04/01/17	03/31/18
49,500	04/01/18	03/31/19
51,000	04/01/19	03/31/20
52,500	04/01/20	03/31/21
54,000	04/02/21	03/31/22
55,500	04/02/22	03/31/23
57,000	04/02/23	03/31/24
58,500	04/01/24	03/31/25
60,000	04/02/25	03/31/26

In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a lien and security interest in substantially all its assets.

The landlord under the lease is Centennial Properties of Georgia, LLC, a Georgia limited liability company. Centennial is owned by Sonny Roshan, Shawn Desai, Pyarali Roy and Sohail Ali, all of whom are former members of AEON and will be received and may in the future receive common stock because of the Merger.

The Company has entered into a lease for its offices in New Jersey, which has a term of six years following the occupancy date and annual rentals ranging from approximately $135,000 in the first year to $148,000 in the final year. The lease also provides AHC with a one-time option to renew the lease for a term of five years at the then-current market rate and, provided AHC pays an early termination fee, allows AHC an early termination option on each of the 18-month, 27-month and 36-month anniversary dates of the effective date of the amendment. As part of the lease agreement, AHC reduced its letter of credit securing its lease payments to approximately $121,000, which was collected by the landlord in the first quarter of fiscal year 2018. The Company is currently in negotiations to terminate this lease obligation and although not guaranteed, expects to be successful during fiscal year 2018.

Other Matters

The events and contingencies described below have impacted or may impact our liquidity and capital resources.

In connection with the private placement of Series D Preferred Stock in June 2013, we issued 665,000 shares of Series D 5% Convertible Preferred Stock. Presently, there are 605,000 shares of Series D Preferred Stock outstanding. The Series D Preferred Stock is convertible into 619,154 shares of AHC common stock at the conversion rate of $9.77139 per share. Each share of Series D Preferred Stock has a stated value of $10.00 per share. The Company has the right to repurchase these shares at the stated value per share, plus accrued and unpaid dividends and to require the holders to convert such securities into common stock starting in June 2016. Each holder of Series D Preferred Stock has the right to require the holders to convert such securities into common stock starting in June 2016. Each holder of the Series D Preferred Stock has the right to convert such shares into common stock at any time commencing on the six-month anniversary date of the issue date. The Series D Preferred Stock pays dividends at the rate of 5% per annum, payable in cash or shares of common stock, at the Company's option, subject to limitations required by the NASDAQ stock market. At December 31, 2017, the Company has accrued dividends on the shares of Series D Preferred Stock in the amount of approximately $787,000 which remain unpaid.

Further, there are 25,000 shares of Series E Preferred Stock outstanding which also accrue dividends at the annual rate of 5% of the issue price payable on a semi-annual basis. The shares of Series E Preferred Stock were issued in March 2017 in exchange for the surrender of the previously outstanding shares of Series B Preferred Stock. At December 31, 2017, the Company has accrued dividends in the amount of approximately $29,000 on the shares of Series E Preferred Stock which remain unpaid.

On March 1, 2017, the Company extended the expiration date of an aggregate of 309,547 outstanding common stock purchase warrants which were originally issued in March and September 2012 in separate private placements of the Company's securities. Of the warrants extended, an aggregate of 124,370 warrants would otherwise have expired on March 15, 2017, and 185,177 warrants would have expired on September 29, 2017. In both cases, the expiration date of the warrants has been extended to September 29, 2018. These warrants have an exercise price of $12.06 per share. Other than the extension of the term of these warrants, the provisions of the warrants remain unchanged.

On March 20, 2017, the Company entered into a note exchange agreement with the holders of an aggregate principal amount of $2,170,000 of outstanding promissory notes (the "Original Notes"), which were due and payable, pursuant to which the Company agreed to issue the holders of such notes, in consideration of the cancellation of the Original Notes, new promissory notes in the aggregate principal amount of $2,545,199, which is equal to the sum of the aggregate principal amount of the original notes plus the accrued but unpaid interest on the Original Notes (the "New Notes"). The New Notes are convertible into shares of the Company's Common Stock at an initial conversion price of $2.03 per share. Based on the initial conversion prices, the New Notes will be convertible into up to 1,253,792 shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that is less than the conversion price then in effect, such conversion price will be decreased to equal 85% of such lower price. The foregoing adjustments to the conversion price will not apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. In addition, the conversion price is subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. All the New Notes have a maturity date of one year from the closing date. As the conversion price of the New Notes is below $2.25, the exercise price of outstanding warrants to purchase an aggregate of 825,184 shares of common stock was adjusted from $2.70 per share to $2.07 per share.

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The New Notes will bear interest at the rate of 5% per annum with interest payable upon maturity, the conversion of the New Notes or on any earlier redemption date. Commencing one month after the Company's common stock is listed for trading on national securities exchange the Company will have the right to redeem all or any portion of the outstanding principal balance of the New Notes, plus all accrued but unpaid interest at a price equal to 110% of such amount. The holders of the New Notes shall have the right to convert any or the entire amount to be redeemed into common stock prior to redemption. Subject to certain exceptions, the New Notes are senior to existing and future indebtedness of the Company and will be secured by a first priority lien on all the Company's assets to the extent and as provided in a Security Agreement entered between the Company and the holders. Subject to certain exceptions, the New Notes contain customary covenants against incurring additional indebtedness and granting additional liens and contains customary events of default. Upon the occurrence of an event of default under the New Notes, the holders may require the Company to repay all or a portion of the note in cash, at a price equal to 110% of the principal, plus accrued and unpaid interest.

       In connection with the above note exchange transaction, the Company exchanged all outstanding shares of Series B Convertible Preferred Stock (the "Series B Preferred Stock") for shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (the "Series E Preferred Stock"). Accordingly, on March 20, 2017, the Company also entered into a separate exchange agreement with the holder of the shares of Series B Preferred Stock, to exchange such shares for a total of 25,000 shares of Series E Preferred Stock. The shares of Series E Preferred Stock are initially convertible by the holder into an aggregate of 187,000 shares of common stock at the initial conversion rate of $4.00 per share. The conversion price of the new preferred stock will be subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events and does not provide for general price-based anti-dilution adjustments. Each share of Series E Preferred Stock has a stated value of $30.00 per share. On March 20, 2017, we filed with the State of Delaware a Certificate of Designations, Rights and Preferences and Number of Shares of Series E Convertible Preferred Stock, referred to as the Series E Designation. The Series E Designation defines the rights and preferences of the Series E Preferred Stock and provides that each share of Series E Preferred Stock will have the following rights and preferences: (i) each holder of the Series E Preferred Stock will have the right, at any time, to convert the shares of Series E Preferred Stock into shares of common stock, (ii) the Series E Preferred Stock will be redeemable at option commencing one year after the closing date (provided that the Company's common stock is listed on a national securities exchange at such time), and (iii) the Series E Preferred Stock will pay dividends at the rate of 5% per annum in cash. Pursuant to the exchange agreement for the preferred stock, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock.

On April 24, 2017, the Company entered into a settlement and mutual release with its former Chief Financial Officer, William A. Marshall to resolve an outstanding arbitration proceeding. Pursuant to the separation agreement and general release, the Company agreed to provide the following to the former CFO: (i) cash payments totaling $170,000 to be paid over time through May 15, 2018, (ii) a lump sum severance payment of $160,000 payable on June 15, 2018, (iii) the issuance of a total of 12,835 vested shares of common stock pursuant to the terms of the restricted stock units granted in January 2013 and January 2017, and (iv) 27,338 stock options previously granted became vested and exercisable for the duration of their original exercise periods, subject, however, to the terms of a lockup agreement. Pursuant to the settlement agreement, the Company issued a secured senior promissory note, subordinated to the interests of the existing senior lenders, which provides for events of default that are customary for similar transactions.

Off-Balance Sheet Arrangements

We have not created, and are not party to any special-purpose or off-balance sheet entities for raising capital, incurring debt or operating parts of our business that are not consolidated into our financial statements. We do not have any arrangements or relationships with entities that are not consolidated into AHC financial statement that are reasonably likely to materially affect liquidity or the availability of capital resources. We have entered into various agreements by which we may be obligated to indemnify the other party with respect to certain matters. These indemnification provisions are generally 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, obligations under these arrangements may be limited in terms of time and/or amount and, in some instance, we may have recourse against third parties for certain payments made by us. It is not possible to predict maximum potential amount of future payments under these indemnification agreements due to the conditional nature of these obligations and the unique facts of each particular agreement. We have not historically made any payments under these agreements that have been material individually of in the aggregate. As of December 31, 2017, we are not aware of any obligations under such indemnification agreements that would require material payments.

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Effects of Inflation and Changing Prices

The impact of general inflation on our operations has not been significant to date and we believe inflation will continue to have an insignificant impact on us.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 As of December 31, 2017, 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. Nevertheless, 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 the Company's cash and marketable securities. 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. We have not used derivative financial instruments in our investment portfolio.

At December 31, 2017, unrestricted cash totaled approximately $357,000 and was in non-interest-bearing checking accounts used to pay operating expenses.

ITEM 4.CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

 We maintain a system of disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act, that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. This information is also accumulated and communicated to management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure. Our management, under the supervision and with the participation of its CEO and CFO, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Report. Our management identified material weaknesses in the control environment described below, and based on that evaluation, because of these material weaknesses, our CEO and CFO concluded that our disclosure controls and procedures were not effective as of December 31, 2017. In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, the CEO and CFO believe that the financial statements included in this report fairly present in all material respects (and in accordance with U.S. generally accepted accounting principles) our financial condition, results of operations and cash flows for the periods presented.

Our management identified the following material weaknesses:

•     We continue to lack sufficient resources in our accounting function and have an insufficient level of monitoring and oversight, which restricts the Company's ability to gather, analyze and properly review information related to financial reporting in a timely manner. Due to the size and nature of AHC, segregation of all conflicting duties may not always be possible and may not be economically feasible. Nevertheless, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of this failure to have segregation of duties on the assessment of disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

•We do not yet have adequate controls to ensure that information necessary to properly record transactions is adequately communicated on a timely basis from non-financial personnel to those responsible for financial reporting. Management evaluated the impact of the lack of timely communication between non-financial personnel and financial personnel on the assessment of disclosure controls and procedures and has concluded that the control deficiency represented a material weakness.

•Due to a lack of sufficient resources within the accounting function, as referenced above, we did not establish and maintain effective controls over the identification of reduced revenue collections due to modifications of payor claims adjudication process and lack of communication between financial personnel and non-financial personnel which resulted in the overstatement of revenues and accounts receivable for the period ended March 31, 2016. Further, due to these weaknesses in our system of internal controls, we also determined that our accounting of inventory was not correct in the interim financial statements for the periods ended September 30, 2016, December 31, 2016 and March 31, 2017. As described in Note 3 to the Condensed Consolidated Financial Statements filed with this Quarterly Report on Form 10-Q, we have restated the previously filed financial statements for all such periods.

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Remediation of Material Weaknesses in Internal Control over Financial Reporting

Considering the material weakness described above, we have designed and continue to implement improvements in our internal control over financial reporting to address these material weaknesses. Management is committed to the continued planning and implementation of remediation efforts to address the material weaknesses as well as of the identified areas of risk. These remediation efforts, summarized below, which are either implemented or in process, are intended to both address the identified material weaknesses and to enhance our overall financial control environment. In this regard, these initiatives include:

Control Environment - to remediate the control environment deficiencies, the leadership team, including the Chief Executive Officer and Chief Financial Officer, have undertaken to reaffirm and reemphasize the importance of internal controls, including general ethical climate and the control environment. In addition, we specifically:

• Hired additional personnel in the accounting department with sufficient U.S. GAAP and financial reporting experience to provide additional oversight of the accounting function and to participate in the preparation of AHC financial statements and SEC reports;

• Hired a new Chief Financial Officer in September 2017 to replace the previous CFO, whose position was terminated in January 2017;

• Improved the documentation around conclusions reached in implementing applicable GAAP to our financial statements; and

• Provided further training of individuals in our accounting and reporting functions to ensure the correct application of generally accepted accounting principles to our financial statements; and

• Continue to review, evaluate and upgrade the design of the procedures for the preparation of financial statements with emphasis on compliance with GAAP.

Monitoring and Control Activities - To further strengthen internal control over financial reporting at the process level, we have performed certain remediation actions, including conducting an internal evaluation of accounting methodologies, reporting architecture, review existing personnel and propose a specific course of action to ensure compliance with all facets of accounting and external reporting. During the second quarter of 2017, accounting personnel have written policies and procedures with detailed controls incorporated for each transaction cycle within the Company. Our next step in this process will be to test these internal controls for existence and effectiveness and make changes accordingly.

In addition to the actions taken above, we intend to take the following actions to address the material weaknesses described above:

• Hire additional personnel with sufficient U.S. GAAP and financial reporting experience.

• Test the existence and effectiveness of controls detailed in the updated written policies and procedures.

• Training will be provided to personnel to ensure adherence to the controls in the written policies and procedures.

• Conduct a thorough review of the design of the procedures for the preparation of financial statements with emphasis on compliance with GAAP.

Until the remediation actions are fully implemented and the operational effectiveness of related internal controls validated through testing, the material weaknesses described above will continue to exist. However, when fully implemented and operational, the Company believes the measures described above will remediate the control deficiencies the Company has identified and strengthened its internal control over financial reporting. The Company is committed to continuing to improve its internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures. In addition, senior management will ensure that its resulting disclosures are subject to a rigorous review process prior to finalizing and releasing financial statements. As the Company continues to evaluate and work to improve our internal control over financial reporting, we may determine to take additional measures to address control deficiencies or determine to modify, or in appropriate circumstances not to complete, certain of the remediation measures described above.

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Changes in Internal Control over Financial Reporting

Other than the ongoing remediation efforts described above, there have been no changes in our internal control over financial reporting during the quarter ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Restatement of Quarterly Financial Statements during the 2017 Fiscal Year

As described in Note 3 to the Condensed Consolidated Financial Statements filed with this Quarterly Report on Form 10-Q, we restated the financial statements included in our Quarterly Reports on Form 10-Q for the periods ended September 30, 2016, December 31, 2016 and March 31, 2017.

 PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

See Item 1 of Part I, "Financial Statements - Note 10 - Commitments and Contingencies.

ITEM 1A. RISK FACTORS.

As provided for under the Private Securities Litigation Reform Act of 1995, we wish to caution shareholders and investors that the following important factors, among others discussed throughout this Quarterly Report on Form 10-Q is set forth below. Our operating results and financial condition have varied in the past and may in the future vary significantly depending on a number of factors. In addition to the risks described below and the other information set forth elsewhere in this report, you should carefully consider the factors discussed in the "Risk Factors" section in our Annual Report on Form 10-K for the year ended June 30, 2017 and in our other reports filed with the SEC for a discussion of the risks associated with our business, financial condition and results of operations. These risks have affected, and in some cases, could, have a material adverse effect upon our business, results of operations, financial condition or liquidity and cause our actual results to differ materially from those contained in statements made in this report and presented elsewhere by management from time to time. The risks identified by the Company in its reports are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may materially adversely affect our business, results of operations, financial condition or liquidity. If any of the matters or events described in the following risks occurs, our business, financial condition or results of operations could be harmed. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment due to any of these risks. Except as set forth below, we believe there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.

Our capital requirements are significant and unless our revenues can sufficiently support our operating costs, we expect to raise additional capital to finance our operations and repay outstanding debt obligations.

Our capital requirements have been and will continue to be significant. We are expending significant amounts of capital to develop, promote and market our services. Our available cash and cash equivalents as of December 31, 2017 totaled approximately $357,000. However, available cash and cash equivalents as of the filing date of this Quarterly Report on Form 10-Q is approximately $1,057,000 and our estimated monthly cash requirement is approximately $1,300,000. Our net cash used in operating activities was approximately $765,000 for the six months ended December 31, 2017 and $21,000 was provided in the six months ended December 31, 2016. Further, as of the filing date of this Quarterly Report on Form 10-Q, there is outstanding an aggregate principal amount of approximately $2,755,000 of notes, consisting of an aggregate principal amount of $2,545,199 of senior secured convertible notes with a maturity date of March 20, 2018 and a secured note subordinated to the interests of the senior lenders in the amount of $210,000 to the Company's former chief financial officer, with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet. Although no guarantee can be given, management anticipates that it will be able to extend of otherwise modify the Company's obligations under the notes for an additional period or periods. We expect the Company's existing resources, revenues generated from operations, and proceeds received from other transactions we are considering (of which there can be no assurance) to satisfy working capital requirements for at least the next twelve months, although no assurances can be given that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy other obligations. These factors raise substantial doubt about the Company's ability to continue as a going concern. The accompanying condensed consolidated financial statements do not include any adjustments to the recoverability and classification of assets carrying amounts or the amount and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, we need to raise additional capital and are exploring potential transactions to improve the Company's capital position. Unless we can increase revenues substantially or generate additional capital from other transactions, the Company's current cash resources will only satisfy working capital needs for a limited period of time.

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We are exploring potential transactions to improve the Company's capital position to ensure we can meet financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities may cause stockholders to experience substantial dilution in their ownership interests and new investors may have rights superior to the rights of other stockholders. Raising additional funds through debt financing or preferred stock, if available, may involve covenants that restrict business activities and options and such additional securities may have the granting of liens on the Company's assets or which grant preferences of payment from revenue streams, all of which could adversely impact the Company's ability to rely on revenue from operations to support ongoing operating costs. Alternatively, we may seek to obtain new financing from existing security holders, which may include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, the Company does not have any definitive agreements with any third parties for such transactions, and there can be no assurance that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the Company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on the Company's business, financial condition and results of operations. Future capital requirements will depend on, and could increase substantially because of many factors including:

• the need to utilize cash to support research and development activities and to make incremental investments in our organization;

• the ability to achieve targeted revenue, gross profit margins and cost management objectives;

• the success or our sales and marketing efforts;

• the need to repay indebtedness;

• the extent and terms of any development, marketing or other arrangements; and 

• changes in economic, regulatory or competitive conditions, including changes in payor reimbursement rates or claim adjudication processes.

We have identified material weaknesses in internal control over financial reporting, which could continue to impact negatively the Company's ability to report results of operations and financial condition accurately and in a timely manner.

As required by Section 404 of the Sarbanes-Oxley Act of 2002, management has conducted an evaluation of the effectiveness of our internal control over financial reporting at December 31, 2017; we did not maintain effective control over financial reporting based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. For a detailed description of these material weaknesses, see Item 4, "Controls and Procedures." Each of our material weaknesses results in more than a remote likelihood that a material misstatement of the annual or interim financial statements that we prepare will not be prevented or detected. As a result, we must perform extensive additional work to obtain reasonable assurance regarding the reliability of our financial statements. As described in Item 4, "Controls and Procedures" and in Note 3 to the Condensed Consolidated Financial Statements filed with this Quarterly Report on Form 10-Q, we restated the financial statements included in our Quarterly Reports on Form 10-Q for the periods ended September 30, 2016, December 31, 2016, and March 31, 2017. In addition, other weaknesses may be identified.

We are in the process of remedying all the identified material weaknesses, and this work will continue during fiscal 2018 and perhaps beyond. For a detailed description of the Company's remedial efforts, see Item 4, "Controls and Procedures." There can be no assurance as to when all the material weaknesses will be remedied. Until the Company's remedial efforts are completed, management will continue to devote significant time and attention to these efforts, and we will continue to incur expenses associated with the additional procedures and resources required to prepare the condensed consolidated financial statements. Certain of the Company's remedial actions, such as hiring additional qualified personnel to implement the reconciliation and review procedures, will be ongoing and will result in the Company incurring additional costs even after the material weaknesses are remedied.

If we are unsuccessful in implementing or following the remediation plan, or fail to update the Company's internal control over financial reporting as the business evolves or to integrate acquired businesses into the Company's controls system, we may not be able to timely or accurately report the Company's financial condition, results of operations or cash flows or to maintain effective disclosure controls and procedures, we could be subject to, among other things: (i) regulatory or enforcement actions by the SEC, (ii) an inability for us to be accepted for listing on any national securities exchange in the near future, (iii) securities litigation, or (iv) a general loss of investor confidence, any one of which could adversely affect the Company's business prospects and the market value of AHC common stock. Further there are inherent limitations to the effectiveness of any system of controls and procedures, including the possibility of human error and the circumvention or overriding of controls and procedures. We could face additional litigation exposure and a greater likelihood of an SEC enforcement or other regulatory action if further restatements were to occur or other accounting-related problems emerge, which may adversely affect the Company's financial condition, results of operations and cash flows.    

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The Company's outstanding debt may impair our financial and operating flexibility.

As of December 31, 2017, there was an aggregate principal amount of secured indebtedness of approximately $2,755,000, consisting of an aggregate principal amount of $2,545,199 of senior secured convertible notes with a maturity date of March 20, 2018 and a secured note subordinated to the interests of the existing senior lenders in the principal amount of $210,000 to the Company's former chief financial officer, with a maturity date of June 15, 2018 and is included in accrued expenses on the condensed consolidated balance sheet. All of the outstanding notes contain covenants and events of default customary for transactions of this nature. For example, the outstanding senior secured notes include restrictions against incurring additional indebtedness and granting further security interests on AHC assets. Without the consent of the holders of these senior debt instruments, we must comply with these restrictions. Among the defined events of default are defaults of the Company's payment obligations, breach of any material covenant or representation of the notes or the related transaction agreements, and the commencement of proceedings under applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar laws either against us or by us. In the event of default under the notes, a holder may require us to repay all or a portion of the outstanding principal, plus interest and certain of the outstanding debt instruments also require that any repayment due to a default will require immediate repayment of the principal and accrued and unpaid interest. If we are unable to consummate an additional financing prior to the maturity date of these debt instruments, or otherwise further extend or exchange them, we will be required to repay these securities, which may have an adverse effect on the Company's cash position. If we are unable to make the scheduled principal and interest payments on these debt instruments or comply with applicable covenants contained therein, we may be in default under one or more these securities which would likely have a material adverse effect on the business, financial condition and results of operations. Further, if we are unable to repay the secured debt instruments when due, or upon an event of default, the holders could foreclose on AHC encumbered assets.

The exercise of the Company's outstanding options, restricted stock units and warrants, or conversion of our outstanding convertible debt and convertible preferred stock, may depress our stock price and dilute your ownership of the company.

As of December 31, 2017, the following options, restricted stock units and warrants were outstanding:

• Employee stock options to purchase approximately 265,000 shares of common stock at exercise prices ranging from $36.00 to $1.75 per share, not all of which are immediately exercisable. The weighted average exercise price of the outstanding stock options is $7.08 per share.

• Director stock options to purchase approximately 612,000 shares of common stock at exercise prices ranging from $1.58 to $36.54 per share, all of which are exercisable. The weighted average exercise price of the outstanding and exercisable options is $3.40 per share.

• Warrants to purchase approximately 4,126,000 shares of common stock with a weighted average exercise price of $4.62 per share.

• An aggregate of approximately 531,000 unvested restricted stock units.

After completing the transaction to exchange shares of Series B Preferred Stock for share of Series E Preferred Stock, there are now outstanding 25,000 shares of Series E Convertible Preferred Stock, which the holder may convert into an aggregate of 187,500 shares of AHC common stock at the initial conversion price of $4.00 per share. Further there is currently outstanding 605,000 shares of Series D Preferred Stock, which are convertible into an aggregate of 619,154 shares of common stock at the initial conversion rate of $9.77139 per share (exclusive of any additional shares of common stock that we may elect to issue in lieu of paying cash dividends on the Series D Preferred Stock). Shares of common stock issued upon conversion of Series D or Series E Preferred Stock may be resold from time-to-time by a holder in accordance with Rule 144 under the Securities Act.

As of December 31, 2017, there was an aggregate principal amount of $2,545,199 of outstanding convertible debt, which, subject to certain limitations, may be convertible by holders into an aggregate of 1,253,792 shares of common stock.

To the extent that these securities are extent that these securities are exercised or converted, or we issue additional common shares, dilution to stockholders will occur. In addition, the terms upon which we will be able to obtain additional equity capital may be adversely affected since the holders of these securities can be expected to exercise or convert them at a time when we could expect to be able to obtain needed capital on terms more favorable to us than the exercise and conversion terms provided by those securities. Further, in the event the conversion price of outstanding convertible debentures or shares of convertible preferred stock is lower than the actual trading price on the day of conversion, the holders could immediately sell their converted common shares, which would have a dilutive effect on the value of the outstanding common shares. The significant downward pressure on the trading price of common stock as preferred stock or debentures holders converted these securities and sell the common shares received on conversion could encourage short sales by the holders of preferred stock or other security holders. This would place further downward pressure on the trading price of common stock. Even the mere perception of eventual sales of common shares issued on the conversion of the shares of preferred stock or debentures could lead to a decline in the trading price of common stock.

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U.S. federal income tax reform could adversely affect us.

