US Postal Service warns it may drop AuthentiDate postmark if revenue doesn’t rise

AuthentiDate Holding Corp. has received notice from the US Postal Service that AuthentiDate’s Electronic Postmark service failed to meet necessary revenue standards between February and April 2005. A strategic alliance agreement between AuthentiDate and the Postal Service names the Schenectady company as the preferred provider of the USPS Electronic Postmark (EPM) service. When the agreement was signed, in August 2002, the parties agreed on certain performance standards, but sales have fallen short. The parties have been discussing a new arrangement since last year, but have been unable to agree on new performance standards. In a letter dated May 23, the Postal Service said it is willing to discuss any plans AuthentiDate may have to improve the EPM system’s revenue, but that it intends to exercise its right to terminate the agreement if AuthentiDate is unable to cure the default. Meanwhile, the AuthentiDate management team, led by new CEO Suren Pai, has been working to recast the electronic postmark as a solutions-based system, to accelerate development of the market for the product. The company and the Postal Service have continued to develop the EPM business using this strategy, and in April launched a new service to authenticate and verify paper documents received via fax. Liberty Healthcare Group Inc., a Pennsylvania-based medical products company, has signed on to use the new service.

Also, on May 17, AuthentiDate announced that the Postal Service has approved an updated version of the EPM service with enhancements including an optional return-receipt capability. Users also may sign up for EPM service account using a username and password, eliminating the need for digital certificates.

“The fundamental shift in Authentidate’s strategy towards selling solutions changes the original business model of the EPM,” Pai said. “As a stand-alone infrastructure offering, targeted at a nascent market for content authentication, the EPM has been unable to meet expectations. We are committed to pursuing a solutions-based strategy to address emerging needs in both the public and private sector, and we need to do a better job of communicating the benefits of this approach to the Postal Service.”