SecProbe.io

CORRESP
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Prepared and filed by St Ives Financial

August 22, 2005

Filed via EDGAR and

Delivered via Facsimile (202) 772-9210

Mr. Mark Kronforst and

Ms. Christine Davis

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington D.C.  20549

 Re:
Authentidate Holding
    Corp.

  Form 10-K for fiscal year ended
    June 30, 2004

  Form 10-Q for the period ended
    March 31, 2005

  File No. 000-20190

Confidential Treatment of Certain Portions of this Letter is

Requested by Authentidate Holding Corp. pursuant to 17 C.F.R. 200.83

Dear Mr. Kronforst and Ms. Davis:

As you know, we are counsel to Authentidate Holding Corp.  We are in receipt of your letter dated July 20, 2005 concerning additional comments to the above-referenced filings of Authentidate Holding Corp. (“Authentidate” or the “Company”). This letter sets forth Authentidate’s responses to the Staff”s additional comments as set forth in your July 20, 2005 letter. In presenting this response, we have followed the enumerated comments and section headings as set forth in your letter.  Please note that in the event you have any questions regarding the Company’s request for confidential treatment under Rule 83, please contact either the Company’s Chief Financial Officer, Mr.
Dennis H. Bunt or the Company’s counsel, Michael A. Goldstein, Esq.

The Company’s responses are as follows:

Revenue Recognition

Comment 1:   We have read your response to prior comment number 1 and note that customers can purchase separate support and maintenance for your Docstar software products.  We further note that you do not believe a support arrangement and related Docstar software license represent separate elements of a single multiple-element arrangement.  Please clarify for us the basis for your belief.  As part of your response, tell us how you considered guidance in AICPA Technical Practice Aid 5100.39

Securities & Exchange
    Commission

  August 22, 2005

  Page 2

Response

The Company has reconsidered its position relative to its DocStar product line after reviewing TPA 5100.39 and discussing it with you on the phone.  The Company views the support contract as a second deliverable (in addition to the first element – the DocStar system).  This change however has no impact on prior financial statements because the revenue on support contracts was always recognized ratably over the life of the contract.  VSOE is determinable for both elements and is based on the price charged when the software license and post-contract customer support (support/upgrade contracts) are sold separately.  The Company recognizes revenue on the software license upon delivery and recognizes revenue on the
support/upgrade contract ratably over the term of the contract.  The Company will clarify its accounting treatment in its Form 10-K for the fiscal year ended June 30, 2005, which it will file in September 2005 to be consistent with the information in this response.  Attached as Appendix A to this letter is the Company’s draft of an enhanced revenue recognition footnote disclosure that it is proposing for the 2005 Form 10-K.

Comment 2: We have considered your response to prior comment numbers 2 and 5 and it remains unclear as to why you believe Trac Med arrangements are subject to SOP 97-2.  Please explain to us how you considered paragraph 2 and footnote 2 of SOP 97-2 in determining that these arrangements involve the selling or licensing of software.  In addition, explain to us how you considered EITF 00-3 that provides guidance regarding whether your customers are purchasing software or merely a right to use your software.

Response

SOP 97-2 “provides guidance on when revenue should be recognized and in what amounts licensing, selling, leasing or otherwise marketing the computer software.  It should be applied to those activities by all entities that earn such revenue.  It does not apply to products or services containing software that is incidental to the products or services as a whole.”  Footnote 2 of SOP 97-2 states that “indicators of whether software is incidental to a product as a whole include (but are not limited to) (a) whether the software is a significant focus of the marketing effort or is sold separately (b) whether the vendor is providing post contract customer support and (c) whether the vendor incurs
significant costs that are within the scope of FASB 86, ‘Accounting for the Costs of Computer Software to Be Sold, Leased or Otherwise Marketed’.”  Further, EITF 00-3 states that a “software element covered by SOP 97-2 is only present in a hosting arrangement if the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty and it is feasible for the customer to either run the software on its own hardware or contract with another party unrelated to the vendor or host of the software.  Therefore, SOP 97-2 only applies to hosting arrangements in which the customer has such an option.”