On December 22, 2017, the president signed into law the statute originally named the "Tax Cuts and Jobs Act" (the "2017 Tax Act") which enacts a broad range of changes to the U.S. Internal Revenue Code. The 2017 Tax Act, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitations on the deductibility of interest and net operating losses, allows for the expensing of certain capital expenditures, and puts into effect a number of changes impacting operations outside of the United States. For the quarter ended December 31, 2017, our net deferred tax asset was valued at the newly enacted corporate rate and was reduced from approximately $11,848,000 at June 30, 2017 to $7,357,000 at December 31, 2017. The revaluation of our deferred tax assets and U.S. federal net operating losses is expected to result in additional charges to the Company's results of operations, which may be material. The Company will continue to assess the impact of the new tax legislation on its net deferred tax assets and liabilities and will continue to examine the impact this tax legislation may have on our business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

a) Sales of Unregistered Securities

Pursuant to the consulting agreement we entered into as of January 4, 2018 with Dr. Armondo Moncada, we agreed to grant him 280,000 restricted stock units pursuant to the Company's 2011 Omnibus Equity Incentive Plan (the "Plan"), which restricted stock units will vest in the event that the Consultant remains engaged by the Company to the end of the term of the consulting agreement and upon the achievement of certain performance criteria, subject to the approval of the Company's shareholders of an amendment to the Plan to increase the number of shares of common stock available for awards to be issued thereunder. The grant of these securities was made pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

Except as previously disclosed in reports filed with the SEC pursuant to the Securities and Exchange Act of 1934, as amended, and as described elsewhere in this Quarterly Report on Form 10-Q, we did not sell unregistered securities during the quarter ended December 31, 2017.

b) Not applicable

c) Repurchase of Equity Securities

We did not repurchase any of our equity securities during the six months ended December 31, 2017.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 As of December 31, 2017, we had two classes of preferred stock outstanding, the Series D convertible preferred stock and the Series E convertible preferred stock. The Series E preferred stock bears a 5% dividend per annum, payable semi-annually in cash. As of the filing date of this Quarterly Report on Form 10-Q, there was approximately $29,000 of accrued dividends on the Series E Preferred Stock. The Series D preferred stock bears a 5% dividend per annum, payable semi-annually in cash, or shares of common stock, at the Company's option. As of the filing date of this Quarterly Report on Form 10-Q, the aggregate amount of the cumulative dividends on the Series D preferred stock which remain unpaid was approximately $787,000.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

On January 23, 2018, the Company accepted a short-term loan in the aggregate principal amount of $500,000 from Hanif A. Roshan, the Company's Chief Executive Officer and Chairman of the Board. To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of $500,000. The Note is an unsecured obligation of the Company and is not convertible into equity securities of the Company. The Note is due and payable on April 23, 2018 and interest will accrue on the Note at the rate of 5% per annum. In addition, the Note also provides the holder with the right to exchange the principal amount of the Note (and unpaid interest thereon) into securities of the Company that it may issue in the next financing, as defined in the Note. The Note contains terms and events of default customary for similar transactions. The Company is using the net proceeds from the transaction for general business and working capital purposes. The description of the terms and conditions of the Note does not purport to be complete and is qualified in its entirety by the full text of the form of the Note, which is filed as an exhibit to this Form 10-Q.

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ITEM 6. EXHIBITS.

Exhibit Number		Description
4.1		Form of Note (*)
10.1		Consulting Agreement between the Company and Armando Moncada, M.D. (*)
31.1		Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
31.2		Certification Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (*)
32.1		Section 1350 Certification of Chief Executive Officer (*)
32.2		Section 1350 Certification of Chief Financial Officer (*)
101.INS		XBRL Instance Document (*)
101.SCH		XBRL Taxonomy Extension Schema (*)
101.CAL		XBRL Taxonomy Extension Calculation Linkbase (*)
101.DEF		XBRL Taxonomy Extension Definition Linkbase (*)
101.LAB		XBRL Taxonomy Extension Label Linkbase (*)
101.PRE		XBRL Taxonomy Extension Presentation Linkbase (*)
(*)	Filed herewith.

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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.
By:	/s/ Hanif A. Roshan
	Hanif A. Roshan
	Chief Executive Officer
By:	/s/ Michael J. Poelking
	Michael J. Poelking
	Chief Financial Officer

Dated: January 26, 2018

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EX-4.1

EXHIBIT 4.1

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

PROMISSORY NOTE

Principal Amount: $500,000.00	Issuance Date: January 23, 2018
Maturity Date:     April 23, 2018

FOR VALUE RECEIVED, Authentidate Holding Corp., a Delaware corporation (the “Borrower”), with its principal offices located at 2225 Centennial Drive, Gainesville, GA 30504 hereby promises to pay to HANIF A. ROSHAN (the “Holder”) at such address as the Holder designates in writing to the Borrower, the principal sum of FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) (the “Principal Amount”), on the Maturity Date stated above. This Note is a direct obligation of the Borrower and ranks subordinate to the outstanding debt securities previously issued by Borrower.

1.      Interest on this Note shall be computed at the rate of 5% per annum, payable in arrears on the Maturity Date, at which time all accrued and unpaid interest shall be immediately due and payable. All computations of interest payable hereunder shall be on the basis of a 360-day year and actual days elapsed in the period for which such interest is payable. Accrued interest on the outstanding principal amount shall be due and payable on the Maturity Date in cash. Payments of all amounts due hereunder shall be made in lawful money of the United States.

2.     Payment of the Principal Amount of this Note, and interest thereon, shall be made upon the surrender of this Note to the Borrower, at its chief executive office (or such other office within the United States as shall be designated by the Borrower to the Holder hereof) (the “Designated Office”), in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. If the Maturity Date shall be a Saturday or a Sunday or shall be a legal holiday in the State of Georgia, then such action may be taken or such right may be exercised on the next succeeding day on which banking institutions in the State of Georgia are open to conduct business.

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3.     Exchange Right.  

(a)     For as long the Note remains outstanding, the Holder shall have the right, in accordance with the terms hereof, to exchange the principal amount of the Note (and unpaid interest thereon) into the securities of the Borrower (the “New Securities”) sold in the Next Financing (defined below). The Holder may exchange all, but not less than all, of the principal amount of the Note, and any accrued and unpaid interest thereon, for the New Securities in the Next Financing upon the same price and other terms and conditions as pertains to the Next Financing and shall be required to execute such agreements pertaining to the Next Financing as the Borrower and the other investors participating in the Next Financing shall execute. In calculating the number of New Securities to be issued to the Holder, such number shall be rounded down to the nearest whole number. The Borrower shall not issue any fractional New Securities under any circumstances, but shall pay to the Holder any cash amounts in respect of the value of any fractional New Securities that may have been issuable in the absence of the aforementioned prohibition. As used herein, the term “Next Financing” shall mean the closing of a sale of equity or debt securities by the Borrower, or series of closings, as part of the same transaction, of equity or debt securities within a period of three months, wherein the Borrower receives cash proceeds in the gross amount of at least $1,000,000, excluding any transaction that is an Exempt Issuance, as defined below (the “Next Financing”). The Holder may exercise this right at any time and from time to time prior to repayment of this Note in accordance with the provisions of paragraph 3(b) of this Note.

(b)     Mechanics. To exchange the Note into the Next Financing, upon no less than two (2) business days’ written notice by the Holder to the Borrower, the Holder shall send by facsimile (or otherwise deliver) a notification of its intent to exercise the exchange right herein. The Holder shall surrender or cause to be surrendered the Note as soon as practicable thereafter to the Borrower, and pay any transfer taxes or other applicable taxes or duties, if required.  The Borrower shall not be obligated to issue New Securities unless either the Note is delivered to the Borrower as provided above, or the Holder notifies the Borrower that the Note has been lost, stolen or destroyed and delivers to the Borrower an affidavit of loss in a form reasonably acceptable to the Borrower. As promptly as practicable on or after the closing of the Next Financing, the Borrower shall issue and deliver to the Holder such number of securities of the Borrower issuable to it in the Next Financing. The Holder is not entitled to any rights of a holder of New Securities until the Note has been surrendered and exchanged (or an appropriate affidavit of loss has been accepted) for such New Securities in the Next Financing and the closing of such Next Financing has occurred. Upon such event, the rights of the Holder of the Note as the Holder hereof shall cease, and the person or persons entitled to receive the New Securities shall be deemed to be a holder of record of such New Securities.

(c)     As used herein, the term “Exempt Issuance” means the issuance of (i) any securities of the Borrower to employees, officers, or directors of the Borrower or other eligible person pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose (for purposes of clarity, the issuance of shares of Common Stock upon exercise of options or vesting of restricted stock units granted pursuant to such an equity compensation plan subsequent to the date hereof shall also be an Exempt Issuance), (ii) securities upon the exercise, exchange or conversion of any equity securities of the Borrower issued and outstanding as of the Issuance Date of this Note (including shares of common stock that the Borrower may issue pursuant to the presently outstanding shares of preferred stock in lieu of cash dividends thereon), (iii) securities issued pursuant to mergers, acquisitions or strategic transactions approved by a majority of the disinterested directors of the Borrower, provided that any such issuance shall only be to a person (or to the equityholders of a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Borrower and shall provide to the Borrower additional benefits in addition to the investment of funds (for purposes of clarity, an Exempt Issuance shall not include a transaction in which the Borrower is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities), (iv) shares of Common Stock (or securities convertible into or exercisable or exchangeable for shares of Common Stock) which may be issued to consultants, vendors, lessors, distributors or similar persons, to the Borrower as consideration for services or assets provided to the Borrower (and the shares of Common Stock which may be issued upon exercise or conversion of convertible securities issued to the class persons specified in this clause), and (v) shares of Common Stock or other securities issued in connection with any stock split, stock dividend or recapitalization of the Borrower.

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4.        Events of Default.

(a)       For purposes of this Note, an “Event of Default” shall consist of any of the following events:

(1)      The Borrower shall fail to pay any portion of the Principal Amount of this Note, or any interest due thereon, when the same becomes due and payable, whether at the Maturity Date or at any accelerated date of maturity or at any other date fixed for payment, and such default continues for 10 days or more.

(2)     the occurrence of any default under, redemption of or acceleration prior to maturity of any indebtedness of the Company or any of its subsidiaries, other than in any amount not in excess of an aggregate of $150,000;

(3)      bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within sixty (60) days of their initiation;

(4)      the commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the filing by it of a petition seeking reorganization or relief under any applicable federal, state or foreign law, or the making by it of an assignment for the benefit of creditors, or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission by it in writing of its inability to pay its debts generally as they become due, or the taking of corporate action by the Company or any Subsidiary in furtherance of any such action;

(5)      the entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order, judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period of sixty (60) consecutive days;

(6)      a final judgment or judgments for the payment of money aggregating in excess of $150,000 are rendered against the Company and/or any of its Subsidiaries and which judgments are not, within forty-five (45) days after the entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered by insurance or an indemnity from a credit worthy party shall not be included in calculating the $150,000 amount set forth above so long as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary (as the case may be) will receive the proceeds of such insurance or indemnity within forty-five (45) days of the issuance of such judgment;

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(7)      the Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period, any payment with respect to any indebtedness in excess of $150,000 due to any third party (other than, with respect to unsecured indebtedness only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation of any agreement for monies owed or owing in an amount in excess of $150,000, which breach or violation permits the other party thereto to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would, with or without the passage of time or the giving of notice, result in a default or event of default under any agreement binding the Company or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations (including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of its Subsidiaries, individually or in the aggregate;

(8)      other than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches, in any material respect, any representation, warranty, covenant or other term or condition of this Note (except, in the case of a breach of a covenant or other term or condition that is curable, only if such breach remains uncured for a period of ten (10) consecutive business days after notice of breach from Holder or fifteen (15) consecutive business days from when the Company became aware of such breach (in each case, subject to any grace or cure period provided therein); or

(9)      Any material representation or warranty of the Borrower herein shall prove to have been false in any material respect upon the date when made.

(b)     Acceleration of Payment. If an Event of Default (other than an Event of Default arising from events described in clauses (3), (4) and/or (5) of Section 4(a)) occurs and is continuing with respect to the Note, the Holder may declare all of the then outstanding Principal Amount of this Note, including any interest to the date of payment immediately due and payable. Upon a declaration of acceleration, such principal and premium, if any, and accrued and unpaid interest, to the date of payment shall be immediately due and payable. Upon the occurrence of an Event of Default arising from events described in clauses (3), (4) and/or (5) of Section 4(a), this Note shall become due and payable automatically, without any declaration or other act on the part of the Holder. In the event of such acceleration, the amount due and owing to the Holder shall be 110% of the outstanding Principal Amount of this Note (plus all accrued and unpaid interest and late charges, if any). The Company hereby, to the fullest extent permitted by applicable law, waives presentment, demand, or any other notice of any other kind (except as otherwise specifically set forth herein), in connection with performance, default, acceleration or enforcement of or under this Note. Upon the payment in full of the amounts due under this Note, the Holder shall promptly surrender this Note to or as directed by the Borrower.

(c)       Collections. If an Event of Default with respect to this Note occurs and is continuing, the Holder may pursue any available remedy by proceeding at law or in equity to collect the defaulted payment or to enforce the performance of any provision of this Note. Notwithstanding any other provision in this Note, the Holder of this Note shall have the right, which is absolute and unconditional, to receive payment of the Principal Amount in respect of the Note held by the Holder, on or after the final Maturity Date, or to bring suit for the enforcement of any such payment on or after such date, and such rights shall not be impaired or affected adversely without the consent of the Holder.

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(d)       No Exclusive Right or Remedy. Except as otherwise provided herein, no right or remedy conferred in this Note upon the Holder is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or hereafter existing at law or in equity or otherwise.  The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission of the Holder of this Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence therein.  Every right and remedy given by this Section 4 or by law to the Holder may be exercised from time to time, and as often as may be deemed expedient, by the Holder.

5.        Transferability; Loss and Replacement.

(a)     This Note has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction.  Neither this Note nor any interest or participation herein may be reoffered, sold, assigned, transferred, pledged, encumbered or otherwise disposed of (a “Transfer”) in the absence of registration under the Securities Act and any applicable state securities laws, or unless (i) such transaction is exempt from, or not subject to, registration under the Securities Act or the securities laws of any state or other jurisdiction and (ii) is made in compliance with applicable federal and state statutory resale restrictions, if any.  The Holder by its acceptance of this Note agrees that it shall not offer, sell, assign, transfer, pledge, encumber or otherwise dispose of this Note or any portion thereof or interest therein other than in a minimum denomination of $50,000 principal amount (or any integral multiple of $10,000 in excess thereof) and then (other than with respect to a Transfer pursuant to a registration statement that is effective at the time of such Transfer) only (a) to the Borrower, (b) to an affiliate of the Holder, (c) to a Person it reasonably believes to be an “accredited investor” within the meaning of Rule 501(a) under the Securities Act, or (d) pursuant to a transaction in compliance with Rule 144 or Rule 144A under the Securities Act, and in the case of (b), (c) and (d) above in which the transferor furnishes the Borrower with such certifications, legal opinions or other information as the Borrower may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act as applicable. 

(b)     By receipt and acceptance of this Note, Holder and any permitted transferee represents and warrants to the Borrower that (i) it is an “accredited investor” as defined in Rule 501(a) under the Securities Act; (ii) either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Note, and has so evaluated the merits and risks of such investment; (iii) is able to bear the economic risk of an investment in the Note and, at the present time, is able to afford a complete loss of such investment; (iv) understands that the Note will be characterized as “restricted securities” under U.S. federal securities laws and have not been and are not being registered under the Securities Act or any state securities laws, must be held indefinitely and may not be offered for sale, sold, assigned or transferred except in accordance therewith and (vii) it has reviewed the Borrower’s filings with the Securities and Exchange Commission and has been afforded (A) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Borrower concerning the terms and conditions of this Note and the merits and risks of the prospective investment in the Note and the Borrower generally and, (B) it has access to information about the Borrower and its subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate the terms and conditions of this Note and the merits and risks of the prospective investment in the Borrower.

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(c)     The Transfer of this Note is registrable on the books of the Borrower upon surrender of this Note for registration of Transfer at the Borrower’s designated office, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Borrower duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.  Prior to due presentation of this Note for registration of Transfer, the Borrower and any agent of the Borrower may treat the Person in whose name this Note is registered as the owner thereof for all purposes, whether or not this Note be overdue, and neither the Borrower nor any such agent shall be affected by notice to the contrary. Upon presentation of this Note for registration of Transfer at the Borrower’s designated office accompanied by (i) certification by the transferor that such Transfer is in compliance with the terms hereof and (ii) by a written instrument of Transfer in a form approved by the Borrower executed by the Holder, in person or by the Holder’s attorney thereunto duly authorized in writing, and including the name, address and telephone and fax numbers of the transferee and name of the contact person of the transferee, such Note shall be transferred on the note register maintained by the Company, and a new Note of like tenor and bearing the same legends shall be issued in the name of the transferee and sent to the transferee at the address and care of the contact person so indicated.  Transfers and exchanges of Notes shall be subject to such additional restrictions as are set forth in the legends on the Notes and to such additional reasonable regulations as may be prescribed by the Borrower as specified herein.  Successive registrations of Transfers as aforesaid may be made from time to time as desired, and each such registration shall be noted on the Note register. No Transfer shall be allowed except to an “accredited investor” as defined under the rules and regulations of the Securities and Exchange Commission.

(d)     Upon receipt by the Borrower of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and in the case of loss, theft or destruction, receipt of indemnity reasonably satisfactory to the Borrower and upon surrender and cancellation of this Note, if mutilated, the Borrower will deliver a new Note of like tenor and dated as of such cancellation, in lieu of such Note.

6.        Miscellaneous.

(a)     This Note constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. Neither this Note nor any term hereof may be amended or waived orally or in writing, except that any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively), and such amendment or waiver shall be applicable upon the written approval of the Borrower and the Holder. Section headings used herein are for convenience of reference only and shall not affect the construction of, or be taken into consideration in interpreting, this Note.

(b)     All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Georgia, without regard to the principles of conflict of laws thereof.

(c)     Upon the occurrence and during the continuance of an Event of Default under this Note, the Borrower shall, upon demand, pay to the Holder the amount of any and all reasonable costs and expenses (including reasonable attorneys’ fees) that Holder may incur in connection with the enforcement or collection of this Note.

(d)     No failure or delay on the part of the Holders hereof in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies.

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(e)       The Borrower hereby, to the fullest extent permitted by applicable law, waives presentment, demand, notice (including without limitation notice of default (except as otherwise specifically set forth herein), notice of protest, notice of intention to accelerate maturity, notice of acceleration of maturity and notice of nonpayment or dishonor), protest and all other demands and notices in connection with delivery, acceptance, performance, default, acceleration or enforcement of or under this Note, and the bringing of suit and diligence in taking any action to collect amounts owing hereunder or in proceeding against any of the rights and properties securing payment hereof, and is directly and primarily liable for the amount of all sums owing or to be owing hereon. No extension of the time for the payment of this Note made by agreement with any person now or hereafter liable for the payment of this Note shall operate to release, discharge, modify, change or affect the original liability of the Borrower under this Note.

(f)     To the extent that Holder receives any payment on account of any of Borrower’s obligations under this Note, and any such payment(s) or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, subordinate and/or required to be repaid to a trustee, receiver or any other person or entity under any bankruptcy act, state or federal law, common law or equitable cause, then, to the extent of such payment(s) received, the Borrower’s obligations or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment(s) had not been received by the Holder and applied on account of Borrower’s obligations. Except as expressly provided herein, no provision of this Note shall alter or impair the obligation of the Borrower, which is absolute and unconditional, to pay the Principal Amount of, and accrued interest, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed.

(g)     If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If the Borrower is at any time required or obligated to pay interest hereunder at a rate that would be in excess of a statutory or legally permitted rate, then the rate of interest shall be deemed to be immediately reduced to such maximum rate and the interest payable shall be computed at such maximum rate and any prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of this Note. 

(h)     Any and all notices or other communications or deliveries to be provided by the Holder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service (e.g., FedEx), addressed to the Borrower, at the address set forth above, or such other facsimile number or address as the Borrower may specify for such purposes by notice to the Holder delivered in accordance with this Section 6(h). Any and all notices or other communications or deliveries to be provided by the Borrower shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of the Holder appearing on the books of the Borrower, or if no such facsimile number or address appears on the books of the Borrower, at the principal place of business of such Holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a business day or later than 5:30 p.m. (New York City time) on any business day, (iii) the second business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Borrower has caused this Note to be executed as of the Issuance Date.

BORROWER: AUTHENTIDATE HOLDING CORP.
By:	/s/ Michael J. Poelking
Name:	Michael J. Poelking
Title:	Chief Financial Officer

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EX-10.1

EXHIBIT 10.1

CONSULTING AGREEMENT

THIS CONSULTING AGREEMENT (the “Agreement”) is made, entered and effective as of January 4^th, 2018 (the “Effective Date”), by and between Authentidate Holding Corp. d/b/a Aeon Global Health, a Delaware corporation (“AEON”), and Dr. Armando Moncada, MD, a Georgia resident (“MONCADA” and/or “Consultant”).

RECITALS:

A. AEON owns and operates Peachstate Health Management, LLC a/k/a AEON Clinical Laboratories, and desires to engage MONCADA, as an independent contractor, to provide certain Consulting Services (as defined herein) to AEON on the terms and conditions as provided herein;

B. MONCADA is a physician who is duly licensed to practice medicine in the State of Georgia, and is board certified in pathology, and has agreed to provide Consulting Services to AEON on the terms and conditions as provided herein; and,

C. The parties desire to memorialize their understanding with respect to the terms and conditions upon which MONCADA will provide such Consulting Services to AEON.

NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants hereinafter set forth, and for other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.         Engagement. AEON hereby engages MONCADA as its Chief Medical Officer -- Pathology Division, and in such capacity MONCADA agrees to provide the services described herein upon the terms and conditions herein specified. MONCADA hereby accepts such engagement and agrees to provide such services to AEON upon the terms and conditions herein specified. It is understood and agreed that in the performance of the Consulting Services, duties, and obligations set forth in this Agreement, that MONCADA shall at all times be acting and performing as an independent contractor, and nothing contained herein is intended to create, nor shall this Agreement be construed as creating, a relationship of employer-employee, principal-agent, or partnership between the parties.

2.         Reporting and Scope of Services. MONCADA shall report to either the Chief Executive Officer or President of AEON and shall consult with, and provide counsel and advice to, AEON on such matters relating to the operation and management of, and the resulting testing stemming from, the pathology laboratory of AEON (See Exhibit “A” attached hereto; collectively, the “Consulting Services”). The Consulting Services shall be performed at such times as AEON and MONCADA agree upon; provided, however, MONCADA acknowledges and agrees that during the scheduled times during that MONCADA is providing professional services hereunder, MONCADA shall provide such services solely and exclusively pursuant to the terms hereof, and shall devote his full-time and attention during such times to the provision of such services hereunder.

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

All Consulting Services to be performed by MONCADA hereunder shall be performed in a professional manner and within any deadlines or time frames which are agreed to between AEON and MONCADA. MONCADA understands that in performing any Consulting Services for AEON, MONCADA will assume full responsibility for such Consulting Services. In addition, MONCADA acknowledges and agrees that MONCADA shall be obligated to use his best efforts to perform the Consulting Services hereunder.

The “Primary Business of AEON”, as used herein, shall mean the medical laboratory testing services (including, but not limited to, toxicology, pharmacogenomics, molecular biology, cancer genetics/genomics, blood wellness panels, and any other testing service which AEON may choose to offer at any time in its sole discretion.

3.       Term. The term of this Agreement shall begin on the Effective Date and, subject to earlier termination pursuant to the terms of this Agreement, shall terminate on December 31, 2020 (the “Term”).

4.        Compensation.

(a)     In consideration of the Consulting Services to be performed by MONCADA pursuant to this Agreement, AEON shall pay the following fees to MONCADA (collectively, the “Consulting Fees”):

(1)     The sum of $40,000 upon the Parties’ execution of this Agreement; and,

(2)     The monthly sum of $25,000 commencing on February 1, 2018, and continuing thereafter through December 31, 2020; and,

(3)     The sum of $40,000 on or before the dates of January 15, 2019, and January 15, 2020.

In addition to the above, and subject to approval of AEON’s Board of Directors, provided that this Agreement has not been sooner terminated or no event has occurred which would constitute a Default (including an event that with notice or lapse of time or both would become a Default), and MONCADA is not currently in breach of any of his obligations hereunder, upon MONCADA completing his third (3^rd) year of service to AEON on or about December 31, 2020, then AEON will grant MONCADA an equity award consisting of two hundred eighty thousand (280,000) restricted shares of restricted common stock or restricted stock units (the “Stock”), with such vesting and other terms as shall be determined by the Board of Directors, with the Stock being transferred on or about January 15, 2021.

