Jeffrey Ronaldi – Chief Executive Officer and Director Philip L. Jones – Chief Financial Officer, Principal Accounting Officer, Vice President-Finance, Controller & Treasurer

Charles A. Warden – The Mid Atlantic Capital Group

Good afternoon. Welcome to Document Security Systems’ Third Quarter 2014 Conference Call. My name is Donna and I will be your operator today. Joining us for today’s call is the company’s CEO, Jeff Ronaldi; CFO, Phil Jones; COO, Peter Hardigan; and President, Robert Bzdick. Following management's prepared remarks, we will open up the call for your questions. Then, before we conclude today’s call, I’ll provide the necessary cautions regarding the forward-looking statements made by management during this call as well as information about the company’s use of non-GAAP financial information. I would like to remind everyone that this call will be available for replay starting later this evening. A webcast replay will also be available via the link provided in the earnings press release as well as available on the company’s website. Now, I would like to turn the call over to the company’s CEO, Jeff Ronaldi. Sir, please proceed.

Thank you and welcome, everyone. Thank you for joining us today. About 30 minutes ago, we issued our third quarter 2014 results in a press release. A copy of the release is available in the Investor Relations section of our website. Our third quarter and first nine months of 2014 marked strong revenue period for our company. These achievements were driven by continued strong demand for our printed products as well as growth in our anti-counterfeiting and authentication solutions. This technology is trusted and are relied upon by major corporations, governments and financial institutions. In our printed products division, our continued focus on top-line growth and cost controls during the third quarter resulted in a 22% increase in revenue and an impressive 160% increase in adjusted EBITDA profitability. In our high-tech division, which includes our anti-counterfeiting and authentication solutions as well as IP monetization, our results reflect operational scalability and diversification as we continue to invest in AuthentiGuard and IP assets. And despite the many adverse changes that have occurred in IP landscape this year, as well as setbacks in some of our own cases, we have recently achieved other important milestones. These include the resumption of our Bascom Research case following a lengthy stay, as well as the scheduling of Markman hearings in three of our IP disputes. As many of you know, a Markman hearing is a critical step at a patent case as it addresses the language and interpretation of patents that are at issue. Such hearings typically provide an indication as to which side is likely to prevail a trial, which usually creates a greater willingness of the party to sell. These recent operational and financial highlights demonstrate our continued progress towards building a more diversified, higher-growth and adjusted EBITDA profitable organization. I would like to turn the call over to our CFO, Phil Jones, to take us through a more detailed discussion of our financials. I’ll return to talk about our operational activities and outlook and then open the call to your questions. Phil? Philip L. Jones: Thank you, Jeff. Turning to our results for the third quarter ended September 30, 2014, total revenue increased 17% to $5 million. As Jeff mentioned, our printed product revenue increased an impressive 22% to $4.5 million. This was driven by increases in plastic product sales and packaging sales, which more than offset a decrease in commercial printing related sales. Our technology sales services and licensing revenues decreased $103,000 to $475,000 due to the absence of settlements during the third quarter of 2014. Turning to our expenses, our cost of goods and expenses totaled $18.7 million. This was up from $6.9 million in the same year-ago period. The increase was primarily due to a non-recurring and non-cash impairment charge of $11.8 million, which I will talk about more shortly. Excluding this charge, our cost of goods and expenses for the quarter were $6.9 million or essentially flat compared to last year. Excluding depreciation and amortization, our cost of goods sold increased 24% to $3.1 million from Q3 of last year. The increase was driven by a higher portion of packaging sales as a percentage of total printed product sales. Our adjusted EBITDA loss, a non-GAAP metric and proxy for operating cash flow totaled $362,000. This was a significant improvement from an adjusted EBITDA loss of $556,000 in the same year-ago quarter. The improvement reflected the 17% increase in revenue as well