Document Security Systems Reports 103% Revenue Growth to $1.7 million in First Quarter 2007.

* Gross profit increases 234% in first quarter 2007

* Gross profit margin improves to 60%

* Organic revenue grows 57%

ROCHESTER, N.Y. -- Document Security Systems, Inc. (AMEX: DMC; "DSS"), a leader in proven, patented protection against counterfeiting and unauthorized copying, scanning and photo imaging, today reported results for the first quarter ended March 31, 2007.

Revenue for the quarter was $1.7 million, up 103%, or $887,000, over revenue of $863,000 in the first quarter of 2006. Driving the growth was significant increases in licensing revenue and early sales from DSS's new On-Demand digital solutions product suite. In addition, DSS's plastic printing division, P3, had record sales for the quarter.

Mr. Patrick White, Chairman, and CEO of DSS, commented, "The first quarter was a strong indicator of the traction we are gaining in the global market with our security solutions. All of our product lines, and more importantly, we saw proof of success with our On-Demand offerings. Beyond the first quarter, there are several exciting opportunities that we are working on with our strategic partners. These relationships are growing and are now substantiating their value through sales."

FIRST QUARTER HIGHLIGHTS

* Together with The Ergonomic Group (EGI), DSS developed and rapidly deployed an On-Demand digital security print solution for Indra Sistemas, S. A. to deliver digital passport certificates for the Panama Maritime Authority.

* DSS received the first technology order from BTI for the production of a work permit for a city in China.

* DSS reached agreement with BTI to extend its technology partnership to cover the Dominican Republic.

* DSS completed the initial shipment of a foreign driver's license order with anticipation of significant follow-on orders under a multi-year term.

OPERATING RESULTS

Gross profit for the first quarter increased 234% to $1.1 million compared with $317,000 in the first quarter of 2006. Gross margin increased to 60% compared with 37% in the first quarter of 2006. The improvements in gross profits and margins reflect the impact of growth in DSS's royalty and digital solutions revenue streams. In addition, DSS realized improved margins on its plastic products and core security products as it leveraged the value of its unique and patented technology.

Operating expenses for the first quarter were $2.3 million compared with $1.3 million in 2006, an increase of approximately $1.0 million, or 72%. The increase in operating expenses includes increases in stock based compensation of $309,000, an increase of approximately $126,000 in amortization of intangible assets primarily associated with the Company's patent portfolio and approximately $91,000 of expense variance in the first quarter of 2007 that was associated with the timing of the acquisition of P3 in February 2006. The remaining increase in operating expenses primarily reflects increases in sales and marketing expenses, which increased 144%, or $295,000, compared with the first quarter of 2006.

The first quarter 2007 Adjusted EBITDA loss was $518,000, or $0.04 per basic and diluted share, compared with a loss of $713,000, or $0.06 per basic and diluted share, for the comparable period in 2006, an improvement of 27% in absolute dollars. (See Reconciliation of GAAP to Non-GAAP Financial Measures table)

In the first quarter of 2007, higher revenue partly offset higher operating costs, to result in a net loss of $1.2 million compared with a net loss of $1.0 million for the first quarter of 2006. On a basic and diluted per share basis, net loss for the 2007 first quarter was $0.09 compared with $0.08 in last year's first quarter.

Mr. White concluded, "We have only begun to commercialize our technologies. We believe that the potential for our technology solutions to be used globally as the foundation of defense on all printed materials is virtually unlimited. We have made excellent progress, but still have a great deal of work ahead of us. We are confidently looking forward to the challenge."

EARLY SECOND QUARTER HIGHLIGHTS AND OUTLOOK

* Initiating technology usage training in China with BTI customer; production expected to begin late in the second half of 2007.

* Expanding presence in Germany to capitalize on interest generated by victory in German intellectual property court

* Pursuing opportunities with U.S. government contractors and integrators with a focus on Department of Homeland Security efforts on customs and court security, as well as a variety of card identification products.

* Starting initial training in the Dominican Republic with a BTI customer.

TELECONFERENCE

The Company invites you to join Patrick White, Chairman and CEO and Peter Ettinger, President on a teleconference to discuss first quarter results and its sales and marketing activities on Monday, May 14, 2007 at 4:30 p.m. Eastern Time. To access the call you may dial [phone]. It is recommended that you dial in approximately 10 to 15 minutes prior to the scheduled start time. Alternatively, you may listen to a live web cast of the call on the Company's website: www.documentsecurity.com.

A replay of the call will be available until June 11, 2007 at midnight Eastern Time by dialing [phone] and entering PIN number 8774014. The archive will be made available on the website for approximately 60 days.

About Document Security Systems, Inc.

A rapidly growing security technology company, 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 can be found at its websites: www.documentsecurity.com and www.plasticprintingprofessionals.com.

Safe Harbor Statement

This release contains forward-looking statements regarding expectations for future financial performance, which involve uncertainty and risk. It is possible the Company's future financial performance may differ from expectations due to a variety of factors including, but not limited to, 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.

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