(b)     Unless AEON and MONCADA agree, in writing, otherwise with respect to any expenses incurred by MONCADA, the Consulting Fees payable to MONCADA under Section 4(a) hereof represent the entire obligation of AEON, and MONCADA shall be responsible for the payment of all costs and expenses incurred in connection with the performance of any Consulting Services hereunder. Furthermore, MONCADA shall be responsible and pay for all applicable taxes and fees on the Consulting Fees paid by AEON, including any self-employment taxes and/or payroll taxes, if applicable.

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

- 2 -

5.           Termination.

(a)         Termination by AEON.

(1)     Termination for Default by MONCADA.  Notwithstanding any other provisions of this Agreement, AEON may, at any time, upon notice to MONCADA, terminate this Agreement as a result of a Default by MONCADA. For purposes of this Agreement, “Default” shall mean any of the following:      

(A)     MONCADA’s breach of any of the enumerated terms of this Agreement, together with the failure to cure such breach within thirty (30) days following written notice thereof, which such notice specifying with particularity the nature of any such breach;

(B)     MONCADA’s neglect of or failure to perform the Consulting Services assigned to MONCADA by AEON (or failure to perform the Consulting Services in accordance with the standards set forth in Section 2 hereof), together with the failure to cure such neglect or non-performance within ten (10) days written following notice thereof, which such notice specifying with particularity the nature of any such neglect or non-performance;

(C)     MONCADA’s medical license, in the state where AEON is located and in any other state where MONCADA has obtained a medical license, is surrendered (voluntarily or involuntarily), revoked, suspended, limited or conditioned in any way;

(D)     MONCADA is excluded from participation in the Medicare, Medicaid, Tricare or any other federal or state healthcare insurance program, or MONCADA’s status as a participating provider in any such program is otherwise terminated, suspended or conditioned in any way;

(E)     AEON reasonably suspects that MONCADA is using or is under the influence of illegal drugs, alcohol or over-the-counter or prescription medication while rendering his services to AEON hereunder and that the use of such substances, in AEON reasonable determination, has impaired MONCADA’s medical judgment and performance or otherwise put AEON at risk;

(F)     MONCADA is indicted for, and subsequently pleads guilty or nolo contendere to, or is convicted of any criminal offense; or,

(G)     MONCADA’s theft, embezzlement, misappropriation, confiscation of, or infliction of material damage to AEON’s property or business opportunities.

Termination pursuant to this Section 5(a) shall result in MONCADA’s immediate forfeiture of all rights and privileges under this Agreement, excluding, however, accrued Consulting Fees which shall be payable as provided in Section 4 above after allowing for the deduction or set-off of any amounts owed to AEON by MONCADA. MONCADA affirmatively acknowledges and agrees that set-off is permissible.

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

- 3 -

(2)      Termination without Default by MONCADA. AEON may terminate this Agreement, without Default by MONCADA and for any reason, by delivering to MONCADA thirty (30) days’ written notice of termination. In the event that this Agreement is terminated pursuant to this Section 5(a)(2), AEON shall pay to MONCADA the Consulting Fees earned through the date of such termination and shall also continue to pay the then applicable Consulting Fee for a period of one (1) month following the termination of the Agreement (collectively, the “Company Termination Payment”) only if MONCADA executes a general release containing obligations and covenants that are no more restrictive than those contained in this Agreement in favor of AEON and its Affiliates in the form and substance that is reasonably satisfactory to AEON.

(b)     Termination as a Result of the Death or Incapacity of Consultant. This Agreement and MONCADA’s engagement hereunder shall be automatically terminated upon the death or legal incapacity (as determined by a licensed physician selected by AEON) of MONCADA. Termination pursuant to this Section 5(b) shall result in MONCADA’s immediate forfeiture of all rights and privileges under this Agreement, excluding, however, accrued Consulting Fees, which shall be payable as provided in Section 4 above, allowing for deduction or set-off of any amounts owed to AEON by MONCADA. Consultant affirmatively acknowledges and agrees that set-off is permissible.

(c)      Termination by Consultant.

(1)     Termination as a Result of a Default by AEON. MONCADA may terminate this Agreement at any time, upon notice to AEON, if AEON fails to cure any breach or default on the part of AEON within thirty (30) days following written notice thereof, which such notice shall specify with particularity the nature of any such breach or default. In the event of a termination under this Section 5(c)(1), AEON shall pay to MONCADA the Consulting Fees earned through the date of such termination and shall continue to pay the then applicable Consulting Fee for a period of one (1) month following termination of the Agreement (collectively, the “Consultant Termination Default Payment”) only if MONCADA executes a general release containing obligations and covenants that are no more restrictive than the ones contained in this Agreement in favor of AEON and its Affiliates in the form and substance that is reasonably satisfactory to AEON.

(2)     Termination without Default by AEON. MONCADA may terminate this Agreement at any time by giving AEON thirty (30) days’ written notice of its intent to terminate this Agreement. Termination pursuant to this Section 5(c)(2) shall result in MONCADA’s immediate forfeiture of all rights and privileges under this Agreement, excluding, however, accrued Consulting Fees, which shall be payable as provided in Section 4 above, allowing for deduction or set-off of any amounts owed to AEON by MONCADA. Consultant affirmatively acknowledges and agrees that set-off is permissible.

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

- 4 -

(d)     Return of Materials. Upon the request of AEON and, in any event, upon the termination of this Agreement for any reason, MONCADA shall: (i) return to AEON and leave at its disposal all memoranda, notes, records, drawings, manuals, computer programs, documentation, diskettes, computer tapes, and other documents or media pertaining to the business of AEON (including all copies of such materials). MONCADA shall also return to AEON and leave at its disposal all materials involving any Trade Secrets or Confidential Information of AEON and (ii) cooperate in good faith with AEON in winding-down the provision of Consulting Services. This Section 5(e) applies to all materials made or compiled by MONCADA, as well as to all materials furnished to MONCADA by AEON or anyone else in connection with MONCADA’s relationship with AEON.

6.           Ownership Acknowledgement and Assignment.

(a)     For purposes of this Agreement, the following definitions shall apply: (1) the “Company” means Authentidate Holding Corp., and any division, Affiliate, subsidiary (including, but not limited to, Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories), associated company or successor in business to any of the foregoing, and (2) “Work Product” means all conceptual, technological, operating, training, marketing or other ideas, processes, designs, developments, and materials, specifically including all customer lists, customer contracts, inventions, discoveries, improvements, enhancements, computer programs, written or other materials in any way pertaining to the existing or contemplated business, products or services of AEON, that MONCADA may develop or conceive of during MONCADA’s relationship with AEON (including, but not limited to, any dental or medical testing protocols with respect to patient cancer screening through saliva or other collection methodologies), alone or with others, during or after working hours, and with or without the use of the resources of AEON. The determination of whether a Work Product exists should be made according to whether the development has any possible significance to AEON in AEON's existing or contemplated business, regardless of whether it is technically eligible for protection under patent, copyright, trade secret, or other proprietary rights or intellectual property laws.

(b)     MONCADA acknowledges and agrees that all Work Product shall be considered “made for hire” by MONCADA for AEON and prepared within the scope of MONCADA's relationship with AEON for the ownership and benefit of AEON. During the Term, MONCADA agrees to make and maintain adequate and current tangible records of such Work Product. MONCADA will, upon AEON’s request, promptly disclose all such Work Product to AEON and make available to AEON any work papers, models, diskettes, computer tapes, or other tangible incidents of such Work Product, it being expressly understood and agreed that such Work Product is solely and exclusively the property of the Company. MONCADA specifically agrees that all copyrightable materials generated or developed under this Agreement shall be considered works made for hire under U.S. copyright law and that all such materials shall, upon creation, be likewise owned exclusively by AEON. To the extent that any such material, under applicable law, may not be considered works made for hire, MONCADA hereby assigns to AEON the ownership of copyright in such materials, without the necessity of any further consideration, and AEON shall be entitled to register and hold in its own name all copyrights in respect of such materials. MONCADA agrees to assign to AEON, in full, any right that MONCADA may acquire now or in the future with respect to any such Work Product. MONCADA irrevocably waives and relinquishes any moral rights recognized by any applicable law in any Work Product. MONCADA agrees to perform, upon the request of AEON, any acts that may be necessary or desirable to transfer ownership of all such Work Product to AEON or to establish original ownership of all such Work Product on the part of AEON, to the fullest extent possible. Such obligations shall continue for a period of no more than seven (7) years beyond the termination of MONCADA’s relationship with AEON with respect to any Work Product that is authored, conceived, produced or made by MONCADA during the period of such relationship, and shall be binding upon MONCADA’s heirs, executors, administrators and other legal representatives.

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

- 5 -

(c)     When requested by AEON, MONCADA shall: (1) execute, acknowledge and deliver any requisite affidavits and documents of assignment and conveyance; (2) aid in the obtaining and enforcement of patents or copyrights with respect to any patentable or copyrightable Work Product in any countries; (3) provide testimony in connection with any proceeding affecting the right, title, or interest of AEON in any trade secret, patent, patent application, copyright, mask work or any other type of proprietary right covering any such development by MONCADA using any products or materials of AEON; and (4) perform any other acts deemed reasonably necessary or desirable by AEON to carry out the purposes of this Agreement. AEON shall reimburse MONCADA for any reasonable out-of-pocket expenses incurred at the request of AEON in the process of perfecting ownership by AEON of any Work Product or transferring ownership thereof to AEON or in taking any of the actions requested by AEON under this Section 6(c). To effectuate the terms of this Section, MONCADA hereby irrevocably constitutes and appoints AEON, with full power of substitution therein, as MONCADA's true and lawful attorney-in-fact to exercise the rights assigned hereby. This power of attorney is irrevocable and coupled with an interest and shall survive the termination of MONCADA's relationship with AEON.

(d)      As a condition precedent of this Agreement, upon this Agreement’s execution MONCADA, in both his individual capacity and as the controlling member, shareholder, manager, officer, or director of those entities known as Pathology Consultants of Georgia, Inc. and PCG Molecular, LLC (and any other entity with whom MONCADA may have associated himself with), agrees to assign and otherwise transfer to AEON, in toto, any and all of the rights and interests to any and all intellectual property of whatever nature or country of origin, whether such be trademarks, patents, patent applications, service marks, etc. (including, but not limited to, the testing protocols associated with MOP^®, BELLA TRIPLE PAP^®, MOP-ID™, and others). MONCADA further represents and warranties to AEON that he is either the sole owner of said intellectual property, or possesses the corporate authority necessary to facilitate the assignment and transfer of ownership therein, and will indemnify AEON and its affiliates from any third-party action(s) related to AEON’s assertions of said assigned rights to same.   MONCADA recognizes and acknowledges that the assignment and transfer of such described intellectual property to AEON (including all standard operating procedures, scope of work, and other documentation related to same) is of primary importance and the foundation upon which this Agreement is predicated upon.

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 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

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7.        Confidentiality, Non-Disclosure, Non-Competition and Non-Solicitation.

(a)     For purposes of this Agreement, the following definitions shall apply: (1) “Trade Secret” means the whole or any portion or phase of any scientific, engineering or technical information, computer code, systems configurations, design, process, procedure, formula, coding or improvement that is valuable and secret (in the sense that it is not generally known to competitors and/or customers of AEON) relating to the Primary Business of AEON, including, but not limited to (A) customer lists, the special demands of particular customers, and the current and anticipated requirements of customers generally for the products and services of AEON; (B) the specifications of any existing or new products under development; and (C) special or unique arrangements with any suppliers or other contractors; and (2) “Confidential Information” means any data or information, other than Trade Secrets, relating to the Primary Business of AEON which is disclosed to MONCADA or known by MONCADA as a consequence of, or through, MONCADA’s relationship with AEON (including information conceived, discovered, originated or developed in whole or in part by MONCADA) and not generally known by the public. Without limiting the generality of the foregoing, Confidential Information includes (without limitation): (A) the sales records, profits and performance reports, pricing manuals, sales manuals, training manuals, selling and pricing procedures and financing methods of AEON; (B) the business plans and internal financial statements and projections of AEON; and (C) any information identified as secret or confidential, or which, from the circumstances in good faith and good conscience, ought to be treated as confidential, relating to the business or affairs of AEON.

(b)     MONCADA acknowledges that because of his relationship with AEON, and during the course of such relationship with AEON, AEON will disclose to MONCADA, MONCADA will have access to, and MONCADA and its employees and/or agents/contractors will create, certain Confidential Information and Trade Secrets of AEON. MONCADA acknowledges that all such Trade Secrets and Confidential Information are, and at all times shall remain, the property of AEON. Nothing contained herein shall be construed so as to grant MONCADA any ownership or other rights in and to the intellectual property of AEON except as expressly stated otherwise herein. No license is granted by AEON to the Confidential Information or Trade Secrets or to any intellectual property right therein except for the limited purpose of enabling MONCADA to perform the Consulting Services pursuant to this Agreement. During MONCADA's relationship with AEON and for so long afterwards as the information or data remain Trade Secrets or Confidential Information, MONCADA agrees to hold such Trade Secrets and Confidential Information in confidence and further agrees not, except to the extent specifically required by MONCADA’s assigned duties for AEON, directly or indirectly, to use, disseminate, disclose, or permit any person to obtain any Trade Secrets or Confidential Information (whether or not in written or tangible form), except as specifically authorized in advance and in writing by AEON. MONCADA further agrees to safeguard and maintain on Company premises, to the extent possible, in the performance of MONCADA’s assigned duties for AEON, all information, documents or other items that contain or embody Trade Secrets or Confidential Information.

(c)     MONCADA acknowledges that because of his relationship with AEON, and during the course of such relationship, AEON and MONCADA will have access to data and financial information furnished to AEON by clients, customers, suppliers and other third parties (collectively, the “Data”). MONCADA further acknowledges that AEON may alter, recast, transform, adapt, supplement or otherwise manipulate the Data (the Data, as manipulated, being hereinafter referred to collectively as the “Altered Data”). During MONCADA’s relationship with AEON and for so long afterwards as the Data or Altered Data remain confidential, MONCADA agrees to hold the Data and Altered Data in confidence and further agrees not, except to the extent specifically required by MONCADA’s assigned duties for AEON, directly or indirectly, to use, disseminate, disclose or permit any person to obtain any Data or Altered Data, except as specifically authorized in advance and in writing by AEON.

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(d)     In addition, and without any intention of limiting MONCADA's other obligations under this Agreement in any way, MONCADA will not reveal any nonpublic information concerning the business, services or the proprietary products and processes of AEON (particularly those under current development or improvement), unless MONCADA has obtained written approval from AEON in advance. In that connection, MONCADA will submit to AEON for review any proposed article, paper or other discussion, explanation or description relating to the work done by MONCADA for AEON before such article, paper and/or other discussion are released or delivered to the public. AEON has the right to disapprove and prohibit, or delete any parts of, such articles, papers, discussions, explanations or descriptions that might disclose AEON’s Trade Secrets or Confidential Information or otherwise be contrary to AEON's business interests.

(e)      In consideration of the payment of the Consulting Fees as set forth herein, except as otherwise provided in this Section 7(e), during the Term and for a period of two (2) years following the termination of Consultant’s relationship with AEON for any reason (the “Non-Compete Period”), MONCADA covenants and agrees that MONCADA will not, without the express written approval of AEON (1) solicit any employees of AEON or any of its Affiliates located within a one hundred (100) mile radius of AEON’s principal place of business, or (2) engage in any business, directly or indirectly, as an individual, partner, shareholder, officer, director, principal, agent, employee, trustee, consultant or in any other relationship or capacity, or solicit any customer of AEON or any of its Affiliates, that offers the same products or services as the Primary Business of AEON as of the date of termination of MONCADA’s relationship with AEON located within that general geographic area described in Section 2 above; provided, however, that MONCADA may own, directly or indirectly, solely as an investment, securities or stock of any entity if MONCADA (A) is not a controlling person with respect to such entity, and (B) does not, directly or indirectly, own five percent (5%) or more of any class of the securities or stock of such entity. Notwithstanding anything to the contrary contained herein, if AEON elects to terminate this Agreement pursuant to Section 5(a)(2), then the Non-Compete Period shall continue until the earlier of: (1) the expiration of the Term, or (2) two (2) years following the date of written notice to MONCADA of the termination of this Agreement pursuant to Section 5(a)(2).

8.       Independent Contractor. MONCADA is an independent contractor of AEON, and no fiduciary duty exists between the parties. MONCADA will have sole control over the manner and means of providing his services under this Agreement. Nothing in this Agreement shall be construed as creating a partnership, joint venture, employer-employee or other relationship other than that of independent parties. MONCADA is not an agent of AEON and is not authorized to make, or enter into, any contract, commitment or agreement on behalf of, or binding upon, AEON except as may be pre-approved in writing by AEON. MONCADA is prohibited from acting as, or holding himself out as, an officer, employee or agent of AEON. MONCADA further understands and agrees that he is not covered under AEON’s workers’ compensation insurance (if required by law) or state unemployment insurance coverages and that he shall be solely responsible for providing his own health insurance coverage, disability insurance coverage, worker’s compensation insurance, general liability insurance, life insurance coverage, and retirement plan benefits, if any.

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MONCADA hereby agrees to indemnify and hold AEON harmless from and against any and all claims, damages, losses, taxes, interest, penalties, obligations, fees or expenses (including, but not limited to, reasonable attorneys’ fees) asserted or imposed against or incurred by AEON or its officers, directors, affiliates and agents which arise out of, or which are caused by (i) the re-classification by a state or federal agency, department, division or office of the relationship described herein as an employer/employee relationship, (ii) the breach by MONCADA of any term or provision of this Agreement, (iii) the claims of any third parties with respect to the intellectual property referenced in Section 6(d) above, or (iv) any of MONCADA’s professional services or activities arising outside of this Agreement.

9.        Covenants.

(a)      In the event MONCADA determines to engage any personnel (either as an employee, consultant or other business partner) for the purpose of performing Consulting Services hereunder (any such person being a “Representative”), MONCADA agrees to be (i) directly responsible for any compensation or benefits due to such Representatives and (ii) fully responsible for the services performed by such persons hereunder. MONCADA shall be solely responsible for and shall indemnify, defend and hold AEON harmless from and against all liability for the payment of compensation, vacation pay, sick leave, social security, employment taxes, worker’s compensation, disability or unemployment insurance, premiums or claims attributable to or assessed upon the services rendered by all such individuals, firms or entities.

(b)      MONCADA shall procure and shall maintain throughout the Term a professional liability insurance policy covering MONCADA and its Representatives for acts of professional negligence with policy limits of not less than $1,000,000 per occurrence, $3,000,000 in the aggregate. MONCADA agrees to include AEON as an additional insured on such professional liability insurance policy and shall provide AEON with a certificate of insurance evidencing such coverage before any work is performed under this agreement and annually thereafter.

(c)     The parties agree to comply with the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191, and the rules and regulations implemented thereunder (“HIPAA”) and shall execute a Business Associate Agreement, the form of which is attached hereto as Exhibit B, which shall be deemed to be incorporated by reference into this Agreement. The parties further agree that their compliance with the terms and conditions of the Business Associate Agreement shall be an integral part of the relationship established hereunder and a breach of the Business Associate Agreement shall be deemed a breach of this Agreement.

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 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

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10.      Representations and Warranties.

MONCADA represents and warrants that the following are true and correct as of the date hereof, and covenants that each of the following representations and warranties shall remain true and correct throughout the Term hereof:

(a)     MONCADA acknowledges that he is aware that the United States securities laws restrict persons with material non-public information about a company obtained directly or indirectly from that company from purchasing or selling securities of such company, or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. In performing its duties hereunder, MONCADA represents that all times he and his Representatives will be in compliance with applicable laws, rules and regulations, including those of the Securities Act of 1933, and the rules and regulations promulgated there under.

(b)      MONCADA has full right, power, and authority to enter into this Agreement, to perform his obligations and duties under this Agreement, and his execution, delivery, and performance of this Agreement does not and will not conflict with, violate, or result in a breach of any other agreement, judgment, order, stipulation, or decree by which he is bound. MONCADA owns or has the right to provide any confidential information in connection with providing services hereunder and the use of any intellectual property, or any part thereof, furnished under this Agreement, to the best of his knowledge, will not infringe any patent, copyright, trade secret, trademark or other proprietary right of a third party.

(c)     MONCADA is not currently bound by any other consulting, employment or services agreement, restriction, or obligation, and will not assume any such obligation or restriction, which does or would in any way interfere or be inconsistent with its provisions of the Consulting Services to be furnished hereunder.

(d)      MONCADA shall perform services for AEON under this Agreement in a reasonable, professional manner at all times, and in accordance with all applicable federal and state laws and regulations, generally accepted medical, surgical and scientific practices, and in accordance with standards prevailing in the community in which the services are rendered at the time of testing.

(e)      MONCADA understands and agrees that any equity awards issuable under this Agreement shall bear a restrictive legend and be subject to such restrictions on their transfer as are set forth in Rule 144 of the Securities Act of 1933, as amended. MONCADA represents and warrants to AEON that (i) he is acquiring the common stock of AEON for his own account for investment purposes only and not with a view to or for distributing or reselling such shares or any part thereof; (ii) he is an “accredited investor” as defined in Rule 501(a) under the Securities Act; (iii) he has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of acquiring the common stock of AEON, has so evaluated the merits and risks of such investment and is able to bear the economic risk of holding the such shares; and (iv) is not acquiring the shares of common stock as a result of any advertisement, article, notice or other communication published in any media channel or by general solicitation by a person not previously known to MONCADA.

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(f)      MONCADA holds an unrestricted license to practice medicine in the State of Georgia and is board certified in Pathology. Further, MONCADA has never been investigated or disciplined by any peer review organization, professional society, regulatory agency, governmental authority or hospital medical staff for any reason. MONCADA will immediately report to AEON any investigation or inquiry by any hospital, other health care organization or institution, regulatory agency, governmental authority, peer review organization or professional society with respect to any event or activity of MONCADA (whether material or not), and any actions, suits or proceedings instituted or threatened against Contractor that directly or indirectly affect AEON.

(g)      MONCADA has never been convicted of, plead guilty or nolo contendere to charges of, or been excluded from the Medicare program as a result of an alleged violation of any federal or state health care statute, regulation, rule or policy. MONCADA is and shall remain eligible to participate in Medicare, Medicaid, Tricare and other federal health programs. MONCADA has not been sanctioned by the Health and Human Services Officer of Inspector General (“OIG”) or excluded by the General Services Administration as set forth on the List of Excluded Providers. MONCADA covenants that it shall, during the Term, remain eligible to participate in Medicare, Medicaid, Tricare and other federal health programs and not be sanctioned by the OIG or excluded by the General Services Administration as set forth on the List of Excluded Providers. MONCADA shall immediately notify AEON in writing of any change in the foregoing.

11.       General.

(a)     Benefits of Agreement. Except as otherwise expressly provided herein, the covenants, stipulations and agreements contained in this Agreement are and shall be for the sole and exclusive benefit of the parties hereto and their respective successors and assigns, and nothing contained in this Agreement, expressed or implied, shall be construed to confer upon, or give to, any other Person any right, remedy or claim under or by reason of this Agreement as a third party beneficiary or otherwise.

(b)     Notice

(1)     All notices, demands, requests and other communications required or permitted to be given by any provision of this Agreement shall be in writing and sent by (A) commercial delivery service; (B) air or other overnight delivery service (e.g., FedEx); ; or (C) hand delivery, to the party to be notified, addressed as follows:

If to AEON: Authentidate Holding Corp.  d/b/a Aeon Global Health 2225 Centennial Drive Gainesville, Georgia 30504 Attention: General Counsel, Paul S. Suda, Esq. Telephone:   404.219.1775 E-mail: psuda@aeonglobalhealth.com 

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If to MONCADA: Armando Moncada, MD 7150 Oxbo Circle Cumming, Georgia 30040 Telephone: 404.416.4589 E-mail: amoncada@pcgmolecular.com 

(2)     Any such notice, demand, request or communication shall be deemed to have been given and received for all purposes under this Agreement: (A) On the next Business Day after the same is deposited with a nationally recognized overnight delivery service that guarantees overnight delivery (e.g., FedEx); and, (B) On the date of actual delivery to such party by any other means; provided, however, if the day that such notice, demand, request or communication shall be deemed to have been given and received as aforesaid is not a Business Day, or if delivery is made after 5:00 p.m. (recipient’s local time) on any Business Day, such notice, demand, request or communication shall be deemed to have been given and received on the next Business Day.

(3)     Any party to this Agreement may change such party’s address for the purpose of notices, demands, requests and communications required or permitted under this Agreement by providing written notice of such change of address to all of the parties by written notice as provided herein.

(c)     Interpretation. The parties hereby agree that each party has reviewed and had the opportunity to review this Agreement, and each party has had the opportunity, whether exercised or not, to have each respective party’s attorney review this Agreement. Accordingly, the normal rule of construction to the effect that any ambiguities are resolved against the drafting party shall not be employed in the interpretation of this Agreement.

