Document Security Systems, Inc. Reports First Quarter 2011 Financial Results

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 Earnings improve 65%
 Net Loss narrows to $.02 per share vs $.07 per share in 2010
 Gross Margin increases to 35%

ROCHESTER, NY--May 12, 2011 — Document Security Systems, Inc. (NYSE AMEX: DMC), a leader in patented protection against counterfeiting and unauthorized copying, scanning and photo imaging, reported results for the first quarter ended March 31, 2011. Management will host a teleconference and web cast today at 4:15 pm ET to discuss the results with the investment community:

Time: 4:15 p.m. Eastern Time

Date: Thursday, May 12th, 2011

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=164471

A replay of the teleconference will be available until May 16th, 2011, 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 #372657 to access the replay. The webcast will be available for replay within the Investor Relations “Events & Presentations” section of the DSS home page located at www.documentsecurity.com.

First Quarter 2011 Highlights

 Sales of $2.7 million decreased $89,000 from the first quarter of 2010.
 Gross profit increased 10% from the first quarter of 2010.
 Gross margin increased 4 basis points to 35%
 Operating expenses decreased 16% from the first quarter of 2010.
 Net loss of ($398,000) was a 65% improvement from the net loss of ($1,121,000) during the first quarter of 2010.
 Net loss per share of $(0.02) improved 71% from a net loss per share of ($0.07) during the first quarter of 2010.

Robert Fagenson, Chairman of the Board, stated: “Our core business continues to improve and despite the slightly lower sales in this seasonally-weak quarter, our team continues to move our company in the right direction. The true value of DMC remains to be in our portfolio of patented technology and product development staff. Our strategic plan remains sound and the quality and diversity of our customer base reinforces our belief that we are on the right track towards our goals of sustainable growth and profitability for the year“.

Document Security System’s CEO Patrick White added: “We are very encouraged to see that our net loss decreased 65%. Our first quarter sales were essentially flat due to seasonality and a continued weak commercial print environment; however, we are very pleased with the sales mix during the quarter. We continue to replace unprofitable standard commercial printing by emphasizing security and digital printing. The result of the evolving sales mix change is having the desired results on our margins. Our gross margin reached 35% up from 31% from the first quarter of 2010, and up from 28% in the fourth quarter of 2010. Our gross profit increased 10% and operating expenses decreased 16% from the first quarter of last year, each of which favorably impacted our financial results during the quarter. We continue to be excited by our expanding customer base, both on the licensing and product sides of our business.”

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
DPI of Rochester: http://www.dpirochester.com
Plastic Printing Professional, Inc.: http://www.plasticprintingprofessionals.com
Protected Paper: http://www.protectedpaper.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 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.

TABLES available in pdf download at top of this page.