Document Security Systems, Inc. Announces 4th Quarter and 2010 Year-End Financial Results

-- 4th Quarter Revenue Increased 77%
-- 4th Quarter Gross Profit Increases 33%
-- 2010 Revenue Increased 35%
-- 2010 Operating Expenses Increase 3%

ROCHESTER, N.Y., March 29, 2011 /PRNewswire/ -- Document Security Systems, Inc. (NYSE AMEX: DMC; "DSS"), a leader in patented protection against counterfeiting and unauthorized copying, scanning and photo imaging, reported results for the fourth quarter and year ended December 31, 2010. Management will host a teleconference and web cast today at 4:30 pm ET to discuss the results with the investment community:

Investor Dial-in (Toll Free): (877) 407-8035

Investor Dial-In (International): (201) 689-8035

Live Web Cast: http://www.investorcalendar.com/IC/CEPage.asp?ID=163906

4th Quarter and 2010 Year-End Results

Fourth Quarter Financial Highlights

* Sales of $4.1 million increased 77% compared to the fourth quarter of 2009, and increased 31% compared to the 3rd quarter of 2010.
o Strong fourth quarter packaging division sales.
* Gross profit of $1,076,000 increased by 33% compared to gross profit of $812,000 in fourth quarter of 2009.
* Net Loss increased by $1,604,000 negatively impacted by one-time charges:
o $376,000 intangible asset impairment expense
o $260,000 note discount expense as a result of the conversion of $800,000 of debt into equity.
* Adjusted EBITDA loss of $465,000 as compared to a loss of $412,000 in 2009. (See Reconciliation of GAAP to Non-GAAP Financial Measures table)
* Cash balance of $4.1 million as of December 31, 2010.

Full Year 2010 Financial Highlights

* Sales of $13.4 million increased 35% compared to 2009.
* Operating expenses increased by 3% compared to 2009.
* Net Loss increased by 15% to $4.6 million compared to a net loss of $4.0 million in 2009.
* Net loss per share of $(0.26) compared to $(0.27) in 2009.
* Adjusted EBITDA loss of $1,837,000 as compared to a loss of $1,974,000 in 2009. (See Reconciliation of GAAP to Non-GAAP Financial Measures table)

Robert Fagenson, Chairman of the Board of Document Security Systems, stated: "We began 2010 with the acquisition of Premier Packaging which marked a significant expansion of our size and capabilities. With this acquisition, our ability to sell and service our anti-counterfeiting and brand protection capabilities to major corporate buyers increased significantly. During 2010, we continued to see the expansion of our secure coupon business with an impressive list of customers. In addition, we advanced existing relationships and forged many new ones, including one with Kodak, which we are very excited about as it will allow our technologies to be presented throughout Kodak's worldwide sales channel. The market is becoming increasingly aware of the solutions our technologies provide as evidence by our growing list of licensees, including ATL Label and most recently, Midwest Banknote in 2011."

Document Security System's CEO Patrick White said, "We are pleased that we were able to end 2010 on a strong note. Our fourth quarter sales met expectations of strong seasonal demand for our packaging division. Furthermore, during the fourth quarter, we strengthened our sales and marketing team, and we expanded our intellectual property portfolio. These ongoing initiatives provide the potential for further growth opportunities for our company. Finally, the investment that was made in our company on December 31, 2010 will provide us with the resources to further expand our sales and marketing team and efforts, reduce operational costs through stronger material buying power, and help us reduce our equipment leasing costs, and lower our interest costs."

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.

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

Document Security Systems, Inc.: www.documentsecurity.com
Plastic Printing Professional, Inc.: www.plasticprintingprofessionals.com
Protected Paper: www.protectedpaper.com
DPI of Rochester: www.dpirochester.com
Premier Custom Packaging: www.premiercustompkg.com

For more information, contact:

Jody Janson
Document Security Systems, Inc.
Investor Relations
Tel: (585) 232-5440
Email: ir@documentsecurity.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.