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Document Securities Systems (AMEX: DMC) Making Progress

|Includes:Document Security Systems, Inc (DSS)
US Corporations have begun to drastically increase their spending on “Brand Protection” and anti-counterfeiting solutions.  DMC should be seeing top line growth. This should help the bottom line and turn DMC profitable in the near future. Through its technology, the company is uniquely positioned to several industries seriously increase their spending on secure product identification solutions.   DMC could become a takeover candidate without profitability, but profits would improve any price paid.
Good news:  in the most recent (June) quarter, the company did achieve positive cash flow from operations.  There have been several other positive developments reported:
·         A licensing agreement with ATL, Inc., a major supplier of pharmaceutical packaging, was announced with Q2 2010 results.  This could bring in high-margin licensing revenues.  Counterfeit drugs accounted for 10% of the drugs sold in the U.S. as of the last report I’ve seen.  This represents a huge loss to the pharma companies, and they are beefing up their packaging security.
·         Several developments which make the company’s  AuthentiGuard® technology more available:  compatibility with both Microsoft and Apple systems, as software as a service version and a cloud computing version, also reported with Q2 2010 results.  Software margins are attractive, and this should be an avenue for good growth.
·         A new patent award in Europe.
·         Several large orders recently announced:  Walgreens renewing a contract for $2.7 million, and a new customer placing a $600,000 contract.
·         Progress in integrating higher margin security features into the company’s printing business.
·         An order for the company’s plastic printing business to be a base-stock provider for African drivers’ licenses.
·         The announced intention to increase sales efforts in order to raise the company’s national profile in the industry.
If DMC keeps making progress, the share price should rise with or without takeover speculation.

Disclosure: no position in DMC
Stocks: DSS