Document Security Systems, Inc. Reports Second Quarter Results, Increase in Revenue of 48% and Positive Cash Flow from Operations

ROCHESTER, N.Y., Aug. 12 /PRNewswire-FirstCall/ -- Document Security Systems, Inc. (NYSEAMEX: DMC) ("DSS"), a leader in patented protection against counterfeiting and unauthorized copying, scanning and photo imaging, reported results for the second quarter ended June 30, 2010.  Management will host a teleconference and web cast today at 4:30 pm ET to discuss the results with the investment community.

Time: 4:30 p.m. Eastern Time

Investor Dial-in (Toll Free): (877) 407-9210

Investor Dial-In (International): (201) 689-8049

Live Web Cast URL: http://www.investorcalendar.com/IC/CEPage.asp?ID=161075

A replay of the teleconference will be available until August 26th, 2010, which can be accessed by dialing (877) 660-6853 if calling within the U.S. or (201) 612-7415 if calling internationally.  Please enter account #286 and conference ID #355429 to access the replay.

Document Security System's CEO Patrick White stated: "Our Chairman of the Board, Robert Fagenson, and our executive team set a goal of becoming cash flow positive from operations, and as a result of our centered commitment to that goal, it was accomplished.  However, we realize that our focus must continue be on the tremendous opportunities that are available for us in the marketplace and on the march towards sustained profitability.  I am confident that the best days for Document Security Systems are ahead of us.  On behalf of management I would like to thank all of our employees for their hard work, sacrifices and dedication and I would also like to thank our shareholders for their continued support.  I look forward to reporting on new business relationships and improved financial performance as we move the company forward."

Fiscal Quarter Ended June 30, 2010 Financial Highlights

• Sales of $3.3 million reflect an increase of 48% from the second quarter of 2009, and an increase of 20% sequentially from the first quarter of 2010.

• Gross profit increased 28% from the second quarter of 2009, and increased 4% sequentially from the first quarter of 2010.

• Operating expenses increased 12% from the second quarter of 2009, but decreased 11% sequentially, from the first quarter of 2010.

• Net loss increased 2% from the second quarter of 2009, and decreased 11% sequentially from the first quarter of 2010.

• The Company achieved positive cash flow from operations of approximately $120,000 in second quarter of 2010.

A full analysis of results for the quarter months ended June 30, 2010 is available in the Company's Form 10-Q, which is available on the Company's website at www.documentsecurity.com, or by visiting the Securities and Exchange Commission website at www.sec.gov.

Recent Business Developments

• Signed licensing agreement with pharmaceutical label manufacturer, ATL.

Provides DSS with a strong partner in the label industry to produce secure labels, including labels with bar code protection technology, for brand and product protection.   Initial focus on solutions for barcode counterfeiting deterrence for the consumer product and pharmaceutical industries.

• Received new client printing & packaging order expected to exceed $600,000.

Company able to leverage competitive advantage of combined packaging and printing capabilities to win new business from a large e-commerce client that are expected to he $600,000 with additional packaging opportunities with this client are in the redesign phase which, when completed, could be valued at over $1.0 million annually.

• Awarded renewal of annual packaging order contract from Walgreens worth approximately $2.7 million through July 2011.

Renewed an annual contract with the Company's largest packaging customer, Walgreens, through July 2011 with expected sales under the program at $2.7 million, with additional opportunities for non-contract work.

• Completed Macintosh compatibility for the Company's AuthentiGuard ADX digital product.  

Significant technology advancement allows AuthentiGuard ADX to operate on both Microsoft and Apple clients, critical for enterprise workgroup implementations.    

• Initial development of AuthentiGuard ADX Lite™ - a "software as a service" version of ADX.  

Development with a cloud computing partner of a hosted version of our AuthentiGuard ADX to initially target smaller legal and professional firms for access to ADX's secure printing and archiving capabilities within a secure, hosted environment.

About Document Security Systems, Inc

Document Security Systems is a world leader in the development of optical deterrent technologies that help prevent counterfeiting and brand fraud from the use of the most advanced scanners, copiers and imaging systems in the market. The company's patented and patent-pending technologies protect valuable documents and printed products from counterfeiters and identity thieves. Document Security Systems' customers, which include international governments, major corporations and world financial institutions, use its covert and overt technologies to protect a number of applications including, but not limited to, currency, vital records, brand protection, ID Cards, internet commerce, passports and gift certificates. Document Security Systems' strategy is to become the world's leading producer of cutting-edge security technologies for paper, plastic and electronically generated printed assets.

More information about Document Security Systems, Inc. and their wholly-owned subsidiaries can be found by visiting:

Document Security Systems, Inc.: http://www.documentsecurity.com

Plastic Printing Professional, Inc.: http://www.plasticprintingprofessionals.com/

Protected Paper: http://www.protectedpaper.com

DPI of Rochester: http://www.dpirochester.com

Premier Custom Packaging: www.premiercustompkg.com

Safe Harbor Statement

The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, and are intended to be covered by the safe harbors created thereby. These forward-looking statements include, but are not limited to, statements regarding expectations for future financial performance, potential sales from new and existing customers, expected benefits from the Company's cost cutting efforts, the potential sale of Legalstore.com, and/or statements preceded by, followed by or that include the words "believes," "could," "expects," "anticipates," "estimates," "intends," "plans," "projects," "seeks," or similar expressions all of which involve uncertainty and risk. Many of these risks and uncertainties are discussed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 filed with the Securities and Exchange Commission (the "SEC"), and in any subsequent reports filed with the SEC, all of which are available at the SEC's website at www.sec.gov. It is possible the company's future financial performance may differ from expectations due to a variety of factors including, but not limited to, the risks referred to above, and changes in economic and business conditions in the world, increased competitive activity, achieving sales levels to fulfill revenue expectations, consolidation among its competitors and customers, technology advancements, unexpected costs and charges, adequate funding for plans, changes in interest and foreign exchange rates, regulatory and other approvals and failure to implement all plans, for whatever reason. It is not possible to foresee or identify all such factors. Any forward-looking statements in this report are based on current conditions; expected future developments and other factors it believes are appropriate in the circumstances. Prospective investors are cautioned that such statements are not a guarantee of future performance and actual results or developments may differ materially from those projected. The company makes no commitment to update any forward-looking statement included herein, or disclose any facts, events or circumstances that may affect the accuracy of any forward-looking statement.

SOURCE Document Security Systems, Inc.

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