(d)     Reasonable Restriction; Review. MONCADA acknowledges that the scope of prohibited activities and time duration of the provisions of this Agreement are reasonable, and are no broader than are necessary to maintain the confidentiality of the Confidential Information and the goodwill associated with the business of AEON. MONCADA also acknowledges that the provisions of this Agreement are not oppressive and do not and will not impose any unreasonable burden on MONCADA.

(e)     Non-disparagement. During the Term and thereafter, the Parties agree not to publicly disparage one another or their officers, directors, employees, members and agents, in any manner which is likely to be harmful to them or their business, business reputation or personal reputation. The Parties shall take the necessary steps to inform their officers, directors and members of senior management of their obligations under this section.     

(f)     Indemnity. The Parties hereby indemnify and agrees to hold one another and any of its members, officers, directors, managers, employees and/or agents harmless from and against any and all claims, demands and actions, and any liabilities, damages, or expenses resulting therefrom, including court costs and reasonable attorney fees, arising out of or relating to their respective obligations to be performed by either hereunder or any breach of any of their obligations or duties hereunder.

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(g)     Damages and Equitable Relief. MONCADA agrees that if he breaches any warranty or any provision of this Agreement relating to confidentiality, ownership of property (including intellectual property), non-competition or non-solicitation, the injury to AEON from any such breach would be impossible to calculate, and that money damages would therefore be an inadequate remedy for any such breach. Accordingly, MONCADA agrees that if he breaches any warranty or any provision of this Agreement relating to confidentiality, ownership of property (including intellectual property), non-competition or non-solicitation, then AEON shall be entitled, in addition to any other remedies which AEON may have, to an injunction or other appropriate order to restrain any continuation of such breach by MONCADA, and that such injunction or other appropriate order be issued without the requirement that AEON post any bond. AEON shall also be entitled to recover its reasonable attorney fees and costs incurred to enforce the obligations of MONCADA hereunder.

(h)     Attorneys’ Fees. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of any alleged dispute, breach, default or misrepresentation in connection with any provisions of this Agreement and such action is successful, the prevailing party shall be entitled to recover reasonable attorney’s fees, court costs and all reasonable expenses, even if not taxable or assessable as court costs, including, without limitation, all such fees, costs and expenses incident to appeal, that are incurred in that action or proceeding, in addition to any other relief to which such party may be entitled.

(i)     Incorporation. All exhibits and schedules attached hereto or to be attached hereto, and all other agreements and instruments referred to herein, are hereby incorporated by reference into this Agreement as fully as if copied herein verbatim.

(j)     No Waiver. Each and every waiver of any covenant, representation, warranty or other provision of this Agreement must be in writing and signed by each party whose interests are adversely affected by such waiver. No waiver that is granted in any one instance shall be construed as a continuing waiver that is applicable in any other instance. No consent or waiver that is expressed or implied by any party to this Agreement to or of any breach or default by any other party to this Agreement in the performance by such other party of its obligations hereunder, shall be deemed or construed to be a consent or waiver to, or of, any breach or default of any other party of the same or any subsequent obligations hereunder. Failure on the part of any party to this Agreement to complain of any act or failure to act of any party to this Agreement or to declare such party in default, irrespective of how long such failure continues, shall not constitute a waiver by the non-defaulting parties of their rights hereunder.

(k)     Section Headings. The Section headings contained in this Agreement are for reference purposes only and shall not affect the interpretation of this Agreement.

(l)     Governing Law Arbitration. This Agreement shall be governed in all respects, including validity, interpretation and effect, by, and shall be enforceable in accordance with, the internal laws of the State of Georgia without regard to conflicts of laws principles.

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(m)     Dispute Resolution.

(1)     Arbitration. Should any dispute, controversy, difference or claim arise among the parties concerning the interpretation, performance or enforcement of this Agreement, the parties shall use their best efforts to settle such disputes amicably between themselves. However, if such efforts fail to resolve the dispute within thirty (30) days from the date that written notice of the dispute was given by one party to the other party, the parties agree that such dispute shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the “Rules”). The arbitration will be held as promptly as possible at such time as the arbitrator may determine; provided, however, that such arbitration shall take place in Atlanta, Georgia. The arbitrator shall determine the matters in dispute in accordance with the laws of the State of Georgia, without regard to principles of conflicts of laws.

(2)     The decision of the arbitrator shall be in writing and shall set forth in detail the facts of the dispute and the reasons for the decision. The decision of the arbitrator will be final and binding upon the parties hereto, who hereby waive any appeal of such award. The expenses of the arbitration will be shared equally between the parties. The parties agree that the award of the arbitrator shall be the sole and exclusive remedy between them regarding any claims, counter-claims, issues, disputes, controversies, differences or accountings presented or pled to the arbitrator. The award of the arbitrator shall be made and shall promptly be payable in U.S. Dollars, free of any tax, deductions or offsets, and any costs, fees or taxes that are incident to enforcing the award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement. Judgment upon the award of the arbitrator may be entered in any court of competent jurisdiction, or application may be made in such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

(n)     Severability; Blue-Penciling. If any provision of this Agreement is held to be unlawful, invalid or unenforceable under present or future laws that are effective during the Term hereof, such provision shall be fully severable, and this Agreement shall be construed and enforced without giving effect to such unlawful, invalid or unenforceable provision. Furthermore, if any provision of this Agreement is capable of two (2) constructions, one of which would render the provision void and the other of which would render the provision valid, then the provision shall have the meaning which renders it valid. If any court determines that any provision of this Agreement is unenforceable because of the duration of such provision or the area covered thereby, such court shall have the power to reduce the duration or area of such provision and, in its reduced form, such provision shall then be enforceable and shall be enforced.

(o)     Counterpart Execution. This Agreement may be executed in multiple counterparts, each one of which shall be deemed an original, but all of which shall be considered together as one and the same instrument. Further, in making proof of this Agreement, it shall not be necessary to produce or account for more than one (1) such counterpart. Execution by a party of a signature page hereto shall constitute due execution and shall create a valid, binding obligation of the party so signing, and it shall not be necessary or required that the signatures of all parties appear on a single signature page hereto.

(p)     Electronic Transmission. Delivery of an executed counterpart of this Agreement may be made by facsimile or other electronic transmission. Any such counterpart or signature pages sent by facsimile or other electronic transmission shall be deemed to be written and signed originals for all purposes, and copies of this Agreement containing one or more signature pages that have been delivered by facsimile or other electronic transmission shall constitute enforceable original documents. As used in this Agreement, the term “electronic transmission” means and refers to any form of communication not directly involving the physical transmission of paper that creates a record that may be retained, retrieved and reviewed by a recipient of the communication, and that may be directly reproduced in paper form by such a recipient through an automated process.

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(q)     Successors and Assigns. This Agreement is binding on the parties hereto and their respective heirs, representatives, successors and assigns. Subject to same, this Agreement may not be assigned by MONCADA.

(r)     Amendments. This Agreement may be modified or amended as herein provided; however, each and every modification and amendment of this Agreement must be in writing and, except as otherwise provided herein, signed by all of the parties hereto.

(s)     Calculation of Time Periods. Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the designated period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday, or legal holiday. The last day of any period of time described herein shall be deemed to end at 5:00 p.m. Central Standard Time or Central Daylight Time, as applicable.

(t)     Entire Agreement. This Agreement contains the entire agreement between the parties regarding the subject matter hereof. Any prior agreements, discussions or representations not expressly contained herein shall be deemed to be replaced by the provisions hereof, and no party has relied on any such prior agreements, discussions or representations as an inducement to the execution hereof.

(u)     Rules of Construction. As used in this Agreement: (i) all defined terms in the singular and plural shall have comparable meanings when used in the plural and vice-versa, unless otherwise specified; (ii) any reference to a “Person” means any individual, partnership, firm, corporation, limited liability company, association, joint venture, trust or other entity, or any governmental or political subdivision or agency, department or instrumentality thereof; (iii) any reference to a “Business Day” shall mean and refer to any day other than a Saturday, a Sunday or a day on which national banks located in Memphis, Tennessee, are authorized or obligated to close their regular banking business; (iv) all pronouns and any variations thereof shall be deemed to refer to masculine, feminine or neuter, singular or plural, as the identity of the person or persons may require; (v) the words “hereof,” “herein,” “hereunder” and words of similar import shall refer to this Agreement as a whole and not any particular provision of this Agreement; (vi) the word “party” or “Parties” when used in this Agreement means only those persons or entities who are signatories to this Agreement; (vii) references to all documents, contracts, agreements or instruments shall include any and all supplements and amendments thereto; and (viii) the word “Affiliate” shall mean (1) any Person directly or indirectly controlling, controlled by, or under common control with, the referenced Person; (2) any Person which has a ten percent (10%) or more beneficial, or voting, interest in the referenced Person; and (3) any officer or director of or partner or member in either the referenced Person or any Person described in (1) or (2) above. For purposes of the above, the term “control” (including "controlling" and "controlled") means the possession, direct or indirect, of the power to direct or to cause the direction of the management and policies of a Person, whether through the ownership or voting interests, by contract, or otherwise.

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(v)     Survival. Notwithstanding the termination of this Agreement by either party for any reason, the provisions and obligations of the parties under Sections 6, 7, 10 and 11 shall survive such termination as if this Agreement remained in full force and effect, and no such termination shall terminate the covenants and obligations stated in Section 6, 7 10 and 11 hereof.

(w)     Consultant Acknowledgement. This Agreement sets forth the terms and conditions whereby MONCADA and MONCADA’s employees, consultants, sub-contractors and agents shall provide and perform Consulting Services. Any of MONCADA’s employees, consultants, sub-contractors or agents selected by MONCADA to provide Consulting Services hereunder shall agree to be bound by the provisions of this Agreement, as evidenced by affixing their signature to an Acknowledgment in substantially the same format as Exhibit A attached hereto.

[Remainder of Page Intentionally Left Blank]

[Signature Page Follows]

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[Signature Page to Consulting Agreement]

EACH PARTY ACKNOWLEDGES AND AGREES THAT SUCH PARTY HAS READ AND UNDERSTOOD THE PROVISIONS OF THIS AGREEMENT, THAT SUCH PARTY HAS BEEN GIVEN AN OPPORTUNITY FOR SUCH PARTY’S LEGAL COUNSEL OR ADVISORS TO REVIEW THIS AGREEMENT AND THAT SUCH PARTY HAS RECEIVED A COPY OF THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused this Agreement to be executed by their duly authorized representative, effective as of the Effective Date.

COMPANY:

Authentidate Holding Corp.

d/b/a AEON Global Health

a Delaware corporation

By: /s/ Hanif A. Roshan

Name: Hanif A. Roshan

Title: CEO

Date: January 4, 2018

CONSULTANT:

By: /s/ Dr. Armando Moncada, M.D.

Name: Dr. Armando Moncada, MD

Individually and as a representative of both

Pathology Consultants of Georgia, Inc. and PCG Molecular, LLC

Date: January 4, 2018

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

- 17 -

EXHIBIT “A”

As Aeon’s Chief Medical Officer -- Pathology Division, MONCADA’s duties and responsibilities will include, but not be limited to, the following:

● On a quarterly basis (i.e., during those blocks of three (3) consecutive months commencing as of January 1, 2018), MONCADA will use his best efforts to generate gross revenues for AEON equal to or exceeding the sum of $200,000.00 for the first quarter, $300,000 for the second, $400,000 for the third, $500,000 for the fourth, $600,000 for the fifth, $800,000 for the sixth, and $1,000,000 during each quarterly period thereafter.

● The overall operation and administration of Aeon’s pathology laboratory

● Validate and roll-out of new molecular based infectious diseases tests

● Record and report test results promptly, accurately, and proficiently

● Ensure the laboratory’s physical plant and environment conditions are of appropriate size, contain required components, and are safe

● Test methodologies to provide the quality of results required for patient care

● Verify procedures are adequate to determine accuracy, precision, and other pertinent performance characteristics of the method

● Establish, document and maintain Quality Control and Quality Assurance programs

● Establish and maintain acceptable levels of analytic performance for each test

● Document all remedial actions

● Generate test reports to include pertinent information required for interpretation

● Specify in writing the responsibilities of each consultant, supervisor, and person engaged in the performance of the pre-analytic, analytic, and post analytic phases of testing

● Identify which procedures lab personnel are authorized to perform, including competency assessment

● Determine whether supervision is required for processing, test performance, or result reporting

● Provide on-site supervision of high complexity test performance by qualified testing personnel as required by CLIA

● Ensure reports are reviewed by appropriate staff to evaluate performance and to identify any problems that require corrective action

● Design approved corrective action plan for when results are unacceptable or unsatisfactory

● Keep abreast of emerging models in health care delivery, and to identify and define new and innovative strategies to achieve business goals and objectives

● Identify opportunities to collaborate and develop clinical integration opportunities with other health delivery systems to achieve affordable outcomes.

● Actively engage in business development opportunities to include your presenting clinical capabilities to legislative officials and other key constituents.

● Provide clinical guidance, support and education to the organization.

● Participate in senior management business and clinical strategy development and implementation.

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

- 18 -

● Build and leverage cross functional collaborative relationships to achieve shared company goals.

● Promote collaboration to both internal and external health care team members.

● Develop and implement strategic goals related to the quality improvement, management programs and accreditation standards.

● Assist with analytics and development of quality measures for new payment models (e.g., value based/risk based payment structures).

General Duties: MONCADA further acknowledges he is to:

● Conduct himself at all times in an ethical manner. MONCADA will provide prospective clients and/or customers of AEON with accurate and complete information that is neither deceptive nor misleading.

● Immediately report to AEON any suspected violations of any federal laws, regulations, federal health care program requirements, or AEON’s internal policies and procedures in connection with the Services provided by MONCADA under the Agreement or otherwise in connection with the sale of clinical testing services marketed by MONCADA on behalf of AEON and its Clients.

● At all times when interacting with Customers, or potential Customers of AEON, to identify himself as AEON’s representative who has been engaged to serve in a medical officer capacity.

● Not make any payment or other transfer of value to any Customer or any other entity that orders testing through AEON or to any other health care practitioner in connection with the services provided by MONCADA under the Agreement or otherwise in connection with the provision of clinical laboratory testing.

 Consulting Agreement by and between Authentidate Holding Corp.

 d/b/a Aeon Global Health and Dr. Armando Moncada, MD

-19-

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hanif A. Roshan, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Authentidate Holding Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  January 26, 2018	/s/ Hanif A. Roshan
	Hanif A. Roshan Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Poelking, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Authentidate Holding Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  January 26, 2018	/s/ Michael J. Poelking
	Michael J. Poelking
	Chief Financial Officer and Treasurer  (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Authentidate Holding Corp. (the “Company”) for the quarterly period ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Hanif A. Roshan, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: January 26, 2018

/s/ Hanif A. Roshan

Hanif A. Roshan

Chief Executive Officer

(Principal Executive Officer)

      A signed original of this written statement required by Section 906 has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

 EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Authentidate Holding Corp. (the “Company”) for the quarterly period ended December 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Poelking, Chief Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: January 26, 2018

/s/ Michael J. Poelking

Michael J. Poelking

Chief Financial Officer and Treasurer

(Principal Financial Officer)

      A signed original of this written statement required by Section 906 has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Dec. 31, 2017	Jan. 19, 2018
Document Information [Line Items]
Entity Registrant Name	AUTHENTIDATE HOLDING CORP
Entity Central Index Key	0000885074
Trading Symbol	adat
Current Fiscal Year End Date	--06-30
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		7,249,370
Document Type	10-Q
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Dec. 31, 2017	Jun. 30, 2017
Current assets
Cash and cash equivalents	$ 357,165	$ 1,121,763
Restricted cash		120,695
Accounts receivable, net	2,467,935	1,020,988
Inventory, net	397,569	347,750
Prepaid expenses and other current assets	38,729	58,711
Total current assets	3,261,398	2,669,907
Property and equipment, net	1,780,123	2,203,543
Other assets
Security deposits	10,211	10,211
Deferred tax asset	7,357,436	11,848,017
Total assets	12,409,168	16,731,678
Current liabilities
Accounts payable	1,269,454	2,177,722
Accrued expenses	2,493,374	2,168,090
Accrued commissions	855,424	427,627
Accrued dividends	816,377	644,979
Deferred rent	170,483	141,833
Related party notes payable	2,545,199	2,545,199
Derivative liabilities	185,176	551,040
Total current liabilities	8,335,487	8,656,490
Deferred rent	90,000	45,000
Total liabilities	8,425,487	8,701,490
Commitments and contingencies
Shareholders' equity
Preferred stock, $.10 par value; 5,000,000 shares authorized, Series D, 605,000 shares and Series E 25,000 shares issued and outstanding at December 31, 2017 , and June 30, 2017, respectively	63,000	63,000
Common stock, $.001 par value; 190,000,000 shares authorized, 7,249,370 shares issued and outstanding on December 31, 2017, and June 30, 2017 , respectively	20,508	8,938
Additional paid-in capital	44,530,041	44,307,479
(Accumulated deficit)	(40,629,868)	(36,349,229)
Total shareholders' equity	3,983,681	8,030,188
Total liabilities and shareholders' equity	$ 12,409,168	$ 16,731,678

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Dec. 31, 2017	Jun. 30, 2017
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	190,000,000	190,000,000
Common stock, shares issued (in shares)	7,249,370	7,249,370
Common stock, shares outstanding (in shares)	7,249,370	7,249,370
Series D Convertible Preferred Stock [Member]
Preferred stock, shares issued (in shares)	605,000	605,000
Preferred stock, shares outstanding (in shares)	605,000	605,000
Series E Convertible Preferred Stock [Member]
Preferred stock, par value (in dollars per share)	$ 30	$ 30
Preferred stock, shares issued (in shares)	25,000	25,000
Preferred stock, shares outstanding (in shares)	25,000	25,000

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Net revenues
Fees for services	$ 5,278,042	$ 4,565,435	$ 8,388,424	$ 10,256,731
Hosted software services	248,530	311,671	491,550	658,605
Telehealth products and services	4,650	9,707	9,300	21,552
Total net revenues	5,531,222	4,886,813	8,889,274	10,936,888
Operating expenses
Cost of revenues	888,541	951,668	2,017,117	2,195,838
Write down of inventory			0	237,674
Selling, general and administrative	3,042,771	4,204,114	6,153,936	7,727,165
Share based compensation	21,111	89,526	51,159	148,476
Depreciation and amortization	200,837	394,484	423,421	803,147
Total operating expenses	4,153,261	5,639,792	8,645,633	10,874,626
Operating income (loss)	1,377,961	(752,979)	243,641	62,262
Other (expense) income
Interest	(37,013)	(92,175)	(64,362)	(370,768)
Change in fair value of derivative liabilities	292,573	621,820	365,864	135,601
Other	(124,149)		(162,294)
Total other (expense) income	131,411	529,645	139,208	(235,167)
Income (loss) before provision for income taxes	1,509,372	(223,334)	382,849	(172,905)
Provision for income taxes	(4,493,239)	(45,404)	(4,493,239)
Net loss	(2,983,867)	(268,738)	(4,110,390)	(172,905)
Less: preferred dividends	(85,699)	(100,624)	(170,249)	(201,248)
Net loss available to common shareholders	$ (3,069,566)	$ (369,362)	$ (4,280,639)	$ (374,153)
Loss per share:
Basic loss per common share (in dollars per share)	$ (0.42)	$ (0.06)	$ (0.59)	$ (0.06)
Diluted loss per common share (in dollars per share)	$ (0.42)	$ (0.06)	$ (0.59)	$ (0.06)
Weighted average number of common shares outstanding:
Basic (in shares)	7,249,370	6,015,053	7,249,370	5,893,655
Diluted (in shares)	7,249,370	6,015,053	7,249,370	5,893,655

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Cash flows from operating activities
Net loss	$ (4,110,390)	$ (172,905)
Adjustments to reconcile net income (loss) to net cash used by operating activities
Impairment of deferred tax asset	4,490,581
Change in fair value of derivative liabilities	(365,864)	(135,601)
Write down of inventory	0	237,674
Depreciation and amortization	423,421	803,147
Deferred taxes
Share based compensation	51,159	148,476
Changes in assets and liabilities
Restricted cash	120,695
Accounts receivable	(1,446,948)	1,067,894
Inventory	(49,819)	(303,637)
Prepaid expenses and other current assets	19,982	49,696
Accounts payable	(650,497)	(1,130,623)
Accrued expenses	325,285	(465,416)
Accrued commissions	427,797	(72,546)
Deferred rent		(4,874)
Net cash provided (used) by operating activities	(764,598)	21,285
Cash flows from investing activities
Purchases of property and equipment		(22,103)
Disposal of fixed assets
Net cash (used in) investing activities		(22,103)
Cash flows from financing activities
Repayments of notes payable		(1,057,811)
Net cash (used in) financing activities		(1,057,811)
Net decrease in cash	(764,598)	(1,058,629)
Cash beginning of period	1,121,763	1,414,706
Cash end of period	357,165	356,077
Supplemental disclosure of cash paid for:
Interest paid	99,005	227,758
Income taxes paid
Non-cash investing and financing activities
Non-cash preferred dividends	137,249	201,248
Earn-out common dividends paid in stock		$ 5,472,598

XML

Note 1 - Description of Business, Reverse Merger and Liquidity

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

1. Description of Business , Reverse Merger and Liquidity

Business

Authentidate Holding Corp. ("AHC") and its subsidiaries primarily provides an array of clinical testing services to health care professionals through its wholly-owned subsidiary, Peachstate Health Management, LLC d/b/a AEON Clinical Laboratories ("AEON"). AHC also continues to provide its legacy secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Web-based services are delivered as Software as a Service (SaaS) to customers interfacing seamlessly with billing, information and records management systems.

Reverse Merger

On

January 27, 2016,

AEON merged into a newly formed acquisition subsidiary of AHC pursuant to a definitive Amended and Restated Agreement and Plan of Merger dat

ed

January 26, 2016,

as amended on

May 31, 2016

and

December 15, 2016 (

collectively the "Merger Agreement") (the "AEON Acquisition"). The merger certificate was filed with the Secretary of State of Georgia on

January 27, 2016.

AEON survived the merger as a wholly-owned subsidiary of AHC (collectively the "Company"). AEON contracts with health care professionals to provide urine and oral fluid testing to patients. The

four

primary tests provided by AEON are Medical Toxicology, Pharmacogenomics, Cancer Genetic Testing and Molecular Biology. Following the completion of the reverse merger, the business conducted by AEON became primarily the business conducted by the Company.

Under accounting principles generally accepted in the United States of America ("

U.S. GAAP"), the merger is treated as a "reverse merger" under the purchase method of accounting. The condensed consolidated financial statements reflect the historical results of AEON prior to the completion of the reverse merger since it was determined to be the accounting acquirer, and do

not

include historical results of AHC prior to the completion of the merger.

Going Concern

As of the filing date of this Quarterly Report on Form

10

-Q,

there is outstanding an aggregate principal amount of

$2,545,199

of senior secured convertible notes with a maturity date of

March 20, 2018

and a secured note subordinated to the interests of the existing senior lenders in the principal amount of

$210,000

with a maturity date of

June 15, 2018

and is included in accrued expenses on the condensed consolidated balance sheet. We expect existing resources, revenues generated from operations, and proceeds received from other transactions we are considering (of which there can be

no

assurance) to satisfy working capital requirements for at least the next

twelve

months; however,

no

assurances can be given, that we will be able to generate sufficient cash flow from operations or complete other transactions to satisfy our other obligations. The accompanying condensed consolidated financial statements do

not

include any adjustments to the recoverability and classification of assets carrying amounts or the amounts and classifications of liabilities that might result from the outcome of these uncertainties. Accordingly, the Company needs to raise additional capital and are exploring potential transactions to improve our capital position. Unless we can 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.

The Company

's capital requirements have been and will continue to be significant and it is expending significant amounts of capital to develop, promote and market its services. The Company's available cash and cash equivalents as of

December 31, 2017

totaled approximately

$357,000

and the Company's working capital deficit was approximately

$5,074

,000.

Nevertheless, our available cash and cash equivalents as of the filing date of this Quarterly Report on Form

10

-Q is approximately

$1,057,000

and our estimated monthly cash requirement is approximately

$1,300,000.

The Company does

not

have a bank line of credit or other fixed source of capital reserves.