as our ongoing cost control initiatives. Along those lines, we continue to target cost savings throughout our operations. The process includes rationalizing our headcount and G&A expenses company-wide, while maintaining our current levels of sales and marketing expenses in order to capitalize on the significant opportunities we’re pursuing in our digital division. Looking at our adjusted EBITDA by division for Q3 2014, in our printed products division, adjusted EBITDA increased to 160% to $603,000. For our technology management division, adjusted EBITDA loss totaled $424,000, while our adjusted EBITDA loss in our corporate division increased 8% to $541,000 compared to last year. As many of you know, we manage our printed products business with cash flow in order to allocate the majority of the cash generated into our higher growth areas. This division continues to be well-positioned to deliver consistent financial performance through 2015. It also serves as a bedrock of our company due to its highly predictable and valuable revenue and cash flow streams. This is core to our long-term strategy and truly unique among IP-centric public companies, the majority of which do not have revenue generating operations. Our technology management groups were less predictable and subject to greater variations in performance are managed to take measured risk of investments in products and intellectual property that we believe will provide significant returns over the long-term. While our technology groups have produced losses from an adjusted EBITDA perspective in 2014, it is important to note that from a cash flow perspective, our technology management division’s efforts have been supported by co-investors and third-party funding where we receive funding in the form of limited recourse debt, deferred legal fee deposits or deferred interest rates in exchange for a share of future monetization proceeds. This business model has been extremely important in offsetting the cash requirements of our technology management’s efforts. Our net loss for the quarter totaled $8.1 million or $0.19 per basis and diluted share. This compares to a net income of $6.5 million or $0.15 per basis and diluted share in the third quarter of 2013. The increase in net loss was primarily due to the $11.8 million impairment charge we took related to our investment in VirtualAgility. Of this amount, $4.7 million was attributable to a 40% non-controlling interest in the invest held by another entity. The net impairment expense of $6.1 million, which also included a $1 million tax benefit, significantly impacted our net loss for the third quarter of 2014. The VirtualAgility investment was carried on our balance sheet at fair value at the time of our merger with Lexington Technology Group in July of 2013. As you may recall, the fair values of Lexington’s assets were determined as part of the purchase price allocation at the time of the merger. Since the merger, we invested approximately $500,000 into VirtualAgility and we believe there may be an opportunity for us to recoup some of this investment. It’s also important to call out that in the third quarter of last year, we recorded a $9.2 million one-time deferred tax benefit. This significantly improved net income in the year-ago period. Excluding the impairment charge in Q3 of this year and the tax benefit in the year-ago period, our net loss in the third quarter of 2014 actually decreased $600,000 to $2.19 million from $2.7 million last year. So while we’re disappointed by the impairment charge we took during the quarter, we’re encouraged by the results of our core businesses. Now turning to the balance sheet. At quarter end, we had $2.3 million in cash and restricted cash. Our cash position reflects the $1.5 million we received during the quarter as part of a third-party co-funding agreement for one of our IP portfolios. Of this amount, $1.4 million was recorded as debt and $150,000 was recorded as other short-term liability. As I mentioned, third-party co-funding has been fundamental to our technology management division’s ability to make IP asset acquisition as well as manage its intellectual property portfolio. As of September 30, our balance sheet reflects the majority of these funding payments. Of which, $1.1 million of deferred expense payments are classified as either other short-term or long-term liabilities and $4.1 million is classified as limited recourse debt. Over time, these amounts will become element of our income statement as offset to legal expenses, patent right payments or other monetization payments that could become due upon successful monetization results. With that, I’d like to turn the call back to Jeff. Jeff?