Securities & Exchange
      Commission

August 22, 2005

Page 3

In the case of Trac Medical, the
    Company believes that it is clear that software is not incidental to the
    product, but rather is the key to the product. The customer does not have
    the contractual right to take possession of the software. They use the software
    on the Trac Medical web site and no software is downloaded to the customers’ computers.
    SOP 97-2 does not apply to these transactions, but SAB 104 and EITF 00-21
    are applicable. EITF 00-21 paragraph 7 states that the various deliverables
    should be divided into separate units of accounting, provided (a) the delivered
    items has value to the customer on a stand-alone basis, (b) there is VSOE
    for the undelivered item(s) and (c) if there is a right of return of the
    delivered item(s), delivery or performance on the undelivered item(s) is
    probably and in control of the vendor. Trac Medical does sell some of the
    delivered items separately (for instance transactions can be purchased separately
    by the customer), so the Company believes that the delivered item(s) has
    standalone value to the customer. To date, the Company has not been able
    to determine VSOE of the undelivered items. However, all elements of the
    contract (the software hosting license, credentialing and post-contract customer
    support) are being accessed by the customer over our hosting site on a monthly
    basis over the term of the agreement. Therefore, the revenue from these
    transactions is deferred and recognized ratably over the life of the contract
    because they are being
  viewed as one unit of accounting.

Comment 3: We have read your response to prior comment 3 and note that certain Trac Med arrangements may include professional services such as custom programming.  You indicate that you recognize revenue related to these services upon delivery and acceptance by the customer.  Please explain to us how you were able to conclude that these services can be accounted for separately from the ongoing service.  As part of your response, please provide reference to applicable accounting literature that you relied on in arriving at your conclusion.

Response

To supplementally clarify the Company’s response to prior comment number 3 regarding contracts entered into by our Trac Medical subsidiary, to date no contract has been signed which included a professional services element.  Custom programming was mentioned in the Company’s response solely to provide the Commission with information as to how the Company would recognize revenue in the event it entered into agreements that provided for Trac Medical to deliver customized deliverables to a customer, which the Company believes may occur in the future.

Comment 4: We have read your response to prior comment number 5.  Your response does not appear to explain why you have not provided the disclosures referred to in the comment or specifically address how you considered the disclosure requirements of paragraph 12 of APB 22 as it relates to your revenue recognition policy.  Please provided an expanded response to prior comment number 5 that addresses these issues.

The Company has drafted an enhanced revenue recognition policy which addresses APB 22 paragraph 12 and Staff’s prior comment number 5.  See the attached Appendix A.

Securities & Exchange
    Commission

August 22, 2005

Page 4

Private Debt Offerings

Comment 5: We have read your response to prior comment number 8.  Based on this response it does not appear that you allocated the proceeds of the transactions based on relative fair value method in accordance with paragraph 16 of APB 14.  Rather it appears that you determined the fair value of the warrants and then allocated the residual proceeds to the debt.  Please tell us how your accounting complies with paragraph 16 and explain to us how you determined the fair value of the stock used in your current calculations.

Rule 83 Confidential Treatment Request by Authentidate Holding Corp.

AHC – 0001
and 0002

Response

On July 19, 2005, the Company sent you a separate letter addressing prior Comment 8. The following is an addendum to that letter. An additional copy of the July 19 letter is attached for your convenience along with the supporting schedule.   This letter is being filed herewith as Appendix B, which is being filed with the Commission pursuant to the confidentiality provisions of Rule 83.1 In addition, the Company believes that the following is relevant to your review of its response to this issue.  When the Company entered into the various debt arrangements, it effectively entered into the high yield debt market.  When the
value of the debt discount as additional cost of capital is included these debt arrangements are consistent with high yield financing.  Schedule 8 illustrates the effective cost of capital for these debt securities issuances which is also being filed with the Commission pursuant to the confidentiality provisions of Rule 83.2

Considering that these were arms-length transactions, the warrants were valued using a generally accepted valuation methodology (Black-Scholes) and the amount allocated to the debt appeared reasonable after considering the resulting effective interest rate.  As a result, the Company did not believe it was necessary to obtain a separate valuation for the debt arrangements.  See the attached Schedule 8.