We are exploring potential transactions to improve our capital position to ensure we can meet our financing and working capital requirements. We would expect to raise additional funds through obtaining a credit facility from an institutional lender or undertaking private debt financings. Raising additional funds by issuing equity or convertible debt securities

may

cause our stockholders to experience substantial dilution in their ownership interests and new investors

may

have rights superior to the rights of our other stockholders. Raising additional funds through debt financing or preferred stock, if available,

may

involve covenants that restrict our business activities and options and such additional securities

may

have powers, designations, preferences or rights senior to our currently outstanding securities. We

may

also enter into financing transactions which involve the granting of liens on our assets or which grant preferences of payment from our revenue streams, all of which could adversely impact our ability to rely on our revenue from operations to support our ongoing operating costs. Alternatively, we

may

seek to obtain new financing from existing security holders, which

may

include reducing the exercise or conversion prices of outstanding securities, or the issuance of additional equity securities. Currently, we do

not

have any definitive agreements with any

third

-parties for such transactions and there can be

no

assurance; however, that we will be successful in raising additional capital or securing financing when needed or on terms satisfactory to the company. If we are unable to raise additional capital when required, or on acceptable terms, we will need to reduce costs and operations substantially or potentially suspend operations, any of which would have a material adverse effect on our business, financial condition and results of operations.

Management has concluded that due to the conditions described above, there is substantial doubt about the entity

's ability to continue as a going concern. We have evaluated the significance of the conditions in relation to our ability to meet our obligations and believe that our current cash balance will provide sufficient capital to continue operations through fiscal

2018.

While our plan is to raise capital from commercial operations and/or product partnering opportunities to address our capital deficiencies and meet our operating cash requirements, there is

no

assurance that our plans will be successful. If we fail to generate sufficient capital from commercial operations or partnerships, we will need to seek capital from other sources and risk default under the terms of our existing loans. We cannot assure you that financing will be available on favorable terms or at all. Additionally, if additional capital is raised through the sale of equity or convertible debt securities, the issuance of such securities would result in dilution to our existing stockholders. Furthermore, despite our optimism regarding the future of the Company, even if the Company is adequately funded, there is

no

guarantee that any of our services will perform as hoped or that such services can be successfully commercialized.

XML

Note 2 - Summary of Significant Accounting Policies

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Significant Accounting Policies [Text Block]

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company

's condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company's financial information. These interim results are

not

necessarily indicative of the results to be expected for the year ending

June 30, 2018

or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended

June 30, 2017,

included in the Company's

2017

Annual Report on Form

10

-K filed with the SEC.

The balance sheet as of

June 30, 2017

has been derived from audited financial statements at that date but does

not

include all of the information required by U.S. GAAP for complete financia

l statements.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Esti

mates

The preparation of

condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

The most sensitive accounting estimates affecting the financial statements are revenue recognition, the allowance for doubtful accounts, depreciation of long-lived assets, fair value of intangible assets and goodwill, amortization of intangible assets, income taxes and associated deferrals and valuation allowances, commitments and contingencies and measurement of derivative liabilities.

Accounts

R

eceivable, Net

Accounts receivable represent customer obligations due under normal trade terms, net of allowance for doubtful accounts.

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience and other currently available evidence. The allowance for doubtful accounts was approximately

$887,000

and

$923,000

as of

December 31, 2017

and

June 30, 2017,

respectively.

Fair

Value Measurements

The Company follows ASC

820

-

10,

"Fair Value Measurements and Disclosures"

, of the FASB to measure the fair value of its financial statements and disclosures about fair value of its financial instruments. ASC

820

-

10

establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC

820

-

10

establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The

three

levels of fair value hierarchy defined by ASC

820

-

10

are described below:

Level  1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 Pricing inputs that are generally unobservable input and not corroborated by market data.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lower priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than

one

level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company's warrant liabilities and certain conversion features underlying the convertible debt are categorized as Level

3.

Revenue Recognition

The Company provides laboratory testing services, web-based hosted so

ftware services, telehealth products and post contract customer support services.

In accordance with Financial Accounting Standards Board ("

FASB") Accounting Standards Codification ("ASC") ASC-

605

"Revenue Recognition"

, the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured. Billings for laboratory testing services are reimbursed by

third

-party payors net of allowances for differences between amounts billed and the cash receipts.

Revenue from laboratory testing services are recognized at the time test results are delivered, net of estimat

ed contractual allowances. Third-party reimbursement revenue is estimated based on cash received over a

12

-month period.

Revenue for hosted software services, telehealth products, and customer support services are recognized when persuasive evidence of

an arrangement exists, delivery has occurred, the selling price is fixed and collectability is reasonably assured. Multiple-element arrangements are assessed to determine whether they can be separated into more than

one

unit of accounting. A multiple-element arrangement is separated into more than

one

unit of accounting if all the following criteria are met: (i) the delivered item has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of the undelivered items in the arrangement; (iii) if the arrangement includes a general right of return relative to the delivered items; (iv) and delivery or performance of the undelivered item is considered probable and substantially in the Company's control. If these criteria are

not

met, then revenue is deferred until such criteria are met or until the period over which the last undelivered element is delivered, which is typically the life of the contract agreement. If these criteria are met, we allocate total revenue among the elements based on the sales price of each element when sold separately which is referred to as vendor specific objective evidence or VSOE.

Concentrations of Credit Risk

The Company maintains its cash in bank deposit acco

unts which, at times,

may

exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At

December 31, 2017

and

June 30, 2017,

the Company had approximately

$119,000

and

$871,000

in excess of FDIC-insured limits. The Company has

not

experienced any losses in such accounts.

Income Taxes

The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for

the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Management considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability for or discloses potential changes that management believes are more

likely than

not

to occur upon examination by tax authorities. Management has

not

identified any uncertain tax positions that require recognition or disclosure in the accompanying consolidated financial statements.

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

Recent Accounting Pronouncements

In

May 2014,

the FASB issued Accounting Standards Update ("ASU")

2014

-

09,

"Revenue from Contracts with Customers"

(Topic

606

) ("ASU

2014

-

09"

), which affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. Under ASU

2014

-

09,

an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU must be applied for annual periods beginning after

December 15, 2017,

with early application permitted for annual reporting periods beginning after

December 15, 2016.

The Company has begun to research this guidance and does

not

believe that this ASU will have a material impact on the consolidated financial results of the Company, we understand it will require increased qualitative and quantitative disclosure about the nature, amount, timing and uncertainty arising from contracts with customers. The Company is still evaluating the impact of this ASU and expects to adopt this ASU effective

July 1, 2018.

In

August 2014,

the FASB issued ASU

No.

2014

-

15,

"Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern".

The amendments in this update state that regarding preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or within

one

year after the date that the financial statements are available to be issued, when applicable). The amendments in this update are effective for the annual reporting period beginning after

December 15, 2016

and for annual periods and interim periods thereafter. Early application is permitted. The Company has adopted ASU

2014

-

15

and has made the necessary disclosures in the "Going Concern" sections of this Quarterly Report on Form

10

-Q.

In

July 2015,

the FASB issued ASU

2015

-

11,

"Inventory

(

Topic

330

):

Simplifying the Measurement of Inventory"

. ASU

2015

-

11

requires inventory measured using any method other than last-in,

first

-out ("LIFO") or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU

2015

-

11

is effective prospectively for fiscal years, and for interim periods within those years, beginning after

December 15, 2016.

Early application is permitted. The Company has determined that the ASU has

no

material impact on its consolidated financial statements and related disclosures since it does

not

sell inventory on a stand-alone basis at net realizable value.

In

January 2016,

the FASB

issued ASU

2016

-

01,

"Financial Instruments (Subtopic

825

-

10

):

Recognition and Measurements of Financial Assets and Financial Liabilities."

ASU

2016

-

01

provides guidance on the recognition and measurement of financial assets and financial liabilities. This ASU requires that all equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income. However, companies

may

elect to measure equity investments that do

not

have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. In addition, the ASU eliminates the requirement to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet. The ASU is effective for the Company in the

first

quarter of

2018.

The Company has determined that the ASU has

no

material impact on its consolidated financial statements and related disclosures since it does

not

have equity investments.

In

February 2016,

the FASB issue

d ASU

No.

2016

-

02,

"Leases"

, which establish a right-of-use (ROU) model that requires a lessee to record an ROU asset and lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classifications affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. ASU

2016

-

02

requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2019.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

"Compensation-Stock Compensation (Topic

718

): Improvements to Employee Share-Based

Payment Accounting"

, which makes several modifications to the accounting for employee share-based payment transactions, including the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. This guidance also clarifies the presentation of certain components of share-based awards in the statement of cash flows. This guidance is effective for annual reporting periods beginning after

December 15, 2016,

and interim periods within those annual periods, and early adoption is permitted. The Company has

not

had stock compensation exercises since the reverse merger; therefore, the ASU is

not

applicable until exercises occur. The Company plans to implement this ASU when such exercises occur.

In

August 2016,

the FASB issued ASU

No.

2016

-

15,

"Statement of Cash Flows

(Topic

230

): Classification of Certain Cash Receipts and Cash Payments,"

which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The guidance is effective for the Company on

July 1, 2018

and early adoption is permitted. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2018.

In

November 2016,

the FASB issued an ASU

2016

-

18,

"Restricted Cash"

, which clarifies the presentation and classification of restricted cash in the statement of cash flows. The ASU requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Company in the

first

quarter of

2018

with early adoption permitted and must be applied retrospectively to all periods presented. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures with the fiscal year beginning

July 1, 2018.

In

May 2017,

the FASB issued ASU

2017

-

09,

"Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting",

which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after

December 15, 2017.

The Company is evaluating the impact of this ASU and expects to adopt this ASU effective

July 1, 2018.

In

July 2017,

the FASB issued ASU

2017

-

11,

"Earnings Per Share (Topic

260

), Distinguishing Liabilities from Equity (Topic

480

) and Derivatives and Hedging (Topic

815

); Part I. Accounting for Certain Financial Instruments with Down Round Features and Part II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception"

,

which states that when determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature

no

longer precludes equity classification when assessing whether the instrument is indexed to the Company's own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option)

no

longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic

260

to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The Company is evaluating the provisions of this ASU and plans to adopt this ASU effective

July 1, 2019.

In

December 2017,

the Securities and Exchange Commission recently issued Staff Acco

unting Bulletin

No.

118,

which is an application of ASC Topic

740,

Income Taxes

, in the reporting period that includes

December 22, 2017,

the date on which the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act changes existing United States tax law and includes numerous provisions that will affect business. Staff Accounting Bulletin

No.

118

implies that if a reasonable estimate can be made of the Act's effects on the Company's financial statements, the reasonable estimate should be reported in the period ending after

December 22, 2017.

The Company has implemented Staff Accounting Bulletin

No.

118

is this Form

10

-Q ended

December 31, 2017

by revaluing its deferred tax asset for the lower tax rates.

XML

Note 3 - Restatement and Correction of Error

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Accounting Changes and Error Corrections [Text Block]

3. Restatement and Correction of Error

In the

fourth

quarter of the year ended

June 30, 2017,

the Company concluded that its results for the quarter ending

December 31, 2016

included errors resulting in the understatement of inventory and the understatement of certain accruals. The financial statements for the quarter have been restated and were presented in the Company's consolidated financial statements included in its Annual Report on Form

10

-K for the fiscal year ended

June 30, 2017.

Management considered the impact to current and past financial statements under the SEC's authoritative guidance on materiality and determined that the error was material, and a restatement of the prior quarter financial statements was the most appropriate recognition of the adjustment so as

not

to mislead readers of the financial statements. The following sections detail the impact of the error on the previously issued unaudited consolidated financial statements for the prior quarter.

The following adjustments were made to the

December 31, 2016

Restated Statements of Income (Unaudited):

AUTHENTIDATE HOLDING CORP

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

	As Originally									As Originally
	Reported						As Restated			Reported						As Restated
	Three Months						Three Months			Six Months						Six Months
	Ended						Ended			Ended						Ended
	Dec 31,						Dec 31,			Dec 31,						Dec 31,
	2016			Adj			2016			2016			Adj			2016
Net revenues
Fees for services	$	4,565,435		$	-		$	4,565,435		$	10,256,731		$	-		$	10,256,731
Hosted software services		311,671			-			311,671			658,605			-			658,605
Telehealth services		9,707			-			9,707			21,552			-			21,552
Total net revenues		4,886,813			-			4,886,813			10,936,888			-			10,936,888
Operating expenses
Cost of revenues		1,128,218			(176,550	)		951,668			2,295,214			(337,050	)		1,958,164
Write-down of inventory		-			-			-			237,674			-			237,674
Selling, general and administrative		4,293,640			-			4,293,640			7,875,641			-			7,875,641
Depreciation and amortization		394,484			-			394,484			803,147			-			803,147
Total operating expenses		5,816,342			(176,550	)		5,639,792			11,211,676			(337,050	)		10,874,626
Operating income (loss)		(929,529	)		176,550			(752,979	)		(274,788	)		337,050			62,262
Other (expense) income, net		529,645			-			529,645			(235,167	)		-			(235,167	)
Income (loss) before provision for income taxes		(399,884	)		176,550			(223,334	)		(509,955	)		337,050			(172,905	)
Income tax provision		45,404			-			(45,404	)		-			-			-
Net loss	$	(445,288	)	$	176,550		$	(268,738	)	$	(509,955	)	$	337,050		$	(172,905	)
less: preferred dividends	$	(100,624	)	$	-		$	(100,624	)	$	(201,248	)	$	-		$	(201,248	)
Net loss available to common shareholders	$	(545,912	)	$	176,550		$	(369,362	)	$	(711,203	)	$	337,050		$	(374,153	)
Loss per share:
Basic loss per common share	$	(0.09	)	$	0.03		$	(0.06	)	$	(0.12	)	$	0.06		$	(0.06	)
Diluted loss per common share	$	(0.09	)	$	0.03		$	(0.06	)	$	(0.12	)	$	0.06		$	(0.06	)

The followi

ng adjustments were made to the

December 31, 2016

Restated Statement of Cash Flow (Unaudited):

AUTHENTIDATE HOLDING CORP.

CONSOLIDATED STATEMENT OF CASH FLOW

	As Originally
	Reported						As Restated
	Six Months						Six Months
	Ended						Ended
	Dec 31,						Dec 31,
	2016			Adj			2016
Cash Flows from Operating Activities
Net Loss	$	(509,955	)	$	337,050		$	(172,905	)
Adjustments to reconcile net loss to cash provided by operating activities
Write off of inventory		237,674			-			237,674
Loss on debt extinguishment		-			-			-
Change in fair value of derivative liabilities		(135,601	)		-			(135,601	)
Deferred taxes		-			-			-
Depreciation and amortization		803,147			-			803,147
Share based compensation		148,476			-			148,476
Deferred rent		(4,874	)		-			(4,874	)
Changes in assets and liabilities
Accounts receivable		1,067,854			-			1,067,854
Inventory		33,413			(337,050	)		(303,637	)
Prepaid expenses and other current assets		49,696			-			49,696
Accounts payable		(1,130,583	)		-			(1,130,583	)
Accrued expenses		(465,416	)		-			(465,416	)
Accrued commissions		(72,546	)		-			(72,546	)
Deferred rent		-			-			-
Net cash provided by operating activities		21,285			-			21,285
Cash flows from investing activities
Purchases of property and equipment		(22,103	)		-			(22,103	)
Net cash used in investing activities		(22,103	)		-			(22,103	)
Cash flows from financing activities
Proceeds from note payable - related party		-			-			-
Repayment of notes payable		(1,057,811	)		-			(1,057,811	)
Net cash used in financing activities		(1,057,811	)		-			(1,057,811	)
Net decrease in cash and cash equivalents		(1,058,629	)		-			(1,058,629	)
Cash and cash equivalents beginning of year		1,414,706			-			1,414,706
Cash and cash equivalents end of year	$	356,077		$	-		$	356,077

XML

Note 4 - Inventory

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Inventory Disclosure [Text Block]

4 . Inventory

Inventory consists of the following:

	December 31,		June 30,
	2017		2017
Laboratory testing supplies	$	397,569	$	347,750
Total inventory	$	397,569	$	347,750

Purchased components of approximately

$31,000

and finished goods of

$207,000

were written down in the

six

months ended

December 31, 2016

to net realizable value.

No

inventory was written down in the

six

months ended

December 31, 2017.

XML

Note 5 - Income Taxes

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

5 . Income Taxes

The Company

's effective tax rate for the

three

and

six

months ended

December 31, 2017

was

179.5%

and

326.4%,

respectively. The unusually high tax rate for the periods was due to a deferred income tax charge of approximately

$4,493,000,

as explained below. For the

three

and

six

months ended

December 31, 2017,

the Company calculated income tax expense based upon an annual effective tax rate forecast adjusted for discrete items that specifically relate to the interim period. Changes in tax laws or rates on deferred tax assets and liabilities are recognized as discrete items in the interim period that includes the enactment date. The differences between the effective tax rate and the U.S. federal statutory tax rate of

35%

principally resulted from state and local taxes, graduated federal tax rate reductions, changes in the valuation allowance, non-deductible expenses, and discrete items for the interim period.

On

December 22, 2017,

the U.S. President signed the Tax Cuts and Jobs Act of

2017

(the "Act"). Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic

740,

Income Taxes ("ASC

740"

) requires that the effects of changes in tax laws or tax rates be recognized in the financial statements in the period in which such changes were enacted. During the

three

months ended

December 31, 2017,

the Company incurred a deferred income tax charge of approximately

$4.5

million due to the write-down of deferred tax assets related to the reduction of the corporate income tax rate per the Act.

At

December 31, 2017,

the Company had a net deferred tax asset of approximately

$7,357,000.

Management has considered the realizability of the deferred tax assets and has concluded that a valuation allowance of approximately

$31,291,000

should be recorded, related to net operating loss carryforwards that are

not

anticipated to be realized. Management determined that a valuation allowance was required with respect to the remaining net deferred tax assets. Realization of these assets is primarily dependent on achieving the forecast of future taxable income, as well as prudent and feasible tax planning strategies.

XML

Note 6 - Related Party Notes Payable

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Short-term Debt [Text Block]

6 . Related Party Notes Payable

	December 31, 2017				June 30, 2017
	Note		Interest rate		Note		Interest rate
	Payable		per annum		Payable		per annum
Secured				Secured
	$	1,056,875	5% interest paid annually		$	1,056,875	5% interest paid annually
		641,294	5% interest paid annually			641,294	5% interest paid annually
		255,417	5% interest paid annually			255,417	5% interest paid annually
		591,613	5% interest paid annually			591,613	5% interest paid annually
Total	$	2,545,199		Total	$	2,545,199

Secured

At

June 30, 2016,

the Company had outstanding a convertible note payable in the aggregate principal amount of

$950,000.

The note was convertible into shares of common stock at an initial conversion price of

$2.25

per share, subject to adjustment. This note had a maturity date of

December 17, 2016.

Based on the initial conversion price, the note was convertible into up to

422,222

shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that is less than the conversion price then in effect, such conversion price would be decreased to equal

85%

of such lower price. This note accrued interest at

9%

 per annum with interest payable upon maturity or on any earlier redemption date. As described in greater detail below under the caption "Exchange Transaction", on

March 20, 2017,

this note was exchanged for a new promissory note in the aggregate principal amount of

$1,056,875.

The new note matures

twelve

months following such extension date and interest accrues on the principal amount of the new note at the rate of

5%

per annum. The new note is secured by a lien on all the Company's assets and is convertible at the initial conversion price of

$2.03

per share.

At

June 30, 2016,

the Company had outstanding a promissory note in the aggregate principal amount of

$320,000.

The note was due and payable on

April

 

15,

2016

and interest accrued on the note at the rate of

10%

 per annum. The note was secured by a

first

priority lien on certain of the Company's assets, as described in a security agreement entered between the Company and the purchaser. The note was convertible into shares of common stock of the Company at an initial conversion price of

$4.86

per share. The note was issued to an affiliate of J. David Luce, a former member of the board of directors. On

September 1, 2016,

the Company entered into an amendment agreement which extended the maturity date to

December 1, 2016

at an interest rate of

5%

per annum. In consideration for such agreement, the Company agreed that the note would be further modified so that it would be convertible into shares of common stock of the Company at a conversion price of

$3.00

per share, which was equal to the most recent closing bid price of the Company's common stock immediately prior to the execution of the amendment agreement. Based on the modified conversion price, the principal amount of the note was convertible into

106,667

shares of common stock. As described in greater detail below under the caption "Exchange Transaction," on

March 20, 2017,

this note was combined with the

$200,000

unsecured note held by the same entity and was exchanged for a new promissory note in the aggregate principal amount of

$641,294.

The new note matures

twelve

months following such extension date and interest accrues on the principal amount of the new note at the rate of

5%

per annum. The new note is secured by a lien on all of the Company's assets and is convertible at the initial conversion price of

$2.03

per share.

Unsecured

At

June 30, 2016,

the Company had outstanding a promissory note in the aggregate principal amount of

$200,000,

held by an entity affiliated with J. David Luce, a former member of the board of directors. The notes accrued interest at the rate of

20%

 per annum, payable in arrears, and was due upon the earlier of (i) 

August 

26,

2016,

or (ii) the closing of a sale of equity or debt securities of the Company, or series of closings, as part of the same transaction, of equity or debt securities within a period of

90

days in the gross amount of at least

$5,000,000

in cash proceeds. On

September 1, 2016,

the note was amended to extend the maturity date to

December 1, 2016

and to allow the investor to elect to further extend the note for an additional

90

days. In consideration for such agreements, the Company agreed that the promissory note would be further modified so that it would be convertible into shares of common stock of the Company at an initial conversion price of

$3.00

per share, which was equal to the most recent consolidated closing bid price of the Company's common stock immediately prior to the execution of the amendment agreement. Based on the conversion price, the principal amount of the note was convertible into up to

173,333

shares of common stock. In

March 2017,

this note was combined with the

$320,000

secured note held by the same entity and exchanged for a new promissory note in the aggregate

principal amount of

$641,294.

The new note matures

twelve

months following such extension date and interest accrues on the principal amount of the new note at the rate of

5%

per annum. The new note is secured by a lien on all of the Company

's assets and is convertible at the initial conversion price of

$2.03

per share. Additional terms and conditions of the new note are described in greater below under the caption "Exchange Transaction".

At

June 30, 2016,

the Company had a promissory note in the aggregate principal amount of

$450,000

to Optimum Ventures, LLC, a related party of Peachstate Health Management, LLC, through common ownership. The note was unsecured and was

not

convertible into equity securities of the Company. The note accrued interest at the rate of

20%

 per annum, payable in arrears, and was due upon the earlier of (i) 

October 

28,

2016,

or (ii) within

30

days of the closing of a sale of equity or debt securities of the Company, or series of closings, as part of the same transaction, of equity or debt securities within a period of

90

days, in the gross amount of at least

$5,000,000

in cash proceeds. As described in greater detail below under the caption "Exchange Transaction", on

March 20, 2017,

this note was exchanged for a new promissory note in the aggregate principal amount of

$591,613.

The new note matures

twelve

months following such extension date and interest accrues on the principal amount of the new note at the rate of

5%

per annum. The new note is secured by a lien on all of the Company's assets and is convertible at the initial conversion price of

$2.03

per share.

Effective as of

January 31, 2017,

the Company accepted a short-term loan in the aggregate principal amount of

$250,000

from Hanif A. Roshan, the Company

's Chief Executive Officer and Chairman of the Board. To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of

$250,000.

The Note was an unsecured obligation of the Company and was

not

convertible into equity securities of the Company. The Note was due and payable on the

30

-day anniversary of the issue date and interest accrued on the Note at the rate of

12%

 per annum. The Note was exchanged for a new secured convertible note in the exchange transaction described below under the caption "Exchange Transaction".

Exchange Transaction

On

March 20, 2017,

the Company entered into a note exchange agreement with the holders of an aggregate principal amount of

$2,170,000

of

outstanding promissory notes (the "Original Notes"), which were due and payable, pursuant to which the Company agreed to issue the holders of such notes, in consideration of the cancellation of the Original Notes, new promissory notes in the aggregate principal amount of

$2,545,199,

which is equal to the sum of the aggregate principal amount of the Original Notes plus the accrued but unpaid interest on the Original Notes (the "New Notes"). The New Notes are convertible into shares of the Company's common stock at an initial conversion price of

$2.03

per share. Based on the initial conversion prices, the New Notes will be convertible into up to

1,253,792

shares of common stock. If the Company issues or sells shares of its common stock, rights to purchase shares of its common stock, or securities convertible into shares of its common stock for a price per share that is less than the conversion price then in effect, such conversion price will be decreased to equal

85%

of such lower price. The foregoing adjustments to the conversion price will

not

apply to certain exempt issuances, including issuances pursuant to certain employee benefit plans. The conversion price is also subject to adjustment upon stock splits, reverse stock splits, and similar capital changes. These conversion options resulted in a derivative liability valued at

$328,422.

All the New Notes have a maturity date of

one

year from the closing date. The New Notes were issued in consideration of the exchange of (i) an aggregate principal amount of

$950,000

of Original Notes convertible at a price of

$2.25

per share, (ii) an aggregate principal amount of

$520,000

of Original Notes convertible at a price of

$3.00

per share, and (iii) an aggregate principal amount of

$700,000

of unconvertible Original Notes.