Thanks, Phil. During the third quarter, we continue to execute on our long-term growth strategy. This was demonstrated by our ability to drive top-line growth, reduced expenses and improved adjusted EBITDA results. In our core printed products division, which is a foundation of our company, we are encouraged by the strong sequential and year-over-year increase in revenue and adjusted EBITDA profitability. This division is positioned to deliver continued revenue and EBITDA growth in the fourth quarter and 2015. Our improving results have been driven in part by our decision to consolidate our print and packaging plants into one facility earlier this year. We’ve also been able to secure long-term contracts with new and existing customers. These types of arrangements provide us with good visibility through 2015. We’ve also seen improvement in performance of our plastics division where we continue to emphasize our idea in security technology. We have placed a significant attention on process improvement as well as in forming strategic partnerships with organizations in the growing secure credential and ID market. As Phil mentioned, our long-term target financial model for our printed products division is to cover our corporate operating costs as well as fund a portion of our IP investment monetization initiatives. In addition, our operating division is important from a litigation perspective where the success rate is historically 10% higher than non-practicing entities. We believe the structure and financial model neutralizes our corporate operating risk, it also provides shareholders with significant upside opportunities with IP licensing activity. This strategy and specification [ph] is truly unique among IP-centric companies, companies that have concentrated IP portfolios that generate little or no revenue yet trade at higher multiples. As we continue to execute on our long-term growth strategy, we believe that stock market will better appreciate our business model, achievements, prospects, and ultimately, our stock will reflect our company’s true intrinsic value. Along those lines, in our digital provision, we continue to aggressively market and develop our AuthentiGuard suite of technologies. These innovations help brand owners protect against product diversion, counterfeit, theft, and other costly and damaging occurrences. We continue to believe this division is poised to deliver high margin sales growth and become a more significant source of recurring revenue for our company. This will allows us to further our technology innovation as well as support our IP initiative. Since we launched AuthentiGuard, we’ve been able to secure two important customer wins. While these implementations have provided modest revenue streams, more importantly, they have marked two significant milestones – proof of concept and delivery of meaningful results. We also continue to build our pipeline of prospective customers and licensees for AuthentiGuard. We are seeing increased interest and demand from existing printed product customers who are looking to implement highly secure print and digital security solution. Last quarter, we secured our first fully integrated print and digital customer, a consumer packaging company. We expect other existing printed product customers will follow too. This reaffirms the strong value proposition of our TENA suite platform as well as secured printing and packaging solution. From a marketing and sales perspective, we continued to aggressively promote and educate the market on how AuthentiGuard can address counterfeit and increase consumer confidence. Response and feedback we’re receiving continues to be positive and we remain confident, we will secure new wins in the near future. AuthentiGuard is a great illustration of our business model. This involves developing and acquiring IP that enables us to bring innovative products and services to market while actively licensing our IT. As you know, our go-to market strategy with both product commercialization and IT licensing is designed to maximize potential returns on our IT investments. This approach provides investors unique access to a stable and diversified business model that capitalizes on the expanding the global IT licensing market. Following this strategy, over the last two years, we have amassed a diversified patent portfolio that aligns with our technology roadmap. These assets support our operating divisions, product innovations and licensing programs. Today, our patent portfolio includes more than a 120 U.S. patents and a number of patent applications across three verticals brand protection, software and internet, and hardware. More than 75% of our patent assets focus on hardware and brand protection technology. Within our hardware vertical, during the third quarter, we reached important interim milestones including the scheduling of a Markman hearing in March, 2015 in our dispute with TSMC and another in May 2015 a dispute with Lenovo. Earlier this week, we issued a press release detailing our current litigation matters. The release should be helpful to investors with respect to the current status of our infringement cases. With respect to our software patent infringement matters, we anticipate that future cases that come before the Federal Courts will help to clarify the abstract idea criteria discussed in the recently decided Alice case, brining more clarity to the issue of patentability of software. Patents are generally long-lived assets and as such, software patents that may be challenged under the Alice rationale today, maybe better off being put on the shelf and so new decisions emerge from a federal, district and appeals courts that offer clarity to the solidity and value of such patents. Now, I would like to touch on a few key points relating to our pending litigation matters also summarized in Monday’s press release. In connection with our dispute with Coupons.com, we do not agree with the reasoning behind the courts ruling that granted Summary Judgment in favor of Coupons, our claim for breach of contract. The opinion granting Summary Judgment cited difficulty in determining damages as a rationale for granting motion. We are currently evaluating our options and made a few other decisions. A Summary Judgment Hearing is schedule in the Bascom case for November 21, 2014. Assuming we survive the Summary Judgment hearing, a Markman hearing has been scheduled for February 25, 2016. We continue to apply for new patents and we recently received two Notices of Allowance from USPTO for new Bascom patent. These patents relate to the same core innovation [indiscernible] in the California case. We believe this reflects that the Bascom patents in the California case will be found to be valid under the new standard and that we will prevail in the current case or future cases on this issue. In our case against Apple, as disclosed in our press release on Monday, the application has been transferred to the Northern District of California. We are hopeful that additional court Judge will be appointed to the case will expedite the scheduling of the all important Markman hearing. This transfer does not impact the merits of our case, which we believe to be strong. As such, we will continue to pursue our investment in this important technology vigorously in California. In our dispute with Taiwan Semiconductor, Samsung and NEC Corporation, we anticipate that mediation session will take place during the fourth quarter of this year, unless the TSMC trade case is transferred to California as requested by TSMC. On October 17, we filed our preliminary response to TSMC’s petition for Inter Partes Review. We are confident in our position regarding the validity of the patents involved. On September 12, Samsung also filed a petition for Inter Partes Review and we have until December 11 to file preliminary response, which we plan to do. With respect to our previously announced investment in Express Mobile, we expect that Express Mobile may need to file an infringement suite this year. With respect to the recently announced purchase of patent from [indiscernible] we’ve been with our R&D team and council to support development and monetization pathway for the IP. We have also assessed the number of opportunities to monetize this portfolio and expect to ramp these efforts in 2015 through licensing and litigation. We anticipate filing additional infringement to – on our current patent portfolio before the end of the year. We have built our business for the long-term and expect to experience up and downs as the IP policy debate is resolved and returns to an equilibrium. One positive impact from the uncertainty in the IP marketplace is that we have seen an unprecedented volume of high-quality IP available for historically low prices. This is a buyer’s market and we plan to capitalize on the opportunity. We plan to do this by leveraging non-dilutive forms of capital from our strategic IP savvy funding partner. Altogether, we continue to be encouraged by the direction and progress of our IP monetization activity. We’ll provide updates regarding our outstanding phases as developments occur. Also, I encourage you to view our active disputes on our corporate website. In summary, our third quarter results reflected continued execution on our long-term growth plan. We’re able to drive top line growth, reduce core expenses and enhance adjusted EBITDA profitability. Our expectations for the future remain high and we see a widening pipeline opportunities ahead. We plan to build on our progress in the fourth quarter and through 2015 to deliver revenue growth and consistent financial performance. Now with that, we are ready to open the call for your question. Operator?