The Company calculated an imputed effective interest rate of approximately 14% – 17% on the various debt arrangements when it included the relative value of the warrants as additional interest expense.  The Company believes that these rates are not inconsistent with “high-yield” financing arrangements and therefore further supports the valuation it has ascribed to the debt and the warrants.

    1

     The Company requests that
          Appendix B, which is the information referenced in Confidential Treatment
          Request No. AHC – 0001 be treated as confidential information
          and that the Commission promptly notify the Company’s designated
          contact person(s) before it permits any disclosure of such confidential
          information.

    2

     The Company requests that Schedule 8,
          which is the information referenced in Confidential Treatment Request
          No. AHC – 0002 be treated as confidential information and that
          the Commission promptly notify the Company’s designated contact
          person(s) before it permits any disclosure of such confidential information.

Securities & Exchange
  Commission

  August 22, 2005

  Page 5

Also please note that with regard to the fair value of the stock used in the calculations, the Company used the average of the high and low stock price on the date each of these tranches closed, which approximates the closing bid on those dates. Reference is made to note 1 on the enclosed Schedule 8.

Marketable Securities

Comment 6: We have read your response to prior comment number 13.  Due to the quantitative materiality and the fact that your auction rate securities do not meet the definition of cash equivalents under paragraphs 8 and 9 of FAS 95, please amend your fiscal 2004 Form 10-K.  In this amendment, you should correct each historical balance sheet and statement of cash flows affected and the correction may be characterized as a reclassification. The amendment should also include the following:

•

Footnote disclosure explaining why the reclassification was made (i.e., to comply with SFAS 95) and clearly describing the impact on the financial statements;

•

Disclosure regarding this reclassification under
Items 307 and 308(c) of Regulation S-K. If you determine that disclosure
is not necessary, explain to us why; and

•

Footnote disclosure explaining the basis for the current or non-current classification of the securities in accordance with paragraph 17 of SFAS 115 and Chapter 3A of ARB 43.

Response

The Company is in the process of
    amending its Form 10-K for fiscal 2004 and will follow your guidance in your
    comment 6. The Company will amend the balance sheet to add a line for marketable
    securities and make the corresponding changes to the Cash Flow Statement.
    Footnotes 1 and 16 to the financial statements will also be amended accordingly
    to include a paragraph on Marketable Securities and make other conforming
    changes. Additionally, the Form 10-K/A will include appropriate conforming
    amendments to other Items, including Management’s Discussion and Analysis
    of Financial Condition and Results of Operation. A draft of the revised balance
    sheet, cash flow and footnotes 1 and 16 is submitted with this letter for
    your review as Appendix C.

The Company does not believe that
    revised responses to Items 307 and 308(c) of Regulation S-K are required
    as the reclassification does not indicate a defect or weakness in either
    of its systems of disclosure controls and procedures or internal controls
    over financial reporting. The Company’s determination to initially
    classify the auction rate securities as “Cash Equivalents” was
    consistent with the classifications determined by a number of other issuers
	and management analyzed this topic and considered the applicable accounting
	literature in reaching its initial conclusion. To the extent that this classification
    was incorrect, it should be viewed as a reasonable misinterpretation of the
accounting literature published at the time that the Form 10-K was filed.  In
    fact, subsequent to that date, the relevant accounting literature was
    clarified regarding the appropriate treatment of an investment in auction rate securities.
    Accordingly, the Company does not believe that its initial classification
    is evidence of a defect in either of its systems of disclosure or internal
    controls and accordingly, the Company believes that its disclosure under
    Items 307 and 308(c) as set forth in the Form 10-K is accurate and does not
    need to be amended.

Securities & Exchange
    Commission

August 22, 2005

Page 6

Judgments and Estimates

Comment 7: Your response to prior comment number 12 indicates that you will expand your disclosures of Critical Accounting Policies and Estimates in future filings.  Please tell us how you expect to expand these disclosures.

Response

Attached as Appendix D to this letter is a draft of the Company’s disclosure on Estimates and Assumptions to be included in its Critical Accounting Policies discussion of its MD&A in future filings. The Company has enhanced its prior disclosure of its critical accounting policies. While it has not changed its procedures, this enhanced disclosure more fully describes the Company’s policy on estimates and assumption.

Controls and Procedures

Comment 8:  We have read your response to prior comment number 15.  Please e