During the year ended

June 30, 2017,

in connection with the exchange of the Original Notes for the New Notes,

the Company also agreed with the holder of all outstanding shares of Series B Convertible Preferred Stock (the "Series B Preferred Stock") to exchange all of its outstanding shares of Series B Preferred Stock for shares of a new series of convertible preferred stock designated as Series E Convertible Preferred Stock (the "Series E Preferred Stock"). Accordingly, on

March 20, 2017,

the Company also entered into a separate exchange agreement with the holder of the shares of Series B Preferred Stock, to exchange such shares for a total of

25,000

shares of Series E Preferred Stock. Each share of Series E Preferred Stock will have a stated value of

$30.00

per share. Pursuant to this exchange agreement, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock. The shares of Series E Preferred Stock are initially convertible by the holder into an aggregate of

187,500

shares of common stock at the initial conversion rate of

$4.00

per share. The conversion price of the new preferred stock is subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events. The right of holders of Series E Preferred Stock to convert these securities into common stock is subject to a

4.99%

beneficial ownership limitation, which beneficial ownership limitation

may

be increased by a holder to a greater percentage

not

more than

9.99%

after providing notice to the Company.

The New Notes bear interest at the rate of

5%

per annum with interest payable upon maturity, the conversion of the New Notes or on any earlier

redemption date. Beginning

one

month after the Company's common stock is listed for trading on a national securities exchange, and Company will have the right to redeem all or any portion of the outstanding principal balance of the New Notes, plus all accrued but unpaid interest at a price equal to

110%

of such amount. The holders of the New Notes shall have the right to convert any or the entire amount to be redeemed into common stock prior to redemption. Subject to certain exceptions, the New Notes contain customary covenants against incurring additional indebtedness and granting additional liens and contain customary event default. Upon the occurrence of an event of default under the New Notes, the holders

may

require the Company to repay all or a portion of the note in cash, at a price equal to

110%

of the principal, plus accrued and unpaid interest.

Loss on Extinguishment of Debt

In accordance with ASC

470

-

50,

"

Debt - Modifications and Extinguishments

", the Company's note exchange agreement was tested to determine whether a debt modification or debt extinguishment had occurred. Based on management's review, debt extinguishment accounting applied. A loss on extinguishment of

$258,037

resulted from the exchange, and was recorded in fiscal year

2017.

The loss consists of the resulting derivative liability of

$328,422

from embedded conversion options in the New Notes and the additional value of

$50,000

of the Series E Preferred Stock compared to the Series B Preferred Stock, offset by the waiving of the unpaid Preferred Series B dividends of

$120,385.

No

expense was yet incurred in fiscal year

2018.

XML

Note 7 - Equity

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

7 . Equity

Preferred Stock

As of

December 31, 2017,

there were

25,000

shares of Series E Convertible Preferred Stock outstanding. The shares of Series E Preferred Stock are initially convertible into an aggregate of

187,500

shares of common stock at the initial conversion rate of

$4.00

per share. The conversion price of the Series E Preferred Stock will be subject to adjustment solely in the event of stock dividends, combinations, splits, recapitalizations, and similar corporate events and does

not

provide for general price-based anti-dilution adjustments. Each share of Series E Preferred Stock has a stated value of

$30.00

per share and has the following rights and preferences: (i) each holder of the Series E Preferred Stock has the right, at any time, to convert the shares of Series E Preferred Stock into shares of common stock, (ii) the Series E Preferred Stock is redeemable at the Company's option commencing

one

year after the original issuance date, provided that the Company's common stock is listed on a national securities exchange at such time, and (iii) the Series E Preferred Stock will pay dividends at the rate of

5%

per annum in cash. The shares of Series E Preferred Stock were issued in a transaction with the holder of the Company's previously outstanding shares of Series B Preferred Stock to exchange the shares of Series B Preferred Stock for the shares of Series E Preferred Stock. Pursuant to the exchange agreement for the preferred stock, the holder of the shares of Series B Preferred Stock agreed to waive all unpaid dividends that had accrued on the shares of Series B Preferred Stock. At

December 31, 2017,

the Company has accrued dividends of approximately

$29,000

on the Series E Preferred Stock which remain unpaid

.

As of

December 31, 2017,

there are

605,000

shares of Series D Convertible Preferred Stock outstanding. The Series D Preferred Stock can be converted by the holders into an aggregate of

619,154

shares of common stock at an initial conversion rate of

$9.77139

per share. The holders of such shares have the right to convert the preferred shares at any time, although the shares received upon conversion

may

not

be offered or sold except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. The Company has the right to repurchase the outstanding Series D Preferred Stock at a redemption price equal to

$10.00

per share, plus accrued and unpaid dividends, and to require holders to convert their Series D Preferred Stock beginning in

June 2016.

Dividends on the Series D Preferred Stock accrue at a rate of

5%

per annum and are payable semi-annually in cash or stock at the Company's option. At

December 31, 2017,

the Company has accrued dividends in the amount of approximately

$787,000

on the Series D Preferred Stock, which remain unpaid. 

The Company

's preferred stock takes precedence over Common Stock but ranks below debt in the event of liquidation. In addition, the Series D Convertible Preferred Stock ranks above the Series E Convertible Preferred Stock.

Earnings

per

Share

FASB ASC Topic

260,

Earnings

per

Share

, requires the presentation of basic and diluted earnings per share. Basic earnings per share is calculated based on the weighted-average number of ordinary shares outstanding during the period, while diluted earnings per share is calculated to include any dilutive effects to ordinary shares. For the

three

and

six

months ended

December 31, 2017,

our ordinary share equivalents consisted of stock options, restricted stock units, convertible debt, preferred stock and warrants.

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2017			2016			2017			2016
Basic earnings (loss) per share
Net loss	$	(2,983,867	)	$	(268,738	)	$	(4,110,390	)	$	(172,905	)
Preferred stock dividends		(85,699	)		(100,624	)		(170,249	)		(201,248	)
Net loss available to common shareholders after preferred stock dividends	$	(3,069,566	)	$	(369,362	)	$	(4,280,639	)	$	(374,153	)
Weighted average shares used in the computation of basic earning per share		7,249,370			6,015,053			7,249,370			5,893,655
Loss per share - basic	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Dilutive earnings (loss) per share
Loss available to common shareholders	$	(3,069,566	)	$	(369,362	)	$	(4,280,639	)	$	(374,153	)
Weighted average shares used in the computation of diluted earnings per share		7,249,370			6,015,053			7,249,370			5,893,655
Dilutive effect of options, warrants, convertible debt and convertible preferred stock		-			-			-			-
Shares used in the computation of diluted earnings (loss) per share		7,249,370			6,015,053			7,249,370			5,893,655
Loss per share - diluted	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Anti-Dilutive Options Excluded		1,253,793			5,354,203			1,253,793			5,354,203

Common Stock Warrants

A schedule of common stock warrant activity

for the

six

months ended

December 31, 2017

is as follows:

Warrant Activity	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		4,150,535		$	4.67		3.87	$	42,582
Issued		-
Expired		(25,000	)	$	12.06		-
Outstanding December 31, 2017		4,125,535		$	4.62		2.89	$	-
Exercisable, December 31, 2017		4,069,979		$	4.18		2.79	$	-

XML

Note 8 - Share-based Compensation

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

  8 . Share-Based Compensation

Stock option activity under the Company

's stock option plans for employees and non-executive directors for the

six

months ended

December 31, 2017

is as follows:

Employee Option Activity	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		226,902			9.04		6.34	$	-
Granted		50,000			2.00		9.70		-
Expired/Forfeited		(11,556	)		23.40		23.40
Outstanding December 31, 2017		265,346			7.08		7.04	$	-
Exercisable December 31, 2017		143,917			11.50		4.94	$	-

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Non-Executive Option Activity	Options			Price		Life (Years)		Value
Outstanding June 30, 2017		602,311			3.57		6.11	$	-
Granted		45,555			1.59		9.74		-
Expired/forfeited		(35,901	)		4.01		-		-
Outstanding and exercisable December 31, 2017		611,965			3.40		7.35	$	-

No

options were granted to the Company

's non-employee directors as of

December 31, 2017

as each director that would have received such options as of such date under the Company's Non-Employee Director Compensation Policy waived the receipt of such compensation for the quarter ended

December 31, 2017.

Restricted

stock unit activity under the Company's restricted stock unit plans for employees and non-executive directors for the

six

months ended

December 31, 2017

is as follows:

	Number of RSUs		Weighted Average Grant Date Fair Value
Outstanding June 30, 2017		411,429	$	1.75
Granted		120,000		0.74
Expired/Forfeited		-
Outstanding December 31, 2017		531,429	$	1.54

XML

Note 9 - Fair Value Measurements and Other Financial Instruments

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9 . Fair Value Measurements and Other Financial Instruments

The carrying amounts of the Company

's financial assets and liabilities, such as cash, accounts receivable, inventory, prepaid expenses, and other current assets, accounts payable and accrued expenses approximate their fair values because of the short maturity of these instruments.

I

n connection with the issuance of a convertible promissory note as discussed in Note

6,

the Company evaluated the note agreement to determine if the agreement contained any embedded components that would qualify the agreement as a derivative. The Company identified certain put features embedded in the convertible note agreement that potentially could result in a settlement in the event of a fundamental transaction, requiring the Company to classify the conversion feature as a derivative liability.

The Company

's Level

3

financial liabilities consist of the derivative conversion features of underlying convertible debt and warrants issued in

2011

to

2015.

The Company valued the conversion features using the Black Scholes model prior to the

three

months ended

September 30, 2016

and the Monte Carlo model for all periods thereafter. These models incorporate transaction details such as the Company's stock price, contractual terms maturity, risk free rates and volatility as of the date of issuance and each balance sheet date. The decrease in the value of the conversion feature of the convertible debt and warrants issued was primarily due to the decrease in the stock price during

2017

compared with prior years.

The Company utilized the following assumptions in valuing the derivative conversion features:

Exercise Price	$2.03	-	$2.07
Risk free interest rate	1.38%	-	2.21%
Expected volatility	100%	-	160%
Remaining Term (years)	0.22	-	5.57

Fair Value of Financial Assets and Liabilities Measured on a Recurring Basis

The fair value of AHC financial instruments, using the fair value hierarchy under U.S. GAAP detailed in "Fair Value Measurements" in Note

2,

"Summary of Significant Accounting Policies and Recently Issued Accounting Standards," of the Notes to the Condensed Consolidated Financial Statements are included in the tables below.

The Company uses Level

3

of the fair value hierarchy to measure the fair value of the derivative liabilities and revalues its derivative liabilities at every reporting period and recognizes gains and losses in the statement of operations that are attributable to the change in the fair value of the derivative liabilities.

The following tables provide a summary of the changes in fair value, including net transfers in and/or out, of all financial assets/ (liabilities) measured at the fair value on a recurring basis using significant unobservable inputs during the

six

months ended

December 31, 2017.

				Convertible
	Warrants			Notes			Total
Balance - June 30, 2017	$	435,036		$	116,004		$	551,040
Change in fair value of derivative liabilities		(254,553	)		(111,311	)		(365,864	)
Balance - December 31, 2017	$	180,483		$	4,693		$	185,176

	Fair
	Value		Level 1		Level 2		Level 3
June 30, 2017 derivative liabilities	$	551,040	$	-	$	-	$	551,040
December 31, 2017 derivative liabilities	$	185,176	$	-	$	-	$	185,176

Derivative Instruments

For the

three

and

six

months ended

December 31, 2017

and

2016,

the Company recorded non-cash income of approximately

$293,000

and

$366,000,

compared to income of

$622,000

and

$136,000

for the prior year periods in other (expense) income for the changes in fair value of the derivative liabilities.

XML

Note 10 - Commitments and Contingencies

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

10 . Commitments and Contingencies

A

complaint was filed by a former independent contractor in the State of Louisiana who was involved in the sales and marketing of the Company's products and services. The caption of the case is

Medlogic, LLC and Malena F. Badon

v.

Peachstate Health Management, LLC., Pyarali Roy, and Universal

Billing Systems, LLC

. Plaintiff alleges certain commissions had

not

been paid in full. The Company believes the contractor was overpaid and has asserted a counter claim for reimbursement of such overpayments. The Company intends to vigorously defend the claim and pursue the counter claim. The parties have completed initial discovery and the matter remains pending. The Company believes the resolution of this matter will

not

have a material effect on its financial statements.

Regarding the termination of the Company

's employment relationship with certain executives, including the former Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") of AHC, the Company has been reviewing its severance obligations to them and the vesting of other post-termination provisions. The Company believes that it has accrued all related severance costs as of

December 31, 2017

related to the past terminations. 

The former CEO of AHC commenced arbitration proceedings against AHC before the American Arbitration Association ("AAA"). A demand for arbitration was filed with the AAA on or about

June 22, 2016

by O

'Connell Benjamin, requesting payment of severance compensation of

$341,620

and other benefits, including the vesting of certain stock option awards, pursuant to an employment agreement. The parties opted to pursue mediation in their attempt to resolve the matter, and a mediation session was held on

October 30, 2017,

but

no

resolution was reached. The Company believes that it has valid defenses to Mr. Benjamin's claims and intends to defend this matter accordingly as the arbitration process ensues.

The Company is a defendant in an action captioned

Cogmedix, Inc. v. Authentidate Holding Corp.

in the Superior Court of Worcester County, Commonwealth of Massachusetts, Case

No.

1685CV01318B.

Suit was filed on

September 6, 2016

alleging the principal amount of

$227,061,

and accumulating interest and attorney fees remain outstanding on a purchase order dated

December 6, 2013.

Management believes that this matter will

not

have a material adverse effect on financial position, results of operations, or cash flows. Nevertheless, this matter is the subject of further negotiations.

On

August 24, 2017,

the Company commenced suit against Mr. Richard G. Hersperger, a former company director and officer, to recover

38,321

shares of common stock and to obtain declaratory relief terminating all further obligations to Mr. Hersperger. The case was filed in the Superior Court of Hall Country, State of Georgia under the caption

 

Authentidate Holding Corp. and Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Richard G. Hersperger, 

Case

No.

2017

-CV-

1686

-B. The complaint also sought damages based on common law fraud and breach of fiduciary duty. Mr. Hersperger threatened to commence litigation against us and certain of our directors. In

December 2017,

the Company entered into a settlement agreement and release with Mr. Hersperger to resolve the dispute. Pursuant to the settlement agreement and release, and in consideration of the general release of claims provided by the former CEO and his agreement to dispose of the shares previously issued to him to a designated

third

party, the Company agreed to pay an amount of

$15,000

to the former CEO and dismiss the above-referenced proceeding it had commenced against him. The Company also agreed to provide a general release to the former CEO.

On

May 3, 2017,

the Company received notice from the Office for Civil Rights ("OCR") of the U.S. Department of Health and Human Services ("HHS") informing the Company that the OCR is conducting a review of the Company

's compliance with applicable Federal Standards for Privacy of Individually Identifiable Health Information and/or Security Standards for the Protection of Electronic Protected Health Information. The OCR is the division of HHS charged with enforcing the Health Insurance Portability and Accountability Act of

1996,

as amended ("HIPAA"), and the privacy, security and data breach rules which implement HIPAA ("HIPAA Rules"). The OCR compliance review covers both the Company's telehealth business and its clinical laboratory operations. The OCR reviewed the Company's premises and conducted interviews on

May 23, 2017

and the Company continues to work on a resolution with the OCR. The OCR

may,

among other things, require a corrective action, issue penalties, or reach a monetary settlement. The Company does

not

expect a material adverse determination on its consolidated financial position, results of operations and cash flows.

The Company is the plaintiff in a case captioned

Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Radius Foundation, Inc. and William Bramlett,

Ph.D.

,

filed on

June 13, 2017

in the State Court of Hall County, State of Georgia. On

October 10, 2017,

Plaintiff filed a motion for default judgment requesting an order of judgment in the principal amount of

$116,650.

The Court has since requested additional information from the Company relating to details of the parties' business relationship which the Company is in the process of providing in order to secure an Order for Default Judgment.

The Company is the plaintiff in a case captioned

Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Trimana, LLC d/b/a Via Medical Center

filed on

April 29, 2016

in the State Court of Hall County, State of Georgia. Service of the Summons and Complaint was perfected upon the Defendant on

October 11, 2017,

and an Answer was due to be filed by the Defendant on or before

November 10, 2017.

No

Answer was filed by the defendant, however, and the Company will be seeking a default judgement in the amount of

$104,442

along with interest and attorney fees.

The Company

, along with its chief executive officer and certain unnamed persons, are defendants in a case captioned

Carlotta Miraflor v. Peachstate Health Management, LLC d/b/a Aeon Global Health, et al.

, filed on

October 4, 2016

in the United States District Court for the Central District of California. Service of the Summons and Complaint was made on

January 3, 2018

and the Company has

not

yet filed its answer to the complaint.

The plaintiff was an independent contractor which provided marketing services to the Company pursuant to a services agreement.

The complaint alleges harassment, retaliation, wrongful termination, assault, and other claims. The lawsuit was preceded by a Dismissal and Notice of Rights by the U.S. Equal Employment Opportunity Commission in

July 2017

on the basis that the plaintiff has been identified as an independent contractor, notwithstanding that the plaintiff alleged that the Company was the employer of the plaintiff. The lawsuit now seeks an injunction enjoining the Company from classifying its sales and marketing personnel as independent contractors and unspecified compensatory damages of at least

$75,000

for plaintiff's alleged loss of earnings, emotional distress, punitive damages, and attorneys' fees and costs. The Company disputes that it was an employer of the plaintiff, believes that it has strong defenses to plaintiff's allegations and intends to vigorously defend the litigation. Management is unable to determine at this time whether this claim will have a material adverse impact on the Company's financial condition, results of operations or cash flow.

The Company is also subject to claims and litigation arising in the ordinary course of business. Management considers that any liability from any reasonably foreseeable disposition of such claims and litigation, individually or in the aggregate, would

not

have a material adverse effect on the consolidated financial position, results of operations or cash flows.

The Company has entered into various agreements by which it

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 the Company under such indemnification clauses are generally conditioned on the other party making a claim. Such claims are generally subject to challenge by the Company and to dispute resolution procedures specified in the particular contract. Further, obligations under these arrangements

may

be limited in terms of time and/or amount and, the Company

may

have recourse against

third

parties for certain payments made by the Company. It is

not

possible to predict the maximum potential amount of future payments under these indemnification agreements due to their conditional nature 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

December 31, 2017,

the Company is

not

aware of any obligations under such indemnification agreements that would require material payments.

XML

Note 11 - Related Party Transactions

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

11 . Related Party Transactions

Except as disclosed herein, the Company has

not

entered into any material transactions or series of similar transactions with any director, executive officer or any security holder owning

5%

or more of common stock since

July 1, 2016.

AEON leases its facilities from Centennial Properties of Georgia, LLC under a lease agreement commencing

April 2014,

as amended

January 20, 2016.

The lease provides for a term of

12

years expiring

March

2026.

The lease payments range from

$46,500

to a maximum of

$60,000.

In connection with the lease agreement, as security for its rent and other obligations under the lease, AEON has provided to the landlord a

first

priority lien and security interest in substantially all its assets. The landlord under the lease is Centennial Properties of Georgia, LLC a Georgia limited liability company. Centennial is owned by Sonny Roshan, Shawn Desai, Pyarali Roy and Sohail Ali, all of whom were AEON members and received common stock in Authentidate as a result of the Acquisition. Mr. Roshan serves as the Chairman and CEO of Authentidate. Mr. Desai is the Chief Technology Officer of AEON. Mr. Roy is the Chief Strategy Officer of AEON. Related party rent expense for the

three

and

six

months ending

December 31, 2017

and

2016

was

$144,000

and

$288,000,

and

$140,000

and

$279,000,

respectively.

The Company holds certain related part

y notes payable with shareholders and affiliates of board members of the Company, as detailed in Note

6.

Interest expense relating to these notes amounted to approximately

$32,000

and

$64,000,

and

$92,000

and

$203,000

for the

three

and

six

months ended

December 31, 2017

and

2016,

respectively.

Effective as of

January 31, 2017,

the Company accepted a short-term loan in the aggregate principal amount of

$250,000

from Hanif A. Roshan, the Company

's Chief Executive Officer and Chairman of the Board. To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of

$250,000.

The Note was an unsecured obligation of the Company, and was

not

convertible into equity securities of the Company. The Note was due and payable on the

30

-day anniversary of the issue date and interest accrued on the Note at the rate of

12%

annum. The Note was exchanged for a new secured convertible note in the exchange transaction described above in Note

6

under the caption "Exchange Transaction".

AHC entered into a lease agreement with Hanif A. ("Sonny") Roshan (the "landlord") for a residential premises at

5455

Golf View Drive, Braselton, Georgia

30517

for a term of

one

year beginning on

January 1, 2017

and ending on

December 31, 2017

for a fixed rent in monthly installments of

$7,500

due and payable by the

first

day of each month. The lease is renewable with a

3%

increase in rent for each renewal. The tenant is responsible for utilities and insurance with the landlord responsible for maintenance and taxes on the premises.

Rent expense was

$22,500

and

$45,000

for the

three

and

six

months ended

December 31, 2017.

XML

Note 12 - Segment Information

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

  1 2 . Segment Information

The Compa

ny is operated as

two

segments: laboratory testing services (AEON), and web-based software (AHC). Laboratory testing services includes the testing of an individual's blood, urine or saliva for the presence of drugs or chemicals and the patient's DNA profile. Web-based software provides secure web-based revenue cycle management applications and telehealth products and services that enable healthcare organizations to increase revenues, improve productivity, reduce costs, coordinate care for patients and enhance related administrative and clinical workflows and compliance with regulatory requirements. Management currently runs each segment separately and measures profitability and operational performance based on the financial statements, which are independently maintained.

Selected financial information related to the

Company's segments is presented below:

	Authentidate			AEON			Total
Three Months ended December 31, 2017
Net revenues	$	253,180		$	5,278,042		$	5,531,222
Cost of revenues		64,978			823,564			888,541
Operating expenses		335,067			3,818,194			4,153,261
Operating loss		(81,887	)		1,459,848			1,377,961
Six Months ended December 31, 2017
Net revenues	$	500,850		$	8,388,424		$	8,889,274
Cost of revenues		120,106			1,897,012			2,017,117
Operating expenses		1,208,452			7,437,181			8,645,633
Operating loss		(707,602	)		951,243			243,641
Three Months Ended December 31, 2016
Net revenues	$	321,378		$	4,565,435		$	4,886,813
Cost of revenues		55,325			896,343			951,668
Operating expenses		1,320,216			4,319,576			5,639,792
Operating loss		(160,596	)		(592,383	)		(752,979	)
Six Months ended December 31, 2016
Net revenues	$	680,157		$	10,256,731		$	10,936,888
Cost of revenues		356,783			1,839,055			2,195,838
Operating expenses		2,764,971			8,109,655			10,874,626
Operating income (loss)		(143,361	)		205,623			62,262
December 31, 2017
Total assets	$	7,474,180		$	4,934,988.74		$	12,409,168
June 30, 2017
Total assets	$	11,772,874		$	4,958,804		$	16,731,678

XML

Note 13 - Subsequent Events

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Subsequent Events [Text Block]

13. Subsequent Events

On

January 4, 2018,

the Company entered into a Consulting Agreement with Dr. Armando Moncada, M.D. ("Moncada") pursuant to which the Company engaged Moncada to act as it Chief Medical Officer - Pathology and to provide certain consulting services in connection with the operating of the Company's pathology laboratory, as specified in the Consulting Agreement, which expires

December 31, 2020;

however, it

may

be terminated sooner by either party upon

30

day's prior written notice. In the event that the Consulting Agreement is terminated by the Company without cause, or by the Consultant due to a breach by the Company, the Consultant will be entitled to receive all fees earned through the date of termination, plus the Company shall pay the Consultant the applicable consulting fee for

one

additional month. Pursuant to the Consulting Agreement, the Company agreed to pay the Consultant the following consulting fees: (i) an amount of

$40,000

upon the execution of the agreement, (ii) the sum of

$25,000

per month, commencing

February 1, 2018,

and (iii) an additional sum of

$40,000

on or about

January 15, 2019

and

January 15, 2020.

Further, the Company agreed to grant the Consultant

280,000

restricted stock units ("

RSUs

") pursuant to its

2011

Omnibus Equity Incentive Plan (the "

Plan

"), which RSUs will vest in the event that the Consultant remains engaged by the Company to the end of the term of the Consulting Agreement and upon the achievement of certain performance criteria, subject to the approval of the Company's shareholders of an amendment to the Plan to increase the number of shares of common stock available for awards to be issued thereunder. In addition, pursuant to the Consulting Agreement, Moncada agreed to transfer and assign to the Company, in his personal capacity as well as in his capacity as a controlling member and/or officer of PCG Molecular, LLC and Pathology Consultants of Georgia, Inc., all rights to the intellectual property of such entities, whether trademarks, patents, patent applications, service marks. The completion of the transaction to acquire the foregoing intellectual property rights is subject to the negotiation and execution of a definitive assignment agreement and other customary closing conditions. Accordingly, there can be

no

assurance that a definitive agreement will be reached by the parties.

