Document Security Systems, Inc. Receives $4 Million Equity Investment

PRESS RELEASE

ROCHESTER, N.Y., Jan. 3, 2011 /PRNewswire/ -- Document Security Systems, Inc. (NYSE Amex: DMC; "DSS"), a world-wide developer and manufacturer of security and authentication solutions which prevent counterfeiting and brand fraud announced today that on December 31, 2010 Fletcher International, Ltd., an affiliate of Fletcher Asset Management, Inc., ("Fletcher") acquired $4.0 million of DMC common stock at $5.29 per share as part of an equity purchase agreement between the two firms.

Under the agreement, Fletcher received the right to make an additional equity investment of up to $4 million during the early part of 2011, and certain warrants that may be exercised for a certain number of years.The full potential share purchase, together with the warrants, if exercised in their entirety for cash, could total $16.0 million at prices ranging between approximately $4.76 and $7.62 per share, subject to adjustment as provided in the transaction documents.

Wm Smith & Co. acted as placement agent for this transaction. Details of the transaction will be included in a Form 8-K to be filed by DSS with the Securities & Exchange Commission.

Said Patrick White, CEO of Document Security Systems, "This funding provides us with the additional resources necessary to leverage our new strategic relationships, improve our working capital position, expand our sales and marketing presence, accelerate our digital product development, and continue pursuing the tremendous market opportunities that we have identified as part of our growing business model."

"We are very excited by Fletcher's investment and confidence in DMC as a long-term financial partner in our business," said Robert Fagenson, non-executive Chairman of the Board of DSS.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy securities. The description of this transaction is qualified in all respects by reference to the transaction documents, which will be filed by the Company with the Securities and Exchange Commission and will be available at www.sec.gov.

About Document Security Systems, Inc

Document Security Systems is a technology company in the security and protection services sector which develops and manufactures products and packaging containing patented and patent pending 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 owns over 30 different patented and patent-pending technologies and products which protect valuable documents and printed products from counterfeiters and identity thieves. 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 its products and services can be found at www.documentsecurity.com, www.plasticprintingprofessionals.com, www.protectedpaper.com, www.dpirochester.com and www.premiercustompkg.com .

About Fletcher Asset Management, Inc.

Founded in 1991, Fletcher Asset Management and its affiliates, including Fletcher International, Ltd., have funded dozens of dynamic companies led by responsible management teams employing more than 50,000 people. Additional information is available at www.fletcher.com.