Thank you. [Operator Instructions] Our first question is coming from Chuck Warden of Mid Atlantic. Please proceed with your question. Charles A. Warden – The Mid Atlantic Capital Group: Yeah. Hey, thank you for taking my question, guys. So I’ve been an investor for quite some times, well before the Lexington merger and I – over that time seen a pretty significant share price decrease. So my question is, what steps is the DSS have planned or think they could do to have the most direct impact on the share price, is sort of the first part. And then the second part is I’m curious to assess management’s view of the reason the depressed valuation of the stock, right now.

First of all Chuck, thanks for the question and thanks for being a shareholder over this trying period. The first question about the share price, what are we doing to change the shares price is a constant evaluation of our products and services and the people involved with it. It’s a reflection on everything that we’re doing and even if things are doing well, we still going to assessing whether we’re doing it correctly or how we are going to improve. We’ve set out a number of goals. We have achieved those goals such as increased EBITDA profitability. We have increased the number of – our patent portfolio without a cash requirement and we will continue to execute on this until we believe that this strategy is fraud [ph]. As far as your second question, that is the assessment of management of where we are today. It’s hard to rationalize the current stock price. We’ve had a couple of setbacks on our cases, but the amount that we invest in those cases does not reflect – does not correspond well with the total collapse of our stock price. It feels like the swings are just too strong for justification and hopefully when people see that we’re performing on the goal that we’ve set out, that will start going back in the other direction. Charles A. Warden – The Mid Atlantic Capital Group: Thank you.

Thank you. [Operator Instructions] our next question is coming from [indiscernible] of Morgan Stanley. Please proceed with your question.

Hi guys. Good afternoon, congratulations on your record revenues of the quarter, my question also focuses on the low stock price. I mean it seems like there was a fire sale going on and I was wondering why or if you could tell us why you along with others on the board or in management haven’t demonstrated more confidence in the company’s future by stepping up and making meaningful stock purchases at these presumably fire sale prices. I think something like that would really go a long way toward maybe having others considered doing the same. Thank you.

Thanks, Eric. I’ve heard this question a lot and the main answer is, our window has been closed for quite some time and will be opening shortly, I think within the next week or so. It’s an individual decision whether to buy or not and I believe most of the management has bought in the past and as they bought in the past at higher prices, I imagine that they might do so in the future. Can’t really talk about specifics of when, where and how, but this could be an interesting time for us.

Okay, thank you.

Thank you. Gentlemen, do you have any closing comments today?

Yeah. Thank you for joining us on our call today. I want to thank you for your continued support and patience as we continue to build DSS into a leading technology innovator. Lastly, if we weren’t able to address all your question on today’s call, please feel free to contact us directly or contact our Investor Relations firm of ALS Group and we will be happy to answer them. I look forward to speaking with you soon.

Before we conclude I would like to provide DSS’s Safe Harbor statement with important cautions regarding forward-looking statements made during this call as well as the statements regarding the company’s use of non-GAAP financial information. Forward-looking statements on this call including without limitations statement related to the company’s plans, strategies, objectives, expectations, potential value, intentions and the adequacy of resources are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act and contain words such as believers, anticipates, expects, plans, intends, and similar words and phrases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the results projected. The factors, risks and uncertainties that could result in those differences include, but are not limited to, those disclosed in the risk factors section of the company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 previously filed with the Securities and Exchange Commission. Forward-looking statements made as part of this call are being made as of today November 13, 2014 and the company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in forward-looking statements. During the call today, management discussed adjusted EBITDA. In the company’s press release issued today, you will find additional disclosures regarding this non-GAAP financial measure and reconciliations of net loss to adjusted EBITDA. Thank you for joining us for today’s presentation. You may now disconnect.