On

January 23, 2018

, the Company accepted a short-term loan in the aggregate principal amount of

$500,000

from Hanif A. Roshan, the Company's Chief Executive Officer and Chairman of the Board. To evidence the loan, the Company issued Mr. Roshan a promissory note (the "Note") in the aggregate principal amount of

$500,000.

The Note is an unsecured obligation of the Company and is

not

convertible into equity securities of the Company. The Note is due and payable on

April 23, 2018

and interest will accrue on the Note at the rate of

5%

 per annum. In addition, the Note also provides the holder with the right to exchange the principal amount of the Note (and unpaid interest thereon) into securities of the Company that it

may

issue in the next financing, as defined in the Note. The Note contains terms and events of default customary for similar transactions. The Company is using the net proceeds from the transaction for general business and working capital purposes.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation

The Company

's condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These interim financial statements have been prepared on the same basis as the Company's annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company's financial information. These interim results are

not

necessarily indicative of the results to be expected for the year ending

June 30, 2018

or any other interim period or for any other future year. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto for the year ended

June 30, 2017,

included in the Company's

2017

Annual Report on Form

10

-K filed with the SEC.

The balance sheet as of

June 30, 2017

has been derived from audited financial statements at that date but does

not

include all of the information required by U.S. GAAP for complete financia

l statements.

Consolidation, Policy [Policy Text Block]

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates, Policy [Policy Text Block]

Use of Esti

mates

The preparation of

condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

The most sensitive accounting estimates affecting the financial statements are revenue recognition, the allowance for doubtful accounts, depreciation of long-lived assets, fair value of intangible assets and goodwill, amortization of intangible assets, income taxes and associated deferrals and valuation allowances, commitments and contingencies and measurement of derivative liabilities.

Trade and Other Accounts Receivable, Policy [Policy Text Block]

Accounts

R

eceivable, Net

Accounts receivable represent customer obligations due under normal trade terms, net of allowance for doubtful accounts.

The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience and other currently available evidence. The allowance for doubtful accounts was approximately

$887,000

and

$923,000

as of

December 31, 2017

and

June 30, 2017,

respectively.

Fair Value Measurement, Policy [Policy Text Block]

Fair

Value Measurements

The Company follows ASC

820

-

10,

"Fair Value Measurements and Disclosures"

, of the FASB to measure the fair value of its financial statements and disclosures about fair value of its financial instruments. ASC

820

-

10

establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC

820

-

10

establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into

three

broad levels. The

three

levels of fair value hierarchy defined by ASC

820

-

10

are described below:

Level  1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 Pricing inputs that are generally unobservable input and not corroborated by market data.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lower priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than

one

level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument. The Company's warrant liabilities and certain conversion features underlying the convertible debt are categorized as Level

3.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

The Company provides laboratory testing services, web-based hosted so

ftware services, telehealth products and post contract customer support services.

In accordance with Financial Accounting Standards Board ("

FASB") Accounting Standards Codification ("ASC") ASC-

605

"Revenue Recognition"

, the Company recognizes revenues when there is a persuasive evidence of an arrangement, title and risk of loss have passed, product is shipped or services have been rendered, sales price is fixed or determinable and collection of the related receivable is reasonably assured. Billings for laboratory testing services are reimbursed by

third

-party payors net of allowances for differences between amounts billed and the cash receipts.

Revenue from laboratory testing services are recognized at the time test results are delivered, net of estimat

ed contractual allowances. Third-party reimbursement revenue is estimated based on cash received over a

12

-month period.

Revenue for hosted software services, telehealth products, and customer support services are recognized when persuasive evidence of

an arrangement exists, delivery has occurred, the selling price is fixed and collectability is reasonably assured. Multiple-element arrangements are assessed to determine whether they can be separated into more than

one

unit of accounting. A multiple-element arrangement is separated into more than

one

unit of accounting if all the following criteria are met: (i) the delivered item has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of the undelivered items in the arrangement; (iii) if the arrangement includes a general right of return relative to the delivered items; (iv) and delivery or performance of the undelivered item is considered probable and substantially in the Company's control. If these criteria are

not

met, then revenue is deferred until such criteria are met or until the period over which the last undelivered element is delivered, which is typically the life of the contract agreement. If these criteria are met, we allocate total revenue among the elements based on the sales price of each element when sold separately which is referred to as vendor specific objective evidence or VSOE.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risk

The Company maintains its cash in bank deposit acco

unts which, at times,

may

exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to certain limits. At

December 31, 2017

and

June 30, 2017,

the Company had approximately

$119,000

and

$871,000

in excess of FDIC-insured limits. The Company has

not

experienced any losses in such accounts.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for

the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in tax laws or rates. The effect on deferred tax assets and liabilities of a change in tax rates will be recognized as income or expense in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized.

Management considers the likelihood of changes by taxing authorities in its filed income tax returns and recognizes a liability for or discloses potential changes that management believes are more

likely than

not

to occur upon examination by tax authorities. Management has

not

identified any uncertain tax positions that require recognition or disclosure in the accompanying consolidated financial statements.

Reclassification, Policy [Policy Text Block]

Reclassification

Certain prior year amounts have been reclassified to conform to the current year presentation.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In

May 2014,

the FASB issued Accounting Standards Update ("ASU")

2014

-

09,

"Revenue from Contracts with Customers"

(Topic

606

) ("ASU

2014

-

09"

), which affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards. Under ASU

2014

-

09,

an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU must be applied for annual periods beginning after

December 15, 2017,

with early application permitted for annual reporting periods beginning after

December 15, 2016.

The Company has begun to research this guidance and does

not

believe that this ASU will have a material impact on the consolidated financial results of the Company, we understand it will require increased qualitative and quantitative disclosure about the nature, amount, timing and uncertainty arising from contracts with customers. The Company is still evaluating the impact of this ASU and expects to adopt this ASU effective

July 1, 2018.

In

August 2014,

the FASB issued ASU

No.

2014

-

15,

"Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern".

The amendments in this update state that regarding preparing financial statements for each annual and interim reporting period, an entity's management should evaluate whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within

one

year after the date that the financial statements are issued (or within

one

year after the date that the financial statements are available to be issued, when applicable). The amendments in this update are effective for the annual reporting period beginning after

December 15, 2016

and for annual periods and interim periods thereafter. Early application is permitted. The Company has adopted ASU

2014

-

15

and has made the necessary disclosures in the "Going Concern" sections of this Quarterly Report on Form

10

-Q.

In

July 2015,

the FASB issued ASU

2015

-

11,

"Inventory

(

Topic

330

):

Simplifying the Measurement of Inventory"

. ASU

2015

-

11

requires inventory measured using any method other than last-in,

first

-out ("LIFO") or the retail inventory method to be subsequently measured at the lower of cost or net realizable value, rather than at the lower of cost or market. Under this ASU, subsequent measurement of inventory using the LIFO and retail inventory method is unchanged. ASU

2015

-

11

is effective prospectively for fiscal years, and for interim periods within those years, beginning after

December 15, 2016.

Early application is permitted. The Company has determined that the ASU has

no

material impact on its consolidated financial statements and related disclosures since it does

not

sell inventory on a stand-alone basis at net realizable value.

In

January 2016,

the FASB

issued ASU

2016

-

01,

"Financial Instruments (Subtopic

825

-

10

):

Recognition and Measurements of Financial Assets and Financial Liabilities."

ASU

2016

-

01

provides guidance on the recognition and measurement of financial assets and financial liabilities. This ASU requires that all equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) be measured at fair value with changes in fair value recognized in net income. However, companies

may

elect to measure equity investments that do

not

have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. In addition, the ASU eliminates the requirement to disclose the method and significant assumptions used to estimate the fair value for financial instruments measured at amortized cost on the balance sheet. The ASU is effective for the Company in the

first

quarter of

2018.

The Company has determined that the ASU has

no

material impact on its consolidated financial statements and related disclosures since it does

not

have equity investments.

In

February 2016,

the FASB issue

d ASU

No.

2016

-

02,

"Leases"

, which establish a right-of-use (ROU) model that requires a lessee to record an ROU asset and lease liability on the balance sheet for all leases with terms longer than

12

months. Leases will be classified as either finance or operating, with classifications affecting the pattern of expense recognition in the income statement. This ASU is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. ASU

2016

-

02

requires modified retrospective adoption for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2019.

In

March 2016,

the FASB issued ASU

No.

2016

-

09,

"Compensation-Stock Compensation (Topic

718

): Improvements to Employee Share-Based

Payment Accounting"

, which makes several modifications to the accounting for employee share-based payment transactions, including the requirement to recognize the income tax effects of awards that vest or settle as income tax expense. This guidance also clarifies the presentation of certain components of share-based awards in the statement of cash flows. This guidance is effective for annual reporting periods beginning after

December 15, 2016,

and interim periods within those annual periods, and early adoption is permitted. The Company has

not

had stock compensation exercises since the reverse merger; therefore, the ASU is

not

applicable until exercises occur. The Company plans to implement this ASU when such exercises occur.

In

August 2016,

the FASB issued ASU

No.

2016

-

15,

"Statement of Cash Flows

(Topic

230

): Classification of Certain Cash Receipts and Cash Payments,"

which clarifies how certain cash receipts and payments are to be presented in the statement of cash flows. The guidance is effective for the Company on

July 1, 2018

and early adoption is permitted. The Company is currently evaluating the effect of adoption of this ASU on

July 1, 2018.

In

November 2016,

the FASB issued an ASU

2016

-

18,

"Restricted Cash"

, which clarifies the presentation and classification of restricted cash in the statement of cash flows. The ASU requires that amounts generally described as restricted cash and restricted cash equivalents be presented with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The ASU is effective for the Company in the

first

quarter of

2018

with early adoption permitted and must be applied retrospectively to all periods presented. The Company is evaluating the impact this ASU will have on its consolidated financial statements and related disclosures with the fiscal year beginning

July 1, 2018.

In

May 2017,

the FASB issued ASU

2017

-

09,

"Compensation-Stock Compensation (Topic

718

): Scope of Modification Accounting",

which amends the scope of modification accounting for share-based payment arrangements, provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting. The ASU is effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after

December 15, 2017.

The Company is evaluating the impact of this ASU and expects to adopt this ASU effective

July 1, 2018.

In

July 2017,

the FASB issued ASU

2017

-

11,

"Earnings Per Share (Topic

260

), Distinguishing Liabilities from Equity (Topic

480

) and Derivatives and Hedging (Topic

815

); Part I. Accounting for Certain Financial Instruments with Down Round Features and Part II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception"

,

which states that when determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature

no

longer precludes equity classification when assessing whether the instrument is indexed to the Company's own stock. As a result, a freestanding equity-linked financial instrument (or embedded conversion option)

no

longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic

260

to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. The Company is evaluating the provisions of this ASU and plans to adopt this ASU effective

July 1, 2019.

In

December 2017,

the Securities and Exchange Commission recently issued Staff Acco

unting Bulletin

No.

118,

which is an application of ASC Topic

740,

Income Taxes

, in the reporting period that includes

December 22, 2017,

the date on which the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act changes existing United States tax law and includes numerous provisions that will affect business. Staff Accounting Bulletin

No.

118

implies that if a reasonable estimate can be made of the Act's effects on the Company's financial statements, the reasonable estimate should be reported in the period ending after

December 22, 2017.

The Company has implemented Staff Accounting Bulletin

No.

118

is this Form

10

-Q ended

December 31, 2017

by revaluing its deferred tax asset for the lower tax rates.

XML

Note 3 - Restatement and Correction of Error (Tables)

6 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Error Corrections and Prior Period Adjustments [Table Text Block]

	As Originally									As Originally
	Reported						As Restated			Reported						As Restated
	Three Months						Three Months			Six Months						Six Months
	Ended						Ended			Ended						Ended
	Dec 31,						Dec 31,			Dec 31,						Dec 31,
	2016			Adj			2016			2016			Adj			2016
Net revenues
Fees for services	$	4,565,435		$	-		$	4,565,435		$	10,256,731		$	-		$	10,256,731
Hosted software services		311,671			-			311,671			658,605			-			658,605
Telehealth services		9,707			-			9,707			21,552			-			21,552
Total net revenues		4,886,813			-			4,886,813			10,936,888			-			10,936,888
Operating expenses
Cost of revenues		1,128,218			(176,550	)		951,668			2,295,214			(337,050	)		1,958,164
Write-down of inventory		-			-			-			237,674			-			237,674
Selling, general and administrative		4,293,640			-			4,293,640			7,875,641			-			7,875,641
Depreciation and amortization		394,484			-			394,484			803,147			-			803,147
Total operating expenses		5,816,342			(176,550	)		5,639,792			11,211,676			(337,050	)		10,874,626
Operating income (loss)		(929,529	)		176,550			(752,979	)		(274,788	)		337,050			62,262
Other (expense) income, net		529,645			-			529,645			(235,167	)		-			(235,167	)
Income (loss) before provision for income taxes		(399,884	)		176,550			(223,334	)		(509,955	)		337,050			(172,905	)
Income tax provision		45,404			-			(45,404	)		-			-			-
Net loss	$	(445,288	)	$	176,550		$	(268,738	)	$	(509,955	)	$	337,050		$	(172,905	)
less: preferred dividends	$	(100,624	)	$	-		$	(100,624	)	$	(201,248	)	$	-		$	(201,248	)
Net loss available to common shareholders	$	(545,912	)	$	176,550		$	(369,362	)	$	(711,203	)	$	337,050		$	(374,153	)
Loss per share:
Basic loss per common share	$	(0.09	)	$	0.03		$	(0.06	)	$	(0.12	)	$	0.06		$	(0.06	)
Diluted loss per common share	$	(0.09	)	$	0.03		$	(0.06	)	$	(0.12	)	$	0.06		$	(0.06	)

	As Originally
	Reported						As Restated
	Six Months						Six Months
	Ended						Ended
	Dec 31,						Dec 31,
	2016			Adj			2016
Cash Flows from Operating Activities
Net Loss	$	(509,955	)	$	337,050		$	(172,905	)
Adjustments to reconcile net loss to cash provided by operating activities
Write off of inventory		237,674			-			237,674
Loss on debt extinguishment		-			-			-
Change in fair value of derivative liabilities		(135,601	)		-			(135,601	)
Deferred taxes		-			-			-
Depreciation and amortization		803,147			-			803,147
Share based compensation		148,476			-			148,476
Deferred rent		(4,874	)		-			(4,874	)
Changes in assets and liabilities
Accounts receivable		1,067,854			-			1,067,854
Inventory		33,413			(337,050	)		(303,637	)
Prepaid expenses and other current assets		49,696			-			49,696
Accounts payable		(1,130,583	)		-			(1,130,583	)
Accrued expenses		(465,416	)		-			(465,416	)
Accrued commissions		(72,546	)		-			(72,546	)
Deferred rent		-			-			-
Net cash provided by operating activities		21,285			-			21,285
Cash flows from investing activities
Purchases of property and equipment		(22,103	)		-			(22,103	)
Net cash used in investing activities		(22,103	)		-			(22,103	)
Cash flows from financing activities
Proceeds from note payable - related party		-			-			-
Repayment of notes payable		(1,057,811	)		-			(1,057,811	)
Net cash used in financing activities		(1,057,811	)		-			(1,057,811	)
Net decrease in cash and cash equivalents		(1,058,629	)		-			(1,058,629	)
Cash and cash equivalents beginning of year		1,414,706			-			1,414,706
Cash and cash equivalents end of year	$	356,077		$	-		$	356,077

XML

Note 4 - Inventory (Tables)

6 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	December 31,		June 30,
	2017		2017
Laboratory testing supplies	$	397,569	$	347,750
Total inventory	$	397,569	$	347,750

XML

Note 6 - Related Party Notes Payable (Tables)

6 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Debt [Table Text Block]

	December 31, 2017				June 30, 2017
	Note		Interest rate		Note		Interest rate
	Payable		per annum		Payable		per annum
Secured				Secured
	$	1,056,875	5% interest paid annually		$	1,056,875	5% interest paid annually
		641,294	5% interest paid annually			641,294	5% interest paid annually
		255,417	5% interest paid annually			255,417	5% interest paid annually
		591,613	5% interest paid annually			591,613	5% interest paid annually
Total	$	2,545,199		Total	$	2,545,199

XML

Note 7 - Equity (Tables)

6 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2017			2016			2017			2016
Basic earnings (loss) per share
Net loss	$	(2,983,867	)	$	(268,738	)	$	(4,110,390	)	$	(172,905	)
Preferred stock dividends		(85,699	)		(100,624	)		(170,249	)		(201,248	)
Net loss available to common shareholders after preferred stock dividends	$	(3,069,566	)	$	(369,362	)	$	(4,280,639	)	$	(374,153	)
Weighted average shares used in the computation of basic earning per share		7,249,370			6,015,053			7,249,370			5,893,655
Loss per share - basic	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Dilutive earnings (loss) per share
Loss available to common shareholders	$	(3,069,566	)	$	(369,362	)	$	(4,280,639	)	$	(374,153	)
Weighted average shares used in the computation of diluted earnings per share		7,249,370			6,015,053			7,249,370			5,893,655
Dilutive effect of options, warrants, convertible debt and convertible preferred stock		-			-			-			-
Shares used in the computation of diluted earnings (loss) per share		7,249,370			6,015,053			7,249,370			5,893,655
Loss per share - diluted	$	(0.42	)	$	(0.06	)	$	(0.59	)	$	(0.06	)
Anti-Dilutive Options Excluded		1,253,793			5,354,203			1,253,793			5,354,203

Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]

Warrant Activity	Number of Shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		4,150,535		$	4.67		3.87	$	42,582
Issued		-
Expired		(25,000	)	$	12.06		-
Outstanding December 31, 2017		4,125,535		$	4.62		2.89	$	-
Exercisable, December 31, 2017		4,069,979		$	4.18		2.79	$	-

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Note 8 - Share-based Compensation (Tables)

6 Months Ended

Dec. 31, 2017

Notes Tables

Share-based Compensation, Stock Options, Activity [Table Text Block]

Employee Option Activity	Number of Options			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding June 30, 2017		226,902			9.04		6.34	$	-
Granted		50,000			2.00		9.70		-
Expired/Forfeited		(11,556	)		23.40		23.40
Outstanding December 31, 2017		265,346			7.08		7.04	$	-
Exercisable December 31, 2017		143,917			11.50		4.94	$	-

				Weighted		Average
				Average		Remaining		Aggregate
	Number of			Exercise		Contractual		Intrinsic
Non-Executive Option Activity	Options			Price		Life (Years)		Value
Outstanding June 30, 2017		602,311			3.57		6.11	$	-
Granted		45,555			1.59		9.74		-
Expired/forfeited		(35,901	)		4.01		-		-
Outstanding and exercisable December 31, 2017		611,965			3.40		7.35	$	-

Schedule of Share-based Compensation, Restricted Stock Units Award Activity [Table Text Block]

	Number of RSUs		Weighted Average Grant Date Fair Value
Outstanding June 30, 2017		411,429	$	1.75
Granted		120,000		0.74
Expired/Forfeited		-
Outstanding December 31, 2017		531,429	$	1.54

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Note 9 - Fair Value Measurements and Other Financial Instruments (Tables)

6 Months Ended

Dec. 31, 2017

Notes Tables

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Table Text Block]

Exercise Price	$2.03	-	$2.07
Risk free interest rate	1.38%	-	2.21%
Expected volatility	100%	-	160%
Remaining Term (years)	0.22	-	5.57

Schedule of Derivative Liabilities at Fair Value [Table Text Block]

				Convertible
	Warrants			Notes			Total
Balance - June 30, 2017	$	435,036		$	116,004		$	551,040
Change in fair value of derivative liabilities		(254,553	)		(111,311	)		(365,864	)
Balance - December 31, 2017	$	180,483		$	4,693		$	185,176

Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis [Table Text Block]

	Fair
	Value		Level 1		Level 2		Level 3
June 30, 2017 derivative liabilities	$	551,040	$	-	$	-	$	551,040
December 31, 2017 derivative liabilities	$	185,176	$	-	$	-	$	185,176

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Note 12 - Segment Information (Tables)

6 Months Ended

Dec. 31, 2017

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Authentidate			AEON			Total
Three Months ended December 31, 2017
Net revenues	$	253,180		$	5,278,042		$	5,531,222
Cost of revenues		64,978			823,564			888,541
Operating expenses		335,067			3,818,194			4,153,261
Operating loss		(81,887	)		1,459,848			1,377,961
Six Months ended December 31, 2017
Net revenues	$	500,850		$	8,388,424		$	8,889,274
Cost of revenues		120,106			1,897,012			2,017,117
Operating expenses		1,208,452			7,437,181			8,645,633
Operating loss		(707,602	)		951,243			243,641
Three Months Ended December 31, 2016
Net revenues	$	321,378		$	4,565,435		$	4,886,813
Cost of revenues		55,325			896,343			951,668
Operating expenses		1,320,216			4,319,576			5,639,792
Operating loss		(160,596	)		(592,383	)		(752,979	)
Six Months ended December 31, 2016
Net revenues	$	680,157		$	10,256,731		$	10,936,888
Cost of revenues		356,783			1,839,055			2,195,838
Operating expenses		2,764,971			8,109,655			10,874,626
Operating income (loss)		(143,361	)		205,623			62,262
December 31, 2017
Total assets	$	7,474,180		$	4,934,988.74		$	12,409,168
June 30, 2017
Total assets	$	11,772,874		$	4,958,804		$	16,731,678

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Note 1 - Description of Business, Reverse Merger and Liquidity (Details Textual) - USD ($)	Jan. 26, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016
Short-term Debt		$ 2,545,199	$ 2,545,199
Cash and Cash Equivalents, at Carrying Value		357,165	1,121,763	$ 356,077	$ 1,414,706
Working Capital (Deficit)		5,074,000
Estimated Monthly Operational Requirement		1,300,000
Secured Convertible Note Payable [Member]
Short-term Debt		$ 2,545,199	$ 2,545,199
Subsequent Event [Member]
Cash and Cash Equivalents, at Carrying Value	$ 1,057,000
Subsequent Event [Member] | Subordinated Secured Note Payable [Member] | Former Chief Financial Officer [Member] | Accrued Expenses [Member]
Due to Related Parties	210,000
Subsequent Event [Member] | Secured Convertible Note Payable [Member]
Short-term Debt	$ 2,545,199

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Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	Dec. 31, 2017	Jun. 30, 2017
Allowance for Doubtful Accounts Receivable, Current	$ 887,000	$ 923,000
Cash, Uninsured Amount	$ 119,000	$ 871,000

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Note 3 - Restatement and Correction of Error - Restated Statements of Income and Cash Flows (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2017
Net revenues
Fees for services	$ 5,278,042	$ 4,565,435	$ 8,388,424	$ 10,256,731
Hosted software services	248,530	311,671	491,550	658,605
Telehealth services	4,650	9,707	9,300	21,552
Net revenues	5,531,222	4,886,813	8,889,274	10,936,888
Operating expenses
Cost of revenues	888,541	951,668	2,017,117	2,195,838
Inventory Write-down			0	237,674
Selling, general and administrative	3,042,771	4,204,114	6,153,936	7,727,165
Depreciation and amortization	200,837	394,484	423,421	803,147
Operating expenses	4,153,261	5,639,792	8,645,633	10,874,626
Operating income (loss)	1,377,961	(752,979)	243,641	62,262
Other (expense) income, net	131,411	529,645	139,208	(235,167)
Income (loss) before provision for income taxes	1,509,372	(223,334)	382,849	(172,905)
Income tax provision	(4,493,239)	(45,404)	(4,493,239)
Net loss	(2,983,867)	(268,738)	(4,110,390)	(172,905)
Less: preferred dividends	(85,699)	(100,624)	(170,249)	(201,248)
Net loss available to common shareholders after preferred stock dividends	$ (3,069,566)	$ (369,362)	$ (4,280,639)	$ (374,153)
Loss per share:
Basic loss per common share (in dollars per share)	$ (0.42)	$ (0.06)	$ (0.59)	$ (0.06)
Diluted loss per common share (in dollars per share)	$ (0.42)	$ (0.06)	$ (0.59)	$ (0.06)
Cash flows from operating activities
Net loss	$ (2,983,867)	$ (268,738)	$ (4,110,390)	$ (172,905)
Adjustments to reconcile net income (loss) to net cash used by operating activities
Inventory Write-down			0	237,674
Loss on debt extinguishment
Change in fair value of derivative liabilities			(365,864)	(135,601)
Deferred taxes
Depreciation and amortization	200,837	394,484	423,421	803,147
Share based compensation	21,111	89,526	51,159	148,476
Deferred rent				(4,874)
Changes in assets and liabilities
Accounts receivable			(1,446,948)	1,067,894
Inventory			(49,819)	(303,637)
Prepaid expenses and other current assets			19,982	49,696
Accounts payable			(650,497)	(1,130,623)
Accrued expenses			325,285	(465,416)
Accrued commissions			427,797	(72,546)
Deferred rent				4,874
Net cash provided by operating activities			(764,598)	21,285
Cash flows from investing activities
Purchases of property and equipment				(22,103)
Net cash used in investing activities				(22,103)
Cash flows from financing activities
Proceeds from note payable - related party
Repayment of notes payable				(1,057,811)
Net cash used in financing activities				(1,057,811)
Net decrease in cash and cash equivalents			(764,598)	(1,058,629)
Cash beginning of period			1,121,763	1,414,706	$ 1,414,706
Cash end of period	$ 357,165	356,077	$ 357,165	356,077	1,121,763
Scenario, Previously Reported [Member]
Net revenues
Fees for services		4,565,435		10,256,731
Hosted software services		311,671		658,605
Telehealth services		9,707		21,552
Net revenues		4,886,813		10,936,888
Operating expenses
Cost of revenues		1,128,218		2,295,214
Inventory Write-down				237,674
Selling, general and administrative		4,293,640		7,875,641
Depreciation and amortization		394,484		803,147
Operating expenses		5,816,342		11,211,676
Operating income (loss)		(929,529)		(274,788)
Other (expense) income, net		529,645		(235,167)
Income (loss) before provision for income taxes		(399,884)		(509,955)
Income tax provision		45,404
Net loss		(445,288)		(509,955)
Less: preferred dividends		(100,624)		(201,248)
Net loss available to common shareholders after preferred stock dividends		$ (545,912)		$ (711,203)
Loss per share:
Basic loss per common share (in dollars per share)		$ (0.09)		$ (0.12)
Diluted loss per common share (in dollars per share)		$ (0.09)		$ (0.12)
Cash flows from operating activities
Net loss		$ (445,288)		$ (509,955)
Adjustments to reconcile net income (loss) to net cash used by operating activities
Inventory Write-down				237,674
Loss on debt extinguishment
Change in fair value of derivative liabilities				(135,601)
Deferred taxes
Depreciation and amortization		394,484		803,147
Share based compensation				148,476
Deferred rent				(4,874)
Changes in assets and liabilities
Accounts receivable				1,067,854
Inventory				33,413
Prepaid expenses and other current assets				49,696
Accounts payable				(1,130,583)
Accrued expenses				(465,416)
Accrued commissions				(72,546)
Deferred rent
Net cash provided by operating activities				21,285
Cash flows from investing activities
Purchases of property and equipment				(22,103)
Net cash used in investing activities				(22,103)
Cash flows from financing activities
Proceeds from note payable - related party
Repayment of notes payable				(1,057,811)
Net cash used in financing activities				(1,057,811)
Net decrease in cash and cash equivalents				(1,058,629)
Cash beginning of period				1,414,706	1,414,706
Cash end of period		356,077		356,077
Restatement Adjustment [Member]
Net revenues
Fees for services
Hosted software services
Telehealth services
Net revenues
Operating expenses
Cost of revenues		(176,550)		(337,050)
Inventory Write-down
Selling, general and administrative
Depreciation and amortization
Operating expenses		(176,550)		(337,050)
Operating income (loss)		176,550		337,050
Other (expense) income, net
Income (loss) before provision for income taxes		176,550		337,050
Income tax provision
Net loss		176,550		337,050
Less: preferred dividends
Net loss available to common shareholders after preferred stock dividends		$ 176,550		$ 337,050
Loss per share:
Basic loss per common share (in dollars per share)		$ 0.03		$ 0.06
Diluted loss per common share (in dollars per share)		$ 0.03		$ 0.06
Cash flows from operating activities
Net loss		$ 176,550		$ 337,050
Adjustments to reconcile net income (loss) to net cash used by operating activities
Inventory Write-down
Loss on debt extinguishment
Change in fair value of derivative liabilities
Deferred taxes
Depreciation and amortization
Share based compensation
Deferred rent
Changes in assets and liabilities
Accounts receivable
Inventory				(337,050)
Prepaid expenses and other current assets
Accounts payable
Accrued expenses
Accrued commissions
Deferred rent
Net cash provided by operating activities
Cash flows from investing activities
Purchases of property and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from note payable - related party
Repayment of notes payable
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash beginning of period
Cash end of period

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Note 4 - Inventory (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Inventory Write-down			$ 0	$ 237,674
Purchased Components [Member]
Inventory Write-down				31,000
Finished Goods [Member]
Inventory Write-down				$ 207,000

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Note 4 - Inventory - Inventory (Details) - USD ($)	Dec. 31, 2017	Jun. 30, 2017
Laboratory testing supplies	$ 397,569	$ 347,750
Total inventory	$ 397,569	$ 347,750

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Note 5 - Income Taxes (Details Textual) - USD ($)	3 Months Ended	6 Months Ended
	Dec. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Effective Income Tax Rate Reconciliation, Percent	179.50%	326.40%
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability	$ 4,493,000	$ 4,490,581
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent		35.00%
Deferred Tax Assets, Net	7,357,000	$ 7,357,000
Deferred Tax Assets, Valuation Allowance	$ 31,291,000	$ 31,291,000

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Note 6 - Related Party Notes Payable (Details Textual)				3 Months Ended	6 Months Ended		12 Months Ended
	Mar. 20, 2017 USD ($) $ / shares	Jan. 31, 2017 USD ($)	Sep. 01, 2016 $ / shares	Jun. 30, 2017 USD ($) $ / shares shares	Dec. 31, 2017 USD ($) $ / shares shares	Dec. 31, 2016 USD ($)	Jun. 30, 2017 USD ($) $ / shares shares	Jun. 30, 2016 USD ($) $ / shares	Mar. 19, 2017 USD ($)
Preferred Stock, Par or Stated Value Per Share | $ / shares				$ 0.10	$ 0.10		$ 0.10
Gain (Loss) on Extinguishment of Debt
Series E Convertible Preferred Stock [Member]
Stock Issued During Period, Shares, Exchange of Convertible Securities | shares				25,000
Preferred Stock, Par or Stated Value Per Share | $ / shares				$ 30	$ 30		$ 30
Convertible Preferred Stock, Aggregate Shares Issued upon Conversion | shares				187,500	187,500		187,500
Convertible Preferred Stock, Conversion Price | $ / shares				$ 4	$ 4		$ 4
Convertible Preferred Stock, Beneficial Ownership Limitation for Conversion Rights without Issuer Consent				4.99%			4.99%
Convertible Preferred Stock, Beneficial Ownership Limitation for Conversion Rights with Issuer Consent				9.99%			9.99%
Stock Issued During Period, Excess Value, Exchange of Convertible Securities				$ 50,000
Series B Preferred Stock [Member]
Preferred Stock, Preferred Dividends in Arrears Waived During Period				$ 120,385
Original Notes [Member]
Debt Instrument, Face Amount	$ 2,170,000
Gain (Loss) on Extinguishment of Debt					$ 0		$ (258,037)
New Notes [Member]
Debt Instrument, Face Amount	$ 2,545,199
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 2.03
Debt Instrument, Convertible, Number of Equity Instruments	1,253,792
Debt Instrument, Percentage of Conversion Price to Price per Share if Lower than Original Conversion Price	85.00%
Debt Instrument, Interest Rate, Stated Percentage					5.00%
Debt Instrument, Term	1 year
Embedded Derivative, Fair Value of Embedded Derivative Liability	$ 328,422
Debt Instrument, Period Following National Securities Exchange Listing of Common Stock to Commence Redemption Right by Debtor					30 days
Debt Instrument, Redemption Price, Percentage					110.00%
Debt Instrument, Event of Default, Outstanding Principal and Interest Payable at Lenders' Option, Percent					110.00%
Unsecured Promissory Note [Member] | Original Notes [Member] | Optimum Ventures, LLC and Hanif A. Roshan [Member]
Debt Instrument, Face Amount	700,000
Secured Convertible Note Payable [Member] | Lender One [Member]
Debt Instrument, Face Amount	$ 1,056,875							$ 950,000
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 2.03							$ 2.25
Debt Instrument, Convertible, Number of Equity Instruments								422,222
Debt Instrument, Percentage of Conversion Price to Price per Share if Lower than Original Conversion Price								85.00%
Debt Instrument, Interest Rate, Stated Percentage	5.00%							9.00%
Debt Instrument, Term	1 year
Secured Convertible Note Payable [Member] | Lender One [Member] | Original Notes [Member]
Debt Instrument, Face Amount	$ 950,000
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 2.25
Secured Convertible Note Payable [Member] | J. David Luce [Member]
Debt Instrument, Face Amount	$ 641,294							$ 320,000	$ 320,000
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 2.03		$ 3					$ 4.86
Debt Instrument, Convertible, Number of Equity Instruments			106,667
Debt Instrument, Interest Rate, Stated Percentage	5.00%		5.00%					10.00%
Debt Instrument, Term	1 year
Secured Convertible Note Payable [Member] | Optimum Ventures, LLC [Member]
Debt Instrument, Face Amount	$ 591,613
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 2.03
Debt Instrument, Interest Rate, Stated Percentage	5.00%
Debt Instrument, Term	1 year
Unsecured Promissory Note [Member] | J. David Luce [Member]
Debt Instrument, Face Amount	$ 200,000							$ 200,000
Debt Instrument, Convertible, Conversion Price | $ / shares			$ 3
Debt Instrument, Convertible, Number of Equity Instruments			173,333
Debt Instrument, Interest Rate, Stated Percentage								20.00%
Debt Instrument, Period Following Issuance in which Sale of Equity or Debt Securities Above Threshold Would Trigger Maturity								90 days
Debt Instrument, Sale of Equity or Debt Securities, Threshold that Would Trigger Maturity								$ 5,000,000
Debt Instrument, Extension Period at Lender Option			90 days
Unsecured Promissory Note [Member] | Optimum Ventures, LLC [Member]
Debt Instrument, Face Amount								$ 450,000
Debt Instrument, Interest Rate, Stated Percentage								20.00%
Debt Instrument, Period Following Issuance in which Sale of Equity or Debt Securities Above Threshold Would Trigger Maturity								90 days
Debt Instrument, Sale of Equity or Debt Securities, Threshold that Would Trigger Maturity								$ 5,000,000
Debt Instrument, Sale of Equity or Debt Securities Above Threshold, Period to Maturity								30 days
Unsecured Promissory Note [Member] | Hanif A. Roshan [Member]
Debt Instrument, Face Amount		$ 250,000
Debt Instrument, Interest Rate, Stated Percentage		12.00%
Debt Instrument, Term		30 days
Convertible Notes Payable [Member] | J. David Luce [Member] | Original Notes [Member]
Debt Instrument, Face Amount	$ 520,000
Debt Instrument, Convertible, Conversion Price | $ / shares	$ 3

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Note 6 - Related Party Notes Payable - Related Party Notes Payable (Details) - USD ($)	Dec. 31, 2017	Jun. 30, 2017
Related party notes payable	$ 2,545,199	$ 2,545,199
Secured Convertible Note Payable [Member]
Related party notes payable	2,545,199	2,545,199
Secured Convertible Note Payable [Member] | Lender One [Member]
Related party notes payable	$ 1,056,875	$ 1,056,875
Debt instrument, stated percentage	5.00%	5.00%
Secured Convertible Note Payable [Member] | J. David Luce [Member]
Related party notes payable	$ 641,294	$ 641,294
Debt instrument, stated percentage	5.00%	5.00%
Secured Convertible Note Payable [Member] | Hanif A. Roshan [Member]
Related party notes payable	$ 255,417	$ 255,417
Debt instrument, stated percentage	5.00%	5.00%
Secured Convertible Note Payable [Member] | Optimum Ventures, LLC [Member]
Related party notes payable	$ 591,613	$ 591,613
Debt instrument, stated percentage	5.00%	5.00%

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Note 7 - Equity (Details Textual) - USD ($)	6 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Preferred Stock, Par or Stated Value Per Share	$ 0.10	$ 0.10
Series E Convertible Preferred Stock [Member]
Preferred Stock, Shares Outstanding	25,000	25,000
Convertible Preferred Stock, Aggregate Shares Issued upon Conversion	187,500	187,500
Convertible Preferred Stock, Conversion Price	$ 4	$ 4
Preferred Stock, Par or Stated Value Per Share	$ 30	$ 30
Preferred Stock, Period Following Issuance Date to Initiate Redemption	1 year
Preferred Stock, Dividend Rate, Percentage	5.00%
Dividends Payable	$ 29,000
Series D Convertible Preferred Stock [Member]
Preferred Stock, Shares Outstanding	605,000	605,000
Convertible Preferred Stock, Aggregate Shares Issued upon Conversion	619,154
Convertible Preferred Stock, Conversion Price	$ 9.77139
Preferred Stock, Dividend Rate, Percentage	5.00%
Dividends Payable	$ 787,000
Preferred Stock, Redemption Price Per Share	$ 10

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Note 7 - Equity - Earnings Per Share (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Basic earnings (loss) per share
Net loss	$ (2,983,867)	$ (268,738)	$ (4,110,390)	$ (172,905)
Preferred stock dividends	(85,699)	(100,624)	(170,249)	(201,248)
Net loss available to common shareholders after preferred stock dividends	$ (3,069,566)	$ (369,362)	$ (4,280,639)	$ (374,153)
Weighted average shares used in the computation of basic earning per share (in shares)	7,249,370	6,015,053	7,249,370	5,893,655
Loss per share - basic (in dollars per share)	$ (0.42)	$ (0.06)	$ (0.59)	$ (0.06)
Dilutive earnings (loss) per share
Loss available to common shareholders	$ (3,069,566)	$ (369,362)	$ (4,280,639)	$ (374,153)
Weighted average shares used in the computation of diluted earnings per share (in shares)	7,249,370	6,015,053	7,249,370	5,893,655
Dilutive effect of options, warrants, convertible debt and convertible preferred stock (in shares)
Shares used in the computation of diluted earnings (loss) per share (in shares)	7,249,370	6,015,053	7,249,370	5,893,655
Loss per share - diluted (in dollars per share)	$ (0.42)	$ (0.06)	$ (0.59)	$ (0.06)
Employee Stock Option [Member]
Dilutive earnings (loss) per share
Anti-Dilutive Options Excluded (in shares)	1,253,793	5,354,203	1,253,793	5,354,203

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Note 7 - Equity - Warrant Activity (Details) - Warrant [Member] - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2017
Warrants outstanding (in shares)	4,150,535
Warrants outstanding, weighted average exercise price per share (in dollars per share)	$ 4.62	$ 4.67
Warrants outstanding, weighted average remaining contractual life (Year)	2 years 324 days	3 years 317 days
Warrants outstanding, aggregate intrinsic value		$ 42,582
Warrants issued (in shares)
Warrants expired (in shares)	(25,000)
Warrants expired, weighted average exercise price per share (in dollars per share)	$ 12.06
Warrants outstanding (in shares)	4,125,535	4,150,535
Warrants exercisable	$ 4,069,979
Warrants exercisable, weighted average exercise price per share (in dollars per share)	$ 4.18
Warrants exercisable, weighted average remaining contractual life (Year)	2 years 288 days
Warrants exercisable, aggregate intrinsic value

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Note 8 - Share-based Compensation (Details Textual) shares in Thousands	6 Months Ended
	Dec. 31, 2017 shares
Non-employee Directors [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	0

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Note 8 - Share-based Compensation - Stock Option Activity (Details) - USD ($)	6 Months Ended	12 Months Ended
	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2017
Employees [Member]
Outstanding, beginning of period (in shares)	226,902
Outstanding, weighted average exercise price (in dollars per share)	$ 9.04
Outstanding, average remaining contractual life (Year)	7 years 14 days	6 years 124 days
Outstanding, aggregate intrinsic value
Number of options granted (in shares)	50,000
Granted, weighted average exercise price (in dollars per share)	$ 2
Granted, average remaining contractual life (Year)	9 years 255 days
Granted, aggregate intrinsic value
Number of options expired/forfeited (in shares)	(11,556)
Expired/forfeited, weighted average exercise price (in dollars per share)	$ 23.40
Expired/forfeited, average remaining contractual life (Year)	23 years 146 days
Expired/forfeited, aggregate intrinsic value
Outstanding, end of period (in shares)	265,346	226,902
Outstanding, weighted average exercise price (in dollars per share)	$ 7.08	$ 9.04
Outstanding, aggregate intrinsic value
Exercisable (in shares)			143,917
Exercisable, weighted average exercise price (in dollars per share)			$ 11.50
Exercisable, average remaining contractual life (Year)	4 years 343 days
Exercisable, aggregate intrinsic value
Non-Executives [Member]
Outstanding, beginning of period (in shares)	602,311
Outstanding, weighted average exercise price (in dollars per share)	$ 3.57
Outstanding, average remaining contractual life (Year)	7 years 127 days	6 years 40 days
Outstanding, aggregate intrinsic value
Number of options granted (in shares)	45,555
Granted, weighted average exercise price (in dollars per share)	$ 1.59
Granted, average remaining contractual life (Year)	9 years 270 days
Granted, aggregate intrinsic value
Number of options expired/forfeited (in shares)	(35,901)
Expired/forfeited, weighted average exercise price (in dollars per share)	$ 4.01
Expired/forfeited, aggregate intrinsic value
Outstanding, end of period (in shares)	611,965	602,311
Outstanding, weighted average exercise price (in dollars per share)	$ 3.40	$ 3.57
Outstanding, aggregate intrinsic value
Exercisable, aggregate intrinsic value

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Note 8 - Share-based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member]	6 Months Ended
	Dec. 31, 2017 $ / shares shares
Number of RSUs outstanding (in shares) | shares	411,429
RSUs outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 1.75
Number of RSUs granted (in shares) | shares	120,000
RSUs granted, weighted average grant date fair value (in dollars per share) | $ / shares	$ 0.74
Number of RSUs expired/forfeited (in shares) | shares
RSUs expired/forfeited, weighted average grant date fair value (in dollars per share) | $ / shares
Number of RSUs outstanding (in shares) | shares	531,429
RSUs outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 1.54

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Note 9 - Fair Value Measurements and Other Financial Instruments (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016
Gain (Loss) on Derivative Instruments, Net, Pretax	$ 292,573	$ 621,820	$ 365,864	$ 135,601

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Note 9 - Fair Value Measurements and Other Financial Instruments - Valuation Techniques (Details)	6 Months Ended
	Dec. 31, 2017 $ / shares
Exercise Price (in dollars per share)
Expected volatility
Minimum [Member]
Exercise Price (in dollars per share)	$ 2.03
Risk free interest rate	1.38%
Expected volatility	100.00%
Remaining Term (years) (Year)	80 days
Maximum [Member]
Exercise Price (in dollars per share)	$ 2.07
Risk free interest rate	2.21%
Expected volatility	160.00%
Remaining Term (years) (Year)	5 years 208 days

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Note 9 - Fair Value Measurements and Other Financial Instruments - Summary in Changes in Fair Value (Details)	6 Months Ended
	Dec. 31, 2017 USD ($)
Balance, beginning of period	$ 551,040
Change in fair value of derivative liabilities	(365,864)
Balance, end of period	185,176
Warrant [Member]
Balance, beginning of period	435,036
Change in fair value of derivative liabilities	(254,553)
Balance, end of period	180,483
Convertible Notes [Member]
Balance, beginning of period	116,004
Change in fair value of derivative liabilities	(111,311)
Balance, end of period	$ 4,693

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Note 9 - Fair Value Measurements and Other Financial Instruments - Derivative Liabilities (Details) - USD ($)	Dec. 31, 2017	Jun. 30, 2017
Derivative liabilities	$ 185,176	$ 551,040
Fair Value, Inputs, Level 1 [Member]
Derivative liabilities
Fair Value, Inputs, Level 2 [Member]
Derivative liabilities
Fair Value, Inputs, Level 3 [Member]
Derivative liabilities	$ 185,176	$ 551,040

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Note 10 - Commitments and Contingencies (Details Textual) - USD ($)							1 Months Ended
	Oct. 11, 2017	Oct. 10, 2017	Aug. 24, 2017	Oct. 04, 2016	Sep. 06, 2016	Jun. 22, 2016	Dec. 31, 2017
Severance Compensation Arbitration Filed by Former CEO [Member]
Loss Contingency, Damages Sought, Value						$ 341,620
Cogmedix, Inc. v. Authentidate Holding Corp [Member]
Loss Contingency, Damages Sought, Value					$ 227,061
Authentidate Holding Corp. and Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Richard G. Hersperger [Member]
Litigation Case, Number of Shares Sought to Recover by Plaintiff			38,321
Litigation Settlement, Amount Awarded to Other Party							$ 15,000
Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Radius Foundation, Inc. and William Bramlett, Ph.D. [Member]
Loss Contingency, Damages Sought, Value		$ 116,650
Peachstate Health Management, LLC d/b/a Aeon Clinical Laboratories v. Trimana, LLC d/b/a Via Medical Center [Member]
Loss Contingency, Damages Sought, Value	$ 104,442
Carlotta Miraflor v. Peachstate Health Management, LLC d/b/a Aeon Global Health, et al. [Member]
Loss Contingency, Damages Sought, Value				$ 75,000

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Note 11 - Related Party Transactions (Details Textual) - USD ($)		3 Months Ended		6 Months Ended		12 Months Ended
	Jan. 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017
Interest Expense, Related Party		$ 32,000	$ 92,000	$ 64,000	$ 203,000
Hanif A. Roshan [Member] | Unsecured Promissory Note [Member]
Debt Instrument, Face Amount	$ 250,000
Debt Instrument, Term	30 days
Debt Instrument, Interest Rate, Stated Percentage	12.00%
Facilities Leased [Member] | Centennial Properties of Georgia, LLC [Member]
Lessee, Operating Lease, Term of Contract				12 years
Operating Leases, Rent Expense, Net		144,000	$ 140,000	$ 288,000	$ 279,000
Facilities Leased [Member] | Centennial Properties of Georgia, LLC [Member] | Minimum [Member]
Operating Leases, Monthly Rent Expense				46,500
Facilities Leased [Member] | Centennial Properties of Georgia, LLC [Member] | Maximum [Member]
Operating Leases, Monthly Rent Expense				60,000
Residential Premises Leased [Member] | Hanif A. Roshan [Member]
Lessee, Operating Lease, Term of Contract						1 year
Operating Leases, Monthly Rent Expense						$ 7,500
Operating Leases, Rent Expense, Net		$ 22,500		$ 45,000
Operating Leases, Increase in Rent Expense Upon Each Renewal						3.00%

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Note 12 - Segment Information (Details Textual)	6 Months Ended
	Dec. 31, 2017
Number of Operating Segments	2

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Note 12 - Segment Information - Selected Financial Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Jun. 30, 2017
Net revenues	$ 5,531,222	$ 4,886,813	$ 8,889,274	$ 10,936,888
Cost of revenues	888,541	951,668	2,017,117	2,195,838
Operating expenses	4,153,261	5,639,792	8,645,633	10,874,626
Operating income (loss)	1,377,961	(752,979)	243,641	62,262
Total assets	12,409,168		12,409,168		$ 16,731,678
Web-based Software [Member]
Net revenues	253,180	321,378	500,850	680,157
Cost of revenues	64,978	55,325	120,106	356,783
Operating expenses	335,067	1,320,216	1,208,452	2,764,971
Operating income (loss)	(81,887)	(160,596)	(707,602)	(143,361)
Total assets	7,474,180		7,474,180		11,772,874
Laboratory Testing Services [Member]
Net revenues	5,278,042	4,565,435	8,388,424	10,256,731
Cost of revenues	823,564	896,343	1,897,012	1,839,055
Operating expenses	3,818,194	4,319,576	7,437,181	8,109,655
Operating income (loss)	1,459,848	$ (592,383)	951,243	$ 205,623
Total assets	$ 4,934,988.74		$ 4,934,988.74		$ 4,958,804

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Note 13 - Subsequent Events (Details Textual) - USD ($)			12 Months Ended
	Feb. 01, 2018	Jan. 04, 2018	Jan. 15, 2020	Jan. 23, 2018
Subsequent Event [Member] | Unsecured Promissory Note [Member] | Chief Executive Officer [Member]
Debt Instrument, Face Amount				$ 500,000
Debt Instrument, Interest Rate, Stated Percentage				5.00%
Subsequent Event [Member] | Chief Medical Officer [Member] | Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		280,000
Moncada [Member] | Scenario, Forecast [Member]
Consulting Agreement, Fee Amount Per Month	$ 25,000
Consulting Agreement, Additional Fee Amount			$ 40,000
Moncada [Member] | Subsequent Event [Member]
Consulting Agreement, Fee Amount upon Execution		$